Bombay High Court
Municipal Corporation Of Greater ... vs M/S.Do-It Computer Jv on 16 August, 2017
Bench: S.C. Dharmadhikari, Vibha Kankanwadi
APPL253.17.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
APPEAL (L) NO. 253 OF 2017
IN
ARBITRATION PETITION NO.161 OF 2015
The Municipal Corporation of Gr. Mumbai ...Appellant
Vs
M/s. Do-It Computer JV ... Respondent
WITH
NOTCE OF MOTION (L) NO. 1373 OF 2017
IN
APPEAL (L) NO. 253 OF 2017
IN
ARBITRATION PETITION NO.1601 OF 2015
The Municipal Corporation of Gr. Mumbai ... Applicant
In the matter between :
The Municipal Corporation of Gr. Mumbai ...Appellant
Vs
M/s. Do-It Computer JV ... Respondent
Mr. Kevic Setalvad, senior counsel with Mr. U.J. Makhija, Ms.
Daisy Dubash, Ms. Vidya Gharpure, Mr. Sandeep Patil and Mr.
R.Y. Sirsikar for the Appellant/Applicant.
Mr. Gajanan Madhiwal, Assistant Engineer (SWM) and Mr.
Manish Pimple, Deputy Chief Engineer (SWM) present.
Mr. Aspi Chinoy, senior counsel with Mr. Simil Purohit, Mr. Suraj
Iyer, Mr. Farhan Khan i/b Ganesh and Company for the
Respondent.
SRP 1/35
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APPL253.17.doc
CORAM : S.C. DHARMADHIKARI &
SMT.VIBHA KANKANWADI, JJ.
WEDNESDAY, 16TH AUGUST, 2017
ORAL JUDGMENT :
1 By this appeal under section 37 of the Arbitration and Conciliation Act, 1996, read with clause 15 of the Letters Patent, the appellant - Municipal Corporation of Greater Mumbai, challenges the order passed by the learned single Judge dated 5 th December, 2016.
2 The learned single Judge dismissed Arbitration Petition No. 1601 of 2015, instituted by the appellant - Municipal Corporation / petitioner challenging an Award of the learned Arbitrator.
3 The Award dated 14th May, 2015, reads as under :
"Considering the pleadings filed, appreciating and appraising the evidence on record, considering the oral submissions made across the bar and written submissions filed on behalf of the Claimant, taking the totality of the circumstances into consideration and for reasons aforesaid, I make the following order:SRP 2/35 ::: Uploaded on - 31/08/2017 ::: Downloaded on - 31/08/2017 23:43:10 :::
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a) The Respondent is ordered and directed to pay to the Claimant the sum of Rs.7,28,20,350/-
(Rupees Seven Crores Twenty Eight Lacs Twenty Thousand Three Hundred and Fifty only) towards idle period charges together with interest thereon to be calculated at the rate of 15% per annum as from 04.07.2014 till payment or realization, whichever is earlier;
b) The Respondent is ordered and directed to pay to the Claimant further sum of Rs.73,76,589/- (Rupees Seventy Three Lacs Seventy Six Thousand Five Hundred and Eight Nine only) towards 5% linear escalation for the work of removal of Refuse by JCBs and dumpers operation for the period from 09.05.2007 to 17.06.2009 with interest to be calculated at the rate of 15% per annum as from 04.07.2014 till payment of realization, whichever is earlier;
c) The Respondent is ordered and directed to pay to the Claimant further sum of Rs.15,24,470/- (Rupees Fifteen Lacs Twenty Four Thousand Four Hundred Seventy only) by way of refund of weighment charges paid by the Claimant at private weigh bridges with interest thereon to be calculated at the rate of 15% per annum as from 04.07.2014 till payment or realization, whichever is earlier; SRP 3/35 ::: Uploaded on - 31/08/2017 ::: Downloaded on - 31/08/2017 23:43:10 :::
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d) Declared that the Claimant is entitled for Rs.286/- per MT (Metric Ton) with linear escalation of 5% every year on the amount of Rs.260/- per MT on the actual transferred municipal solid waste or for a minimum of 600 MT per day, whichever is higher, and that the Respondent is liable to pay to the Claimant the said sum for the period commencing from 18.06.2009 till expiration of the contractual period, that is, 08.05.2017;
e) The Respondent is also ordered and directed to pay to the Claimant the sum of Rs.15,10,000/- (Rupees Fifteen Lacs Ten Thousand only) towards costs of arbitration."
4 When this appeal was listed before us for admission on the earlier occasion and today, Mr. Chinoy the learned senior counsel appearing on behalf of the respondent raised a preliminary objection to its maintainability. 5 In the submission of Mr. Chinoy, the appellant challenged the order of the learned single Judge dated 5 th December, 2016, by filing an appeal being Appeal (L) No. 116 of 2017.
