Calcutta High Court
Structure India vs State Of West Bengal on 15 May, 2002
Equivalent citations: (2002)3CALLT336(HC)
Author: J.K. Biswas
Bench: Tarun Chatterjee, Jayanta Kumar Biswas
JUDGMENT J.K. Biswas, J.
1. This Appeal has been filed against the judgment dated 1st November 1990, whereby a learned Judge of this Court set aside the award on an application filed by the State of West Bengal, the respondent herein, under Sections 30 and 33 of the Indian Arbitration Act, 1940.
2. In April 1977, the Executive Engineer, Burdwan Division No. 1, Public Works Department of the Government of West Bengal invited a tender being Tender No. 4/Burdwan-1 of 1977-78. It was for construction of the Administrative Building (Purta Bhavan) at Burdwan. The estimated value of work put to tender was Rs. 65,25,455/-. The tender was not an item rate one. In page 7 of the price schedule to the tender, against item No. 49C, a specific price rate was mentioned for the white washing work. The rate fixed was Rs. 47.50 per square meter. The appellant submitted its tender agreeing to carry out the work mentioned in the said tender at 5% above the rates shown in the price schedule of the probable items with approximate quantity. Appellant's such tender was accepted by a letter dated 14th May 1977, by the Superintending Engineer, PWD, Western Circle No. 1. It was accepted for the amount of Rs. 68,51,728/- as against the estimated amount of Rs. 65,25,455/- which had been put to tender. The work was to be completed within 24 months i.e. by 13th May 1979. However, the appellant completed the work on 30th April 1981.
3. After completion of the work the concerned department prepared the final bill payable against the contract. The appellant examined the bill. By a letter dated 27th May, 1982, the appellant pointed out that the white washing rate at which the payable amount had been calculated in the final bill, was not correct. The appellant contended that the rate should have been Rs. 47.50 'per square' meter as mentioned against item No. 49C of the specification price schedule to the tender, and not Rs. 47.50 'per % square meter' as mentioned in the final bill.
4. By a letter dated 26th June 1982 the concerned department informed the appellant that the rate mentioned in the price schedule against item No. 49C for white washing was in fact Rs. 47.50 'per % sq.m.' as will be evident from any book of printed schedule of rates of Western Circle No. 1 of the PWD. It was further stated that because of an inadvertent typographical mistake, which was bona fide, the mark % did not appear at the relevant place of the price schedule to the tender.
5. The parties continued to exchange letters regarding the rate of said item No. 49C for the white washing work. It may be mentioned here that by a letter dated 6th August 1982 the concerned Executive Engineer informed the appellant that not item rate tender had been called for and the rate quoted by the appellant was for the whole amount put to tender and such whole amount had been worked out after taking into account the white washing item (item No. 49C of the tender) for which the estimated amount had been calculated at the rate of Rs. 47.50 per % sq.m. and not at the rate of Rs. 47.50 per sq.m. and this fact was evident from the records.
6. The appellant received the final payment under protest. For the white washing work of an area of 42,000 sq.m., a sum of Rs. 19,950/- was paid to the appellant at the rate of Rs. 47.50 per % sq.m. Then by a letter dated 27th December 1982 the appellant submitted a list of its outstanding claims. A total claim of Rs. 40,06,876.00 was made. In that claim, on account of balance of white washing charges a sum of Rs. 20,78,802.00 was included.
7. In reply the concerned department wrote a letter dated 2nd February 1983. It was stated in the said letter that as per Clause-2 of the notice inviting tender the printed schedule of rates of Western Circle-1 (PWD) for 1976-77 was a part of the tender document and it was mentioned in such printed schedule that rate of white washing would be 'per % sq.m.' and not 'per sq.m.'. It was further mentioned in the said letter that the appellant had given declaration (i.e. the last page of special terms and conditions and specifications attached with the tender) that the appellant had carefully gone through 'the Circle schedule' as defined in Clause-2 of the NIT and also the schedule of rates of the Western Circle-1 for building works, road works and carriage of materials and labour (for 1976-77) as referred to in the general conditions of the 'Circle schedule' and had agreed to accept the same as part and parcel of the contract in case his tender was accepted. The department further mentioned in that letter that the appellant was not entitled to take advantage of a genuine typographical mistake which had inadvertently crept into the price schedule to the tender.
8. Thereupon by a letter dated 15th February 1983, the appellant demanded appointment of Arbitrator. Ultimately by an order dated 16th November 1983, passed by a learned Judge of this Court in Matter No. 1429 of 1983, the Arbitrator was appointed.
9. Before the Arbitrator the parties adduced both oral and documentary evidence. There is no dispute that the documents and letters of the parties referred to hereinbefore were also produced before the Arbitrator by the parties, as documentary evidence in support of their respective cases.
10. On 23rd May, 1989, the Arbitrator made the award. The Arbitrator directed the State to pay a sum of Rs. 24,60,961.03p to the appellant by way of full and final settlement of all claims made by the appellant. The Arbitrator further directed payment of interest and cost. It may be mentioned here that the total claim made before the Arbitrator by the appellant was Rs. 40,06,876.80/-.
