Jharkhand High Court
M/S Upendra Prasad & Bros vs Union Of India Through Deputy Chief ... on 20 July, 2023
Bench: Shree Chandrashekhar, Ratnaker Bhengra
IN THE HIGH COURT OF JHARKHAND AT RANCHI
(Commercial Appellate Jurisdiction)
Commercial Appeal (DB) No. 11 of 2022
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M/s Upendra Prasad & Bros, having its registered office at Area No.4,
Bermo, PO-Jaridih, Bazar, PS Gandhi Nagar, District-Bokaro-829114
(Jharkhand) through its Partner Sudhir Kumar, son of Shri Upendra Prasad,
r/o Flat No.B-4, Maharana Apartment, P.P Compound, PO-Ranchi, PS-
Hindpiri, District-Ranchi-834001 ...... Appellant
Versus
Union of India through Deputy Chief Engineer (Cons) East Central
Railways having its office at Satary (Near Loyola Centre) PO & PS-
Hazaribagh-825301 ...... Respondent
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PRESENT
HON'BLE MR. JUSTICE SHREE CHANDRASHEKHAR
HON'BLE MR. JUSTICE RATNAKER BHENGRA
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For the Appellant : Mr. Sachin Kumar, Advocate
Mr. Rahul Saboo, Advocate
For the Respondent : Mr. Prabhat Kumar Sinha, CGC
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JUDGMENT
CAV on 18th July 2023 Pronounced on 20th July 2023 Per, Shree Chandrashekhar,J.
M/s Upendra Prasad & Bros. challenged the Award dated 28 th September 2012 through a petition filed under section 34 of the Arbitration and Conciliation Act, 1996 vide Misc. (Arb.) Case No.10 of 2011, re-registered as Original Suit No.51 of 2018, which has been dismissed by an order dated 18th September 2019. Aggrieved thereof, the appellant who is the claimant has filed the present Commercial Appeal under section 13(1-A) of the Commercial Courts Act, 2015.
2. Briefly stated, M/s Upendra Prasad & Bros. entered into an agreement on 29th January 2003 with East Central Railway for the earthwork of cutting, filling, compaction, blanketing etc. and construction of minor bridges and associated works extended from Reach (V) Ch. 21.5 to 27.0 kilometers. The total value of work was for Rs.3,31,60,415.00 and the entire work was to be completed by 30 th July 2003 - within 18 months.
2 Commercial Appeal (DB) No. 11 of 2022 However, on account of the difficulties arising from land problems and High Tension Line at the work site completion of the project was seriously interrupted and even by extending the period for completion of the project by further 32 months the problems at the work site continued and finally the claimant rescinded the contract through letter dated 9th March 2006.
3. By virtue of clause-64 (3)(A)(II) of General Conditions of Contract, the General Manager, East Central Railway constituted an arbitral Tribunal consisting of three members vide letter dated 9 th August 2007 with a stipulation to publish intelligible Award with the sums of award separately on individual items of the contractor's claims and railway's counter-claims. Later on, constitution of the arbitral Tribunal was changed and substituted by nominating a fresh panel of Arbitrators by an order of the General Manager, East Central Railway through letter dated 22nd/23rd December 2009. The arbitral Tribunal entered upon reference on 10 th August 2010 and permitted the parties to file their statement of claims/counter-claims along with supporting documents such as index plan, site order book, details of Gairmajarua land etc. and hearings were conducted on 10th August 2010, 9th September 2010, 18th November 2010 and 17th December 2010.
4. The claimant raised claims under nine heads viz.
(i) compensation for idle workforce (ii) loss caused due to delay in design and drawing (iii) compensation for idle manpower (iv) compensation for unutilized equipment (v) compensation for further loss on account of non-availability of land, idling of 50% capacity, dumpers, manpower etc.
(vi) loss of profit on unexecuted work (vii) refund of Security Deposit and Earnest Money (viii) interest over a sum of Rs.1,56,69,451.61 for 2½ years with interest @ 18% amounting to Rs.70,51,253.22 and (ix) cost of arbitration. However, only the claim for release of payment for final bill was allowed and an Award was made for Rs.14,74,978.11 towards full and final settlement of the dispute.