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APPL253.17.doc 6 When that appeal was listed before a Division Bench of this Court, on 20th April, 2017, the following order was passed :
"1. The learned Senior Counsel has placed on record a copy of letter dated 17th April, 2017 which is marked as "X" for identification.
2. The learned Senior Counsel appearing for the appellant on the basis of written instructions contained in the aforesaid letter seeks permission to withdraw this appeal with liberty to file appropriate proceedings before the learned Single Judge. He seeks continuation of ad-interim relief granted on 4th April, 2017 for a reasonable time.
3. Accordingly, we dispose of the appeal as withdrawn with liberty as prayed. However, all contentions of the respondent in the proceedings which may be filed by the appellant are expressly kept open. The ad-interim relief granted on 4 th April, 2017 shall continue to operate for a period of ten weeks from today.
4. We accept the statement made by the learned Senior Counsel appearing for the appellant that bank guarantee has been furnished by the appellant in terms of the order dated 4 th April, 2017.SRP 5/35 ::: Uploaded on - 31/08/2017 ::: Downloaded on - 31/08/2017 23:43:10 :::
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5. Needless to add that unless there are directions issued to the contrary by this Court, on the expiry of period of ten weeks from today, the Prothonotary and Senior Master shall encash the bank guarantee and pay the amount to the respondent.
6. In view of this order, the pending Notice of Motion does not survive."
7 In the submission of Mr. Chinoy, pursuant to the withdrawal of the appeal as above, the appellant-Municipal Corporation moved Notice of Motion (L) No.1275 of 2017 in the disposed of Arbitration Petition seeking an order, according to the learned counsel for the Municipal Corporation, for a correction of the record. However, by a reasoned order dated 3 rd July, 2017, that application/Notice of Motion was dismissed. 8 Thereupon, this appeal has been instituted and which is styled as Appeal (L) No. 253 of 2017.
9 When it was earlier listed before this Court and an SRP 6/35 ::: Uploaded on - 31/08/2017 ::: Downloaded on - 31/08/2017 23:43:10 ::: APPL253.17.doc objection was raised to its maintainability, the Municipal Corporation sought a clarification of the order passed on 20 th April, 2017. They sought this clarification from the very Bench which passed that order. That is how that Bench was requested to assemble in Chambers and when it so assembled, it passed a clarificatory order of 20th July, 2017.
10 That was unsuccessfully assailed in the Hon'ble Supreme Court of India and in that regard, Mr. Chinoy relied upon the order passed in Special Leave Petition No. 19045 of 2017.
11 Summarizing the import of all these orders and relying on a judgment of the Hon'ble Supreme Court in the case of M/s. Green View Tea Industries vs. Collector, Golaghat & Anr. (2002) 1 SCC 109 and an order and judgment of the Hon'ble High Court of Delhi in LPA No.73 of 2007 Government of NCT of Delhi and Ors. vs. Mool Chand Sharma decided on 26th February, 2013, it is urged that the present appeal is not maintainable. 12 The argument is that there was no liberty sought SRP 7/35 ::: Uploaded on - 31/08/2017 ::: Downloaded on - 31/08/2017 23:43:10 ::: APPL253.17.doc while withdrawing the earlier appeal to file a fresh appeal to challenge the impugned order. The fresh appeal, therefore, would not lie and must be dismissed as incompetent. 13 Mr. Kevic Setalvad, learned senior counsel appearing for the appellant, in meeting this preliminary objection, would submit that the orders passed by this Court and the Hon'ble Supreme Court cannot be read in the manner suggested by Mr. Chinoy. Their import and impact is very clear. The consequences are that there was a liberty implicit in the order passed by this Court on 20th April, 2017, and the further order in July 2017 that a fresh appeal can be brought in the event the clarification or correction of record is not issued or as desired by the appellant- Municipal Corporation. Therefore, in law, the present appeal is maintainable.
14 Mr. Setalvad has relied upon a judgment of the Hon'ble Supreme Court of India in the case of State of Maharashtra vs. Ramdas Shrinivas Nayak & Anr. (1982) 2 SCC 463 and an old judgment of the High Court of Lahore reported in 1967 Indian Cases 1002 Banwarilal vs. Musammat Kishen Devi . SRP 8/35 ::: Uploaded on - 31/08/2017 ::: Downloaded on - 31/08/2017 23:43:10 :::
APPL253.17.doc 15 After having heard both sides at great length and perusing with their assistance, the legal position and decisions brought to our notice, so also the earlier orders in this appeal, in the view that we take on the merits of this appeal, we do not deem it necessary to decide this question. The view that we take on the merits of this appeal, therefore, enables us to keep this point open, for decision in an appropriate case.