11. The reasons in support of the award, as recorded by the Arbitrator, were as follows:
"The respondent accepted that the work was completed on or about March 31, 1981 beyond the stipulated period after May 31, 1977 but according to them there was no justification for attribution of such delay on the part of the respondent. According to them, the drawings were ready in time and in any event the claimant did not raise any objection regarding non-availability of the drawing at the start of the work. The respondent, however, did not support their case by producing their suggested records. That apart there was no denial of any belated supply of drawings by the respondent as contended by the claimant. The respondent also accepted that there were alterations or revisions of the drawings after the work was started, but, according to them, the same were of minor nature and it was with the competency of the Engineer-in-charge to make such alteration or revision. However, no records were produced to show that such alteration was of minor nature as suggested. No categorical denial was also made in the counterstatement that such alteration did affect the progress of the work or for that dismantling of the work already done as per original scheme was necessitated. The respondent also accepted the contention of the claimant that the supply of materials like steel and cement could not be ensured in a planned manner. The respondent admitted that there were occupations of some portion of the building during the construction period but according to them this was done when such portion was complete in all respect. However, there was no categorical denial that such occupation did not cause any hinderance to the claimant for completing the work in time. The respondent, however, relied on correspondence to show that such delay was due to the inefficiency, laches and/or negligence on the part of the claimant and for that contended that the Government had to incur a loss to the tune of Rs. 2,00,000/- and the respondent claimed the said sum from the claimant. As regards the said item No. 49(C) the respondent argued with some force that if the quantity and the amount in column No. 6 are taken into consideration, it would be evident that the rate was Rs. 47.50 per 100 sq.mtr. Thus according to them, the rate in respect of the said item No. 49(C) shown in the agreement was due to typographical mistake. However, no original typed document was produced in the proceedings. I have also carefully gone through the said specific price schedule of probable items produced in the proceedings and found several deletion/corrections against various items but there was no such deletion or correction in item No. 49(C) as aforesaid. The record by itself does not clearly establish that such omission of figure '100' before sq. metre was due to typographical mistake as suggested by the respondent. That apart, the respondent admitted the receipt of protest letter dated 27.5.1982 issued by the claimant before presenting the final bill to them."
12. On 7th September 1989 the State filed the application under Sections 30 and 33 of the Arbitration Act, 1940. That application for setting aside the said award was registered in this Court as Award case No. 485 of 1989.
13. It was contended in that application that the award was perverse and it was given by the Arbitrator by ignoring material documents on record, without applying his mind to the materials on record, and without any evidence adduced by the claimant in support of the claim. It was further contended that on the 8th sitting held on 15th May 1984 as many as six issues had been framed by the Arbitrator, and as such by granting the lump sum awarded and by not passing the award on the basis of issues framed, the Arbitrator acted illegally and committed misconduct. The further contention was that by failing to consider the relevant provisions of the contract document the Arbitrator in reality deliberately overlooked the material evidence while deciding the dispute. The State also contended that on the face of oral evidence witnesses and the provisions in the contract documents regarding applicability of Circle schedule rates for white washing, the Arbitrator acted perversely in allowing the absurd claim made by the claimant for white washing taking advantage of a trifle typographical mistake.
14. The application filed by the State was contested by the appellant by filing an affidavit-in-opposition dated 19th January 1990. The main contention raised by the appellant in said affidavit-in-opposition was that the arbitration agreement had not provided that the Arbitrator would be required to give reasons for his award and therefore, the award passed by the Arbitrator being an unreasoned award was not open to challenge on the grounds taken in the application for setting aside.
15. By the impugned judgment the learned Judge allowed the State's said application and set aside the said award. The learned Judge held that the claim of Rs. 20,78,802/- towards outstanding of white washing charges made by the claimant was baseless and this apparent fact the Arbitrator had failed to consider. The learned Judge further held that it was apparent from the findings of the Arbitrator that the total claim made under item No. 49C by the claimant was allowed giving the lump sum award, and that such illegally awarded portion being not severable the entire award was liable to be set aside.
16. Mr. Kapoor, appearing for the appellant has contended before us that the award being a non-speaking and unreasoned award by which only a lump sum was awarded, was not open to challenge in an application for setting aside the award, and as such, the learned Judge committed errors of law and jurisdiction in setting aside the award.
17. In support of his contention Mr. Kapoor, has relied on the following decisions: Firm Madanlal Roshanlal Mahajan v. Hukumchand Mills Ltd., ; Union of India v. Bungo Steel Furniture Private Ltd., reported in AIR 1967 1032, Sudarsan Trading Company v. Government of Kerala and Anr., , Arosan Enterprise Ltd. v. Union of India and Anr., and Indu Engineering and Textile Ltd. v. Delhi Development Authority, .
18. Mr. Banerjee appearing for the respondent State has submitted that in the facts and circumstances of this case the learned Judge has rightly set aside the award. Mr. Banerjee has relied on the following decisions: Union of India v. Kalinga Construction Co. (P) Ltd., , Central Coal Fields Ltd. v. Mining Construction & Multi Contract (P) Ltd., , Vipinbhai R. Parekh v. G.M. Western Railway, , Coimbatore District, P.T. Sangam v