5. The arbitral Tribunal did not agree to the other claims made by the claimant observing that the claimant has failed to complete the work even on the extended date of completion. As noticed above, the arbitral Award dated 5th July 2011 was put to challenge by the claimant in Misc.
3 Commercial Appeal (DB) No. 11 of 2022 (Arb.) Case No.10 of 2011 for setting aside the Award or to remit the Award to the arbitral Tribunal for correction in terms of para-20 (a) and (c) of the Award or for appointment of a retired High Court Judge to adjudicate upon the dispute and re-appraisal of the Award. However, during pendency of the proceeding before the Commercial Court at Dhanbad the Award dated 5 th July 2011 was modified by the arbitral Tribunal and a modified award dated 28th September 2012 has been published, whereunder the Award for Rs.14,74,978.11 has been modified and reduced to Rs.1,11,493/-. The Modified Arbitration Award dated 28th September 2012 was challenged in the pending Original Suit No. 51 of 2018 which has been dismissed by an order dated 18th September 2019.
6. The Presiding Officer of the Commercial Court at Dhanbad after briefly referring to the stand of the claimant and taking into consideration site order book, daily progress report etc. came to a finding that no error was committed by the arbitral Tribunal in making of the Award. On the issue of modification of the Award dated 5th July 2011, the learned Presiding Officer has simply observed that there is nothing on record to show that the award is bad as per the provisions of section 34 of the Arbitration and Conciliation Act, 1996.
7. The learned Presiding Officer of the Commercial Court at Dhanbad has held as under:
".............. There is nothing on record to show that the award is bad as per provisions of sec 34 of the Arbitration and Conciliation Act. After going through the record I find that the parties were given appropriate notice of the appointment of the aribtration tribunal and the arbitration award deals properly with the dispute and the award did not carry any pertinent illegality, hence the same is not against the public policy of India. So I do not find any reason to interfere with the Award. In the light of above discussion, it is, therefore, ORDERED That this case stands dismissed."
8. The only question canvassed before us is; whether the arbitral Tribunal could have modified the Award dated 5th July 2011?
9. Union of India has sought to take refuge under section 33 of the Act of 1996. Mr. Prabhat Kumar Sinha, the learned CGC would contend that 4 Commercial Appeal (DB) No. 11 of 2022 it was an apparent clerical error in the Award dated 5 th July 2011 which has been corrected by the arbitral Tribunal.
10. Section 33 of the Arbitration and Conciliation Act, 1996 reads as under:
33. Correction and interpretation of award; additional award.--
(1) Within thirty days from the receipt of the arbitral award, unless another period of time has been agreed upon by the parties--
(a) a party, with notice to the other party, may request the arbitral tribunal to correct any computation errors, any clerical or typographical errors or any other errors of a similar nature occurring in the award;
(b) if so agreed by the parties, a party, with notice to the other party, may request the arbitral tribunal to give an interpretation of a specific point or part of the award. (2) If the arbitral tribunal considers the request made under sub-
section (1) to be justified, it shall make the correction or give the interpretation within thirty days from the receipt of the request and the interpretation shall form part of the arbitral award. (3) The arbitral tribunal may correct any error of the type referred to in clause (a) of sub-section (1), on its own initiative, within thirty days from the date of the arbitral award.
(4) Unless otherwise agreed by the parties, a party with notice to the other party, may request, within thirty days from the receipt of the arbitral award, the arbitral tribunal to make an additional arbitral award as to claims presented in the arbitral proceedings but omitted from the arbitral award.
(5) If the arbitral tribunal considers the request made under sub- section (4) to be justified, it shall make the additional arbitral award within sixty days from the receipt of such request. (6) The arbitral tribunal may extend, if necessary, the period of time within which it shall make a correction, give an interpretation or make an additional arbitral award under sub-section (2) or sub- section (5).
(7) Section 31 shall apply to a correction or interpretation of the arbitral award or to an additional arbitral award made under this section."