16 The respondent before us was awarded a contract by the Municipal Corporation of Greater Mumbai. 17 The contract, in terms of the tender notice, was for work of design, supply, installation, operation and maintenance of a Mechanized Refuse Transfer Station on built, own and operate basis for a period of ten years. The rates and schedule of quantities came to be decided in two parts for design, supply, installation, commencing and operation of Mahalaxmi Refuse Transfer Station on 'BOO' basis for a period of ten years and transportation of compacted refuse upto the landfill / processing plant on weight basis. The rates under this part were stipulated SRP 9/35 ::: Uploaded on - 31/08/2017 ::: Downloaded on - 31/08/2017 23:43:10 ::: APPL253.17.doc at clauses (a) to (h) of Sr. No.1 below the rates and schedule of quantities and the second was removal and transportation of municipal solid waste from Mahalaxmi Transfer Station to Deonar Dumping Ground on weight basis by providing a closed body vehicle as per Maharashtra Solid Waste Rules, 2000, 18 The preamble to the tender notice clearly stipulates that the Municipal Corporation of Greater Mumbai has to cater to a population of twelve million. The daily collection of refuse, including debris, is more than 7500 metric tons. The Municipal Solid Waste Rules, 2000 (for short MSW) has made it mandatory on all civic authorities to transport the collected refuse in closed vehicles without allowing any leakages during transportation with minimum labour handling. The scheme was to install a closed system with sufficient storage capacity compaction and transportation of refuse in closed vehicles to the landfill sites / processing plants in a environment friendly manner. The scheme was to operate for a period of ten years on the above basis. Such a work was awarded to the respondent and it is common ground that during the execution of the same, disputes and differences arose. In terms of the agreement between the parties, the same SRP 10/35 ::: Uploaded on - 31/08/2017 ::: Downloaded on - 31/08/2017 23:43:10 ::: APPL253.17.doc were referred to an Arbitrator. The sole Arbitrator made his Award. The Award came to be made after the statement of claim and statement of defence was filed. There were two compilations of documents followed by an additional compilation, all of which were filed by the respondent-contractor. The additional compilation contained documents which the contractor obtained by applying to the appellant under the Right to Information Act, 2005. Pertinently, the appellant did not file any documents. All the documents filed by the contractor were, by consent, taken on record as admitted in evidence. The parties informed the Arbitral Tribunal that they did not intend to lead any oral evidence. It is in these circumstances that the oral arguments were heard extensively and the subject Award was made. The tender was invited on 14th February, 2006. The work order, after acceptance of bid, was issued on 9th November, 2006.
19 The Arbitrator has proceeded, on the admitted factual position, to determine the following points :
i) Whether the Claimant proves that there is a delay of 25 months for commencement of the SRP 11/35 ::: Uploaded on - 31/08/2017 ::: Downloaded on - 31/08/2017 23:43:10 ::: APPL253.17.doc contract work for reasons attributable to the Respondent and if yes, whether the Claimant is entitled for the claim of idle period ?
ii) Whether the Claimant proves that it is entitled for revision of rate of per MT as claimed and if so, at what rate ?
iii) Whether the Claimant proves that they are entitled for rates as stipulated under the Tender document ?
iv) Whether the Claimant proves that during the delayed period, it was entitled to 5% linear escalation rate and if yes, whether the Claimant proves that the same is applicable for use of JCB also ?
v) Whether the Claimant proves that the use of JCB post the commencement of MRTS was necessary at the instance of the Respondent ?
vi) Whether the Claimant proves that it had to use private weight bridges as there was no adequate facility available for vehicles for weighment at Dumping yard for commencement of the MRTS at the dumping yard ?
SRP 12/35 ::: Uploaded on - 31/08/2017 ::: Downloaded on - 31/08/2017 23:43:10 ::: APPL253.17.doc vii) Whether the Claimant proves that it is
entitled for interest and if so at what rate ?
viii) Whether the Respondent proves that the delay occasioned due to the road work was not attributable to the Respondent?
ix) Whether the Respondent proves that the
Claimant failed to comply with tender
requirements in so far as the same are concerned with regard to hopper designs / installation ?
x)What award ?
20 With the above background, we proceed further to state that this Award dated 14th May, 2005, was challenged by the appellant in the above Arbitration Petition and which was dismissed on 5th December, 2016.
21 The primary contention raised by Mr. Setalvad is that the Award should have been set aside by the learned single Judge. The order refusing to set aside the same is contrary to section 34 of the Arbitration & Conciliation Act, 1996. Once the terms of the contract have been exceeded and the claims awarded SRP 13/35 ::: Uploaded on - 31/08/2017 ::: Downloaded on - 31/08/2017 23:43:10 ::: APPL253.17.doc by the learned Arbitrator are beyond the same, then, his Award was liable to be set aside.