11. According to "Oxford Advanced Learning Dictionary" (8th edition) the word "arithmetic" means the type of mathematics that deals with the adding, multiplying etc. of numbers and the word "clerical" means connected with office work. As per the Britannica Dictionary the word "arithmetic" means a branch of mathematics that deals with numbers and their addition, subtraction, multiplication, and division and the word "clerical" means of or relating to a clerk or office worker. Therefore as understood in common parlance the expression "arithmetical error" refers to a mistake of calculation. Similarly the expression "clerical error" shall pertain to such error which is an apparent typographical mistake and on 5 Commercial Appeal (DB) No. 11 of 2022 correcting such error the order remains the same but in the garb of correction of arithmetical and/or clerical error the whole basis of the order/document cannot be changed and the document/order cannot be rewritten. This is a common perception that an error occurring from an accidental slip or omission is a mistake which is entirely unintentional. An error which does not require a strenuous exercise for its discovery and elaborate arguments on questions of fact or law can be corrected under section 33. A simple example of such an error which can be corrected by the civil Court within the confines of its powers is in not recording something in a decree which the Court infact has ordered in the judgment. Similarly a grammatical or arithmetical mistake apparent on the face of record or a typographical error such as typing "plain" in place of "plaint" which sometimes may not even be objected to by the opposite party is what can be corrected by the Arbitrator. So, as regards section 33, there is another qualification attached to the exercise of powers by the Arbitrator that the error should be apparent on the face of record. In "Gyan Prakash Arya v. M/s Titan Industries Ltd."1 the Hon'ble Supreme Court has held that only in a case of arithmetical and/or clerical error, the award can be modified and such errors only can be corrected.
12. For easy reference, the whole of the Modified Arbitration Award dated 28th September 2012 is extracted below:
MODIFIED ARBITRATION AWARD No. UP/KQR-HZME/Arbitration/2003 Dated 28/09/2012 In the matter of Arbitration in connection with Contract Agreement No.CE/Con/AgU/06/02-03 dated 29.01.2003 for the work of "Earthwork in cutting filling. compaction, turfing, construction of minor bridges and other associated works between Koderma to Hazaribagh in connection with construction of new BG rail line from Koderma to Ranchi (Reach V) i.e. Ch. 21.50 to 27.00 km"
Between M/s Upendra Prasad & Brothers Engineers & Contractors Bermo No.4, P.O.-Jaridih Bazar, Bermo (Bokaro)-82911 .................Claimant Vs. Union of India Represented Through 1 (2023) 1 SCC 153 6 Commercial Appeal (DB) No. 11 of 2022 Shri K.K. Bhargava Dy.CE/Const.
EC Railway,
Hazaribagh .................Respondent
1.0 That as per the award published on 05/07/2011, the Arbitral
Tribunal had given the award vide para 21 (A) (VII) and 22 (A) on the basis of contractor's claim, which is reproduced below:-
21.A(VII) Claim No.1 (iv) & (v) Security Money & Earnest Money Deposit at the tune ₹12,41,000/- and ₹50,000/-respectively. Tribunal Remarks: The Security Deposit and Earnest Money Deposit can be refunded to the claimant after successful completion of work. In the instant case, the claimant executed the work in 3.255 Km out of total 5.5 Km. In addition to this, the claimant did not complete the work of minor bridges in all respects. The agency does not fulfill the criteria of successful completion of work hence refunding of Security Deposit and Earnest Money is ruled out. SN Claim No. Description of claim Claimed amount Award
22. (i) "A" CONTRACTOR'S CLAIM
(a) 1(i) Establishment loss @ 5% for 18 ₹92,112,28 Nil months
(b) 1(ii) (a) Loss of establishment, labour & ₹2,76,336.79 Nil equipment due to delay in design & drawing of minor bridges for 18 months
(c) 1(ii) (b) Idle manpower for 18 months ₹8,29,010.37 Nil
(d) 1(ii) (c) Idling of equipments from ₹5,28,000.00 Nil 22/03/2002 to 27/06/2002
(e) 1(ii) (d) Loss of equipments due to non ₹95,30,694.24 Nil availability of land till 05/06/2004 for 24 months
(f) 1(iii) Loss of profit on unexecuted ₹31,12,297.95 Nil work @ 15%
(g) 1(iv) & (v) Security Deposit and Earnest ₹12,41,000.00 Nil Money Deposit & ₹50,000.00
(h) 1(vi) Interest @ 18% for Two & half ₹70,51,253.22 Nil years
(i) 1(vii) Cost of Arbitration ₹50,000.00 Nil (B) Release of final bill: The agency executed a work of ₹ 14,74,978.11 and the bill was prepared by Executive Engineer(Con), EC Railway, Koderma. It is implied that the claimant has done the work hence they should be paid.