22 Elaborating this contention, Mr. Setalvad would submit that even if the mobilization period was extended, the Arbitrator has faulted the appellant for being responsible for this extension, the claim could not have been awarded for this period at the contract rate. In other words, the rate for mobilization and for the work under the contract to be performed is distinct. The rate which was applicable at various stages of the performance of the work, as stipulated by the schedule, could not have been awarded to compensate the claimant-contractor for the mobilization period. In that regard, our attention was drawn by Mr. Setalvad to the Award and the particular contractual stipulations.
23 Mr. Setalvad then contended that the learned Arbitrator has based his conclusion on the impression of some of the officers of the Municipal Corporation and which has been put down in writing in notes. However, such notes or contents thereof cannot displace the contract terms and conditions. So SRP 14/35 ::: Uploaded on - 31/08/2017 ::: Downloaded on - 31/08/2017 23:43:10 ::: APPL253.17.doc long as the contract did not permit grant of compensation at the rate beyond the stipulated one, then, such notes are of no assistance and could not have been relied upon. The notes, by no stretch of imagination, can be construed as admission of the liability and on behalf of the Municipal Corporation. Alternatively, and without prejudice, even if the notes and letters are taken in their entirety as valid piece of evidence, they should have been perused as a whole. The contents thereof cannot be read, torn from the context or by picking and choosing sentences therefrom. In such circumstances and when the underlying feature of all this is that these are merely views of the officers and not a decision of the Municipal Corporation as a legal entity, then, all the more the Award cannot be sustained. 24 The argument is that the understanding of the sole Arbitrator that there is a parallel mechanism itself is faulty and not justified by the contract terms and conditions. If there is a specific rate of Rs.180 per metric ton stipulated, then, no linear escalation and in terms awarded is permissible. 25 The other argument is based on the contents of the SRP 15/35 ::: Uploaded on - 31/08/2017 ::: Downloaded on - 31/08/2017 23:43:10 ::: APPL253.17.doc Award and where the learned Arbitrator has purported to award 5% linear escalation. It is stated that not only that has been awarded, but there are several declarations given with regard thereto. A huge sum of rupees twenty four crores and odd has been awarded under that head. In such circumstances the claimants claim for 5% linear escalation for post mobilization period and as noted in paragraph 35 of the Award deserves to be interfered with.
26 It is also argued that the Award has crystallized a sum, but the Municipal Corporation has given a security in the form of a bank guarantee exceeding this amount. The amount exceeds about Rs.10 crores approximately and under the bank guarantee. Therefore, if this Court is not inclined to interfere with the order of the learned single Judge, then, it should continue the ad-interim arrangement for a reasonable period and within which either the order in this appeal could be challenged or the sums payable under the Award would be re-worked or re- computed.
27 For the above reasons, it is submitted that the SRP 16/35 ::: Uploaded on - 31/08/2017 ::: Downloaded on - 31/08/2017 23:43:10 ::: APPL253.17.doc impugned order be set aside.
28 Mr. Chinoy, learned senior counsel appearing on behalf of the respondent would support the Award as also the order of the learned single Judge. He would submit that an Award can be set aside only within the parameters permitted by law and particularly by section 34 of the Arbitration and Conciliation Act, 1996. No ground other than the one permissible in law or on broad considerations of equity, justice or sympathy for public bodies would, therefore, justify interference and with the understanding and interpretation of the contract terms and conditions by the sole Arbitrator and the appreciation and appraisal of the documentary evidence by him. Once there is no perversity and the view taken is a possible one, then, all the more we should dismiss this appeal is the submission. 29 For properly appreciating these contentions, we would have to keep in mind the parameters for setting aside the award permitted under the Arbitration and Conciliation Act, 1996. The Act by section 34 enacts the challenge procedure. That appears under Chapter VII under the heading Recourse Against Arbitral SRP 17/35 ::: Uploaded on - 31/08/2017 ::: Downloaded on - 31/08/2017 23:43:11 ::: APPL253.17.doc Award. Sub-section (1) of section 34 permits recourse to a Court against an arbitral award only by an application for setting aside such award in accordance with sub-sections (2) and (3). By sub- section (2) of section 34, an Arbitral Award will be set aside by the Court only if the party making the application furnishes a proof in terms of sub-section (2) clause (a) together with its sub- clauses or if the Court finds that the subject matter of the dispute is not capable of settlement by arbitration under the law for the time being in force or the Arbitral Award is in conflict with the public policy of India. Needless to clarify that by Explanation-1, an Award is in conflict with the public policy of India only if its making was induced or affected by fraud or corruption or was in violation of section 75 or 81 of the Act or it is in contravention with the fundamental policy of Indian law or it is in conflict with the most basic notions of morality or justice. Once again by Explanation it is clarified that for the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.