2.0 That on the basis of rejoinder submitted by Dy.EC/Con/G, EC Railway, Mahendrughat, Patna vide his letter No. ECR/ CAO/CON.WT/ Misc.ARBN/3247 dt.08/08/2012 wherein it was pointed out that due to clerical error, the amount given as final award was arithmetically incorrect. Accordingly, the Arbitral Tribunal corrects the award as under:
7 Commercial Appeal (DB) No. 11 of 2022
21.A(VII) Claim No.1(iv) & (v) Security Money & Earnest Money Deposit at the tune of ₹ 12,41,000/- and ₹ 50,000/-
respectively.
Tribunal Remarks: The Security Deposit and Earnest Money Deposit can be refunded to the claimant after successful completion of work. In the instant case, the claimant executed the work in 3.255 Km out of total 5.5. Km. In addition to this, the claimant did not complete the work of minor bridges in all respects. The agency does not fulfill the criteria of successful completion of work hence refunding of Security Deposit and Earnest Money is ruled out. The amount of SD withheld is ₹ 13,13,485/- and EM is ₹ 50,000/-
SN Claim No. Description of claim Claimed amount Award
22.(i) "A" CONTRACTOR'S CLAIM
(a) 1(i) Establishment loss @ 5% for 18 ₹92,112,28 Nil months
(b) 1(ii) (a) Loss of establishment, labour & ₹2,76,336.79 Nil equipment due to delay in design & drawing of minor bridges for 18 months
(c) 1(ii) (b) Idle manpower for 18 months ₹8,29,010.37 Nil
(d) 1(ii) (c) Idling of equipments from ₹5,28,000.00 Nil 22/03/2002 to 27/06/2002
(e) 1(ii) (d) Loss of equipments due to non ₹95,30,694.24 Nil availability of land till 05/06/2004 for 24 months
(f) 1(iii) Loss of profit on unexecuted ₹31,12,297.95 Nil work @ 15%
(g) 1(iv) & (v) Security Deposit and Earnest ₹13,63,485.00 Nil* Money Deposit
(h) 1(vi) Interest @ 18% for Two & half ₹70,51,253.22 Nil years
(i) 1(vii) Cost of Arbitration ₹50,000.00 Nil The claimant has made a claim of ₹12,91,000/- as refund of SD and EMD. However, the actual amount of SD of the said contract comes to ₹13,13,485/- and of EMD comes to ₹ 50,000/- (Total-₹13,63,485/-) which the Tribunal decides cannot be refunded.
After statutory deduction the net amount of final bill payable is ₹1,11,493/- and the claimant should be paid accordingly. Award given in para 1 to 21 stands as it is and para 22(B) should be read as under:
22. "B" RAILWAY'S COUNTER CLAIM Railway liquidated damages Nil Nil TOTAL AMOUNT OF AWARD ₹ 1,11,493/-
(ii) Hence, in totality and as full and final settlement of the case, ₹1,11,493/- (Rupees One Lakh Eleven Thousand Four Hundred Ninety Three only) amount is awarded.
This corrected award is published on 28th September 2012.
Sd/- Sd/- Sd/-
(Sunil Kumar) (Randhir Sahay) (K. Mal)
8 Commercial Appeal (DB) No. 11 of 2022
Co-Arbitrator & Co-Arbitrator & Presiding Arbitrator &
Chief Workshop Manager Sr.DFM, Executive Director/Estt.(Res.)