30 We have found from a reading of the order of the SRP 18/35 ::: Uploaded on - 31/08/2017 ::: Downloaded on - 31/08/2017 23:43:11 ::: APPL253.17.doc learned single Judge and on a perusal of the Arbitration Petition that the recourse against the Arbitral Award is founded on the grounds as enumerated and extensively in the Arbitration Petition. The first ground was that the Arbitral Tribunal erroneously concluded that the mobilization period of six months commenced on 9th November, 2006 and ended on 8th May, 2007 when in fact, the work order was issued, it was made clear that the period would start from the date of handing over of the MRTS site to the claimant-respondent.
31 On a perusal of grounds A and D of the Arbitration Petition, we do not find that any serious dispute was raised with regard to the extension and handing over the site. The site was to be handed over before May, 2007, so as to enable the contractor to commence the work as per the work order and within the ambit and scope of the contract. We have noted already the nature of the work and that is correctly not overlooked by the learned Arbitral Tribunal and the learned single Judge while considering the recourse against the Arbitral Award. The nature of the work where the site itself was to be handed over for a clear period of ten years and for operating, maintaining a system SRP 19/35 ::: Uploaded on - 31/08/2017 ::: Downloaded on - 31/08/2017 23:43:11 ::: APPL253.17.doc devised so as to treat the garbage, then, it is common ground that as understood by the parties and terms of the contract, the handing over has to take place. If that is not handed over so as to enable commencement of the work and the period is extended for reasons entirely attributable to the appellant, then, the claim for compensation under that head could have been considered. 32 The Municipal Corporation, in Ground E of the petition challenging the Award, stated that the period from January, 2008 to June, 2009 is concerned, the operation at the MRTS site could not be started as a result of work of Storm Water Drain. That was a high priority project implemented by the Solid Waste Department which was vital to the city of Mumbai and it was being aided by and funded substantially by the Central Government. The work under that project (BRIMSTOWAD) was virtually non negotiable and it took precedence over other works of the Solid Waste Department. It is in these circumstances that the MRTS site could not be handed over for commencement of work. Then, Ground F pertains to Electricity and Water supply and relied upon clause 22 of the work order dated 9 th November, 2006. In Ground G, an alternate and without prejudice SRP 20/35 ::: Uploaded on - 31/08/2017 ::: Downloaded on - 31/08/2017 23:43:11 ::: APPL253.17.doc submission was made. That is founded on the claim made by the respondent for compensation for delay in starting the work at the site till June, 2009. The Municipal Corporation says that assuming it is responsible for this delay and was liable to compensate, the contract period of ten years was reduced, the Municipal Corporation of Greater Mumbai had offered the respondent to extend the contract period for further two years in lieu of monetary compensation to be paid to it. That offer was rejected. No argument was canvassed either before the learned single Judge or before us as far as this aspect is concerned. 33 The essential argument revolves around Grounds and I of the petition appearing at pages 65 to 67 of the paper- book.
34 In Ground H the submission was about the methodology adopted by the learned Arbitrator for making an Award compensating the respondent for the delay or any part thereof for commencement of the work and it is totally erroneous, illogical and results in double payment for the same work to the respondent-claimants. The payment is being demanded and SRP 21/35 ::: Uploaded on - 31/08/2017 ::: Downloaded on - 31/08/2017 23:43:11 ::: APPL253.17.doc awarded as if there are two separate contracts. It is a failure on the part of the learned Arbitrator to appreciate that there were regular monthly payments and within the same contract. It is this aspect of the matter which is summarized in Grounds H, I and J of the petition that was essentially pressed before us. 35 In that regard, the learned sole Arbitrator had noted the admitted facts. In paragraph 21 of the Award which follows paragraph 20, which paragraph, in turn, sets out the admitted factual position, the learned Arbitrator noted that it was proved and established by the respondent that there was delay of twenty five months for commencement of the contract work for reasons attributable to the Municipal Corporation. The respondent claimed that it suffered loss and/or damages on account of the delay caused and which is entirely attributable to the Municipal Corporation. Therefore, it is entitled to be compensated. The claims have been made as noted in paragraph 21 of the Award under several sub-heads, for idle period from 9 th May, 2007 to 17th June, 2009; for revision on MT operating rate; for 5% linear escalation for post mobilization period; for operations carried out using JCBs; for usage of JCBs post commencement of MRTS; for SRP 22/35 ::: Uploaded on - 31/08/2017 ::: Downloaded on - 31/08/2017 23:43:11 ::: APPL253.17.doc payment of weighment charges at private weigh bridges as per actuals; for interest and for cost of arbitration. 36 With regard to the last four, we do not think any serious argument was canvassed and as noted in the order of the learned single Judge.
37 The claimant's claim for idle time compensation was noted by the learned Arbitrator at Rs.7,28,20,350/- together with interest. The case of the respondent was that the work was to commence on the expiry of six months' mobilization period and which is reckoned as 9th May, 2007, onwards. It was entitled to Rs.153/- per metric ton for a minimum of 600 metric tons with 5% linear escalation every year as per the tender condition forming part of the contract. The Arbitrator noted that this claim was made in terms of the tender document as also the conditions of the contract between the respondent and the Municipal Corporation. The Arbitrator referred to clause 1 of sub-clause (B) of section VI dealing with technical specifications in respect of incoming load flexibility in the tender and the addendum and corrigendum No.1 issued by the Municipal Corporation of Greater SRP 23/35 ::: Uploaded on - 31/08/2017 ::: Downloaded on - 31/08/2017 23:43:11 ::: APPL253.17.doc Mumbai. After referring to the same, it was noted that the quantum of weight mentioned as 700 metric tons per day was modified to 750 metric tons per day. The respondent was assured for payment of minimum 600 metric tons a day and as per the terms of the contract, the respondent was entitled to Rs.153 per metric ton of garbage transported for the first year. For the subsequent years, the respondent-claimant was entitled for a linear escalation of 5% as stated in the work order dated 9 th November, 2006. That is how this claim was noted and what the Municipal Corporation contended was that it made payment to the respondent at the rate of Rs.180/- per metric ton for the use of JCBs and tenders and thus having paid for the same garbage, it is not expected to make payment twice to the respondent- claimant. The learned Arbitrator found no merit in this contention even if that was canvassed with reference to some contractual terms. The contractual terms have been interpreted and understood by the Arbitrator to mean that the respondent was required to be paid, as stipulated by the contract, from the date of commencement, namely, 9th May, 2007. This is an admitted fact and it is not as if to derive support for the finding and conclusion on this point that a note internally made dated 4 th SRP 24/35 ::: Uploaded on - 31/08/2017 ::: Downloaded on - 31/08/2017 23:43:11 ::: APPL253.17.doc November, 2009, and prepared by the Deputy Chief Engineer (Solid Waste Management) of the Municipal Corporation was relied upon. It may be that there was some understanding arrived at by parties and noted in this note of assured payment of 600 metric tons per day but the Award, as far as this aspect is concerned, is not founded only on this note. The claim is awarded by interpreting the terms and conditions of the contract. The contract having commenced on 9 th May, 2007, the Municipal Corporation was held liable to compensate the respondent for the period commencing on 9th May, 2007, for the contractor has expended money to acquire equipment and has incurred expenses. The argument that the Municipal Corporation had already compensated for the same garbage transferred with the use of JCBs which would otherwise have been transferred through MRTS has been noted and specifically rejected by both the sole Arbitrator and the learned single Judge. The reasons assigned in that behalf have been carefully perused by us with the assistance of Mr. Setalvad.
38 With all pursuasive abilities at his command, Mr. Setalvad was not able to pursuade us to take a different view. It SRP 25/35 ::: Uploaded on - 31/08/2017 ::: Downloaded on - 31/08/2017 23:43:11 ::: APPL253.17.doc may be that the garbage was to be transferred for garbage lying at site could not have been tolerated and that would have destroyed the very object and purpose of awarding such contract. However, that it was transported by JCBs and for which the claim was made does not mean that every other preparation made, steps taken, equipment acquired, expenses incurred for the work to commence from 9th May, 2007; that having not been commenced on account of delay wholly attributable to the Municipal Corporation, means no compensation on that count. There must be a stipulation to the contrary and which was not found in the contract. The Arbitrator was, therefore, in a position to take a view of the contractual terms and conditions and which he has taken. He has noted that if the garbage was to be taken and transported by JCBs during the mobilization period, but after the commencement of the contract period, it was through MRTS, which means a modern machinery. Thus, the period during which the contractor places orders for the equipment, the same gets ready and gets delivered, the compensation would be allowed but beyond that period if the equipment and the machinery is not mobilized at site, then, the contractor was to be held responsible. Similarly, if the contractor makes all the arrangements for SRP 26/35 ::: Uploaded on - 31/08/2017 ::: Downloaded on - 31/08/2017 23:43:11 ::: APPL253.17.doc commencement of the work, but the clear site required has not been arranged and handed over and there is a delay in the same, the reasons for which are entirely attributable to the Municipal Corporation, then, for that idle period the claim has to be considered and the compensation awarded. It is in that sense the parallel mechanism or the parallel procedures have been understood and termed as such. The learned sole Arbitrator and the single Judge have not carved out anything beyond the contract as argued by Mr. Setalvad in awarding this claim. They have gone strictly by the terms and conditions of the contract. The interpretation that is placed on the terms, that if the contract does not rule out grant of compensation for such idle period, then, it can be considered and awarded is the basis for eventually making an award under this head. We do not think that the understanding of the contractual terms is so perverse as would bring the conclusion within the parameters laid down by sub- sections (2) and (3) of section 34 of the Arbitration and Conciliation Act.