Carriage Repair Workshop Eastern Railway Railway Board, New Delhi Harnaut Asansol Division, Asansol
13. The jurisdiction of the Arbitrator must remain confined only to the correction of arithmetical and/or clerical error(s). Howsoever wide the powers under section 33 of the Act of 1996 are construed a rehearing on questions of fact or law or to permit a party to raise a new argument which was not at all advanced at the first stage cannot be countenanced. The Award dated 5th July 2011 was already under challenge by the claimant in Misc.(Arb.) Case No. 10 of 2011. Even assuming that the arbitral Award of Rs. 14,74,978.11 included Security Deposit etc. the arbitral Tribunal had no jurisdiction to entertain rejoinder dated 8 th August 2012 filed by the Railway to modify the said Award. The Commercial Court at Dhanbad has committed an apparent error in law by not exercising the jurisdiction vested in it under section 34 of the Act of 1996 in as much as modification in the Award dated 5th July 2011 has been done without notice to the claimant. In fact, this is not even a case pleaded by Union of India that a copy of the rejoinder affidavit dated 8thAugust 2012 was served upon the claimant and it was afforded opportunity to file its response. This is also not a case set-up by Union of India that the claimant waived its right to file objection to the rejoinder affidavit dated 8th August 2012 or that it adopted dilatory tactics which forced the arbitral Tribunal to pass an ex-parte order.
14. There can be no measure of doubt that the aggrieved party may approach the arbitral Tribunal within 30 days from the receipt of the award unless otherwise agreed upon by the parties. Clause (a) to sub-section (1) to section 33 provides that a party with notice to the other party may request the arbitral Tribunal to correct any computation errors, any clerical or typographical errors or any other errors of a similar nature occurring in the award. For the present, we are not required to refer to the powers of arbitral Tribunal to give an interpretation on a specific point or part of the Award and would simply observe that the procedure adopted by the arbitral Tribunal was illegal. The arbitral Tribunal had no jurisdiction to entertain rejoinder affidavit dated 8th August 2012 after lapse of 30 days from the 9 Commercial Appeal (DB) No. 11 of 2022 receipt of the arbitral Award by Union of India. This is also an admitted position that the claimant had no notice to the application moved by the Railway purportedly under section 33 of the Act of 1996. Under sub-section (3) of section 33, the arbitral Tribunal may correct any error of the type referred to in clause (a) of sub-section (1) on its own initiative within 30 days from the date of the making of arbitral Award. The Modified Arbitral Award dated 28th September 2012 however does not indicate that the arbitral Tribunal has on realising any computation errors or clerical or typographical errors or any other errors of a similar nature occurring in the award has decided on its own to correct such errors in the Award dated 5th July 2011.
15. To set-aside the arbitral Award, powers of the Court are limited to the grounds mentioned under section 34. The expressions "only by" and "only if" in different sub-sections to section 34 leave no manner of doubt that any judicial interference with an arbitral Award must remain confined to the specific grounds mentioned under sub-section(2). Therefore an Award which is (i) contrary to substantive provisions of law or (ii) provisions of the Arbitration and Conciliation Act, 1996 or (iii) prejudicial to the rights of the parties is open to challenge in the Court under section 34(2) of the Act of 1996. Furthermore, under sub-clause (iii) of section 34(2)(a) an arbitral Award may be set-aside by the Court if the party making the application was not given proper notice of the appointment of an Arbitrator or of the arbitral proceedings or was otherwise unable to present his case. In "Ssangyong Engg. & Construction Co. Ltd. v. NHAI" 2 the Hon'ble Supreme Court has held that where materials are taken behind the back of the parties on which the parties have had no opportunity to rebut, the ground under section 34(2)
(a)(iii) is available to challenge the arbitral Award.
16. The Modified Arbitration Award dated 28th September 2012 has been made without notice to the claimant. This is also a glaring mistake committed by the arbitral Tribunal that the basis of the original Award has been changed and a modified Award has been prepared on new grounds. However, the Commercial Court at Dhanbad has overlooked the aforementioned illegality committed by the arbitral Tribunal on account of
2. Ssangyong Engg. & Construction Co. Ltd. v. NHAI : (2019) 15 SCC 131 10 Commercial Appeal (DB) No. 11 of 2022 which the order dated 18th September 2019 has been rendered unsustainable in law.
17. Therefore, the order dated 18th September 2019 passed in Original Suit No. 51 of 2018 is set-aside.
18. Commercial Appeal (DB) No. 11 of 2022 is allowed to the aforesaid extent.
(Shree Chandrashekhar, J.) (Ratnaker Bhengra, J.) (Ratnaker Bhengra, J.) Jharkhand High Court, Ranchi Dated: 20th July 2023 Sudhir/Tanuj/Amit N.A.F.R