39 We must at once clarify that we do not sit as a Court of appeal under section 34 so as to scrutinize and verify each and SRP 27/35 ::: Uploaded on - 31/08/2017 ::: Downloaded on - 31/08/2017 23:43:11 ::: APPL253.17.doc every claim of the nature made in the present case and find out further whether that could have been awarded on the basis of the materials produced or whether that was permissible to be awarded within the terms of the contract. If all this was otherwise permissible, meaning thereby, the contract does not rule out considering and awarding of the same, materials in that behalf are already placed on record, then, the adequacy and sufficiency thereof, the reasons for awarding of the same cannot be scrutinized by re-appreciating and reappraisal of the same documentary evidence all over again. It is on that count that we find that as far as this aspect is concerned the award was not vitiated as contended.
40 We have also noted the serious argument canvassed before us by the Municipal Corporation that its internal notes have been utilised for making an Award against it. There is a difference between relying on internal notes and the files and reports (records relating to the contract) which have been maintained during the course of the contract. If during the course of monitoring and supervision of the work, the competent authorities and comprising of experts like Chief Engineer, make SRP 28/35 ::: Uploaded on - 31/08/2017 ::: Downloaded on - 31/08/2017 23:43:11 ::: APPL253.17.doc certain reports, then, we do not think that they lose their evidenciary value if they are relied upon for their contents. They are corroborative materials and which have been considered by the learned Arbitrator to be so in the facts of this case. The learned Arbitrator has not based his conclusions solely on the information derived by the respondent-claimants under the Right to Information Act, 2005, or only on the internal notes in the file. He has taken an overall view of the matter. It was permissible for him to look at the reports and which formed a part of the record. Pertinently there was no controverting material placed by the Municipal Corporation. The entire compilation of documents placed on record was admitted in evidence by consent. Once we cannot overlook this position, then, the criticism of the Municipal Corporation that the Award was based entirely on the internal notes fails to convince us.
41 It is then argued that the claim for 5% linear escalation for post mobilization period for operations carried out with JCBs has been awarded erroneously and that is equally without merit. The learned Arbitrator has considered this aspect by finding out as to when the operations could commence. Even SRP 29/35 ::: Uploaded on - 31/08/2017 ::: Downloaded on - 31/08/2017 23:43:11 ::: APPL253.17.doc in the post mobilization period, the JCBs had to be utilised. The claimant says that it was required to use the JCBs only for the mobilization period after which it was to revert to modern technique. Then, the JCBs were not to be utilised. However, it had no option, but to use JCBs for the delayed period of 25 months till final commissioning date of 18 th June, 2009 and that was as per the instructions of the Municipal Corporation and its officials. After 18th June, 2009, it was required to use and/or deposit the same at the instance of the Municipal Corporation for the contract work. It is also the case of the respondent that the tender provided for a 5% linear escalation every year commencing from the expiry of the one year of contract and the Municipal Corporation had paid Rs.180 per metric ton for the operations carried out by the respondent. Such operations were carried out and, according to the learned Arbitrator, for a period of twenty five months. Hence, on the completion of the first year, the respondent became entitled to 5% linear escalation on the per metric ton rate. The Municipal Corporation may have denied any liability in this regard, but the Arbitrator found that there are no specific provisions in the contract which enables him to reject this claim. Clause No.5 of the highlights of the tender were noted. SRP 30/35 ::: Uploaded on - 31/08/2017 ::: Downloaded on - 31/08/2017 23:43:11 :::
APPL253.17.doc It was found that the rates stipulated therein were not restricted to the use of MRTS site only. The rate for the mobilization period being Rs.180/- per metric ton, the claimant is entitled to 5% linear escalation because of the delayed commencement of the contractual work entirely on account of the reasons attributable to the Municipal Corporation. This claim could not have been rejected unless there was any specific prohibition. If the contract does not rule out award of such claim, then, on an analysis and appreciation of the contractual terms and interpretation thereof as a whole that the claim was awarded.
42 As held above, we do not think that even on this count, the Arbitrator's approach could have been faulted. 43 Beyond noting all these contentions which were reiterated before the learned single Judge, with respect, he has found nothing to the contrary in the record. The entire work and with its salient features has been considered by the learned single Judge. In a fairly detailed order and which runs into 27 pages, analysing the rival contentions, the learned single Judge concluded that the Arbitrator proceeded rightly on the basis that SRP 31/35 ::: Uploaded on - 31/08/2017 ::: Downloaded on - 31/08/2017 23:43:11 ::: APPL253.17.doc the mobilization period of six months commenced on 9 th November, 2006, and ended on 8 th May, 2007. The contract period commenced from 9 th June, 2007. The six months period of mobilization starts in terms of clauses 10 and 11 of the tender documents as soon as the letter of acceptance is issued. The work order, being the letter of acceptance, is dated 9 th November, 2006. Though in the work order there was an attempt to extend the commencement of the mobilization period by adding the words of handing over Mahalaxmi Refuse Transfer Station (MRTS) site, the respondent-claimant had pointed out that there cannot be a unilateral change. This objection was raised in writing on 2 nd January, 2007, and the Municipal Corporation, in writing, vide letter dated 22nd March, 2007, admitted and confirmed that the mobilization period of six months ended on 8th May, 2007. 44 It is in these circumstances that the Arbitrator was to consider the reasons for the delay; once they were found to be attributable only to the Municipal Corporation and not to the contractor, then, for the idle period, namely, 9 th May, 2007 to 17th June, 2009, the claims arose. If the claims arose also because when the period commenced the contractor was told to utilise the SRP 32/35 ::: Uploaded on - 31/08/2017 ::: Downloaded on - 31/08/2017 23:43:11 ::: APPL253.17.doc JCBs and continue to do so, then, even on that count, there was a claim raised which could have been considered and awarded. The reasons which the Judge assigns from paragraphs 28 to 35 of the order passed by him, therefore, do not contravene the mandate of the Arbitration and Conciliation Act, 1996. Rather, they maintain the discipline that the requirement of interference by the Courts in Arbitral Awards is minimum and the parties must be encouraged to settle their disputes by the mode of arbitration. 45 Even from paragraph 36 onwards where the learned single Judge considers the demand for 5% linear escalation and after mobilization period for operations carried out using JCBs and dumpers, he has found that the reasons the Municipal Corporation assigns are not enough to deny the claim. The claim has been awarded essentially because of the delay and in handing over the site for the commencement of the work. The argument to the contrary by the Municipal Corporation has been turned down on this basis. The reasons, therefore, from paragraphs 36 to 38 cannot be said to be based on no material or contrary to the terms and conditions of the contract.
SRP 33/35 ::: Uploaded on - 31/08/2017 ::: Downloaded on - 31/08/2017 23:43:11 :::
APPL253.17.doc 46 Once we find that the Arbitrator has not exceeded the terms and conditions but has relied upon the materials produced, then, the principal contention must fail. Even the second argument that the claims have been awarded solely on the basis of the written note has failed to impress us and for the reasons assigned herein above. Thirdly, we do not find that anything which is expressly incorporated in the contract has been overlooked and materials which cannot be considered have been taken into account. This argument was canvassed on the footing that in relying upon the written notes or letters, the Arbitral Tribunal has overlooked the terms and conditions of the contract. We do not think that the Award was based on such materials as have no evidenciary value or that it is solely based on some minutes or written notes. We have, in the foregoing paragraphs, found that there are cogent and satisfactory reasons for taking these documents as corroborative material. The correspondence, as also the notes have been perused in their entirety, but the findings are not based on the same alone. There are reports as well and which certify the extent of the work and setting out the reasons why it could not be commenced in time. SRP 34/35 ::: Uploaded on - 31/08/2017 ::: Downloaded on - 31/08/2017 23:43:11 :::
APPL253.17.doc 47 For all these reasons, we do not find that this is a fit case for interference in our appellate jurisdiction. The appeal fails and it is dismissed without any order as to costs. 48 At this stage, a request is made to extend the ad- interim order so as to enable the Municipal Corporation to consider its position and to re-work and re-compute the sums payable under the Award. The request is opposed by Mr. Chinoy. 49 Having heard both sides on this point, we find that there is a bank guarantee which is furnished by the Municipal Corporation - appellant and which is still alive. While we continue the bank guarantee and direct that it should be kept alive for a further period of twelve weeks, we direct that the Municipal Corporation, if unable to obtain any orders from the higher court during this period or unable to re-work or re-compute the claims and furnish the computation to the Registry in that behalf, the respondent-claimant shall be entitled to have the bank guarantee encashed on the expiry of the above period.
SMT.VIBHA KANKANWADI, J. S.C. DHARMADHIKARI, J. SRP 35/35 ::: Uploaded on - 31/08/2017 ::: Downloaded on - 31/08/2017 23:43:11 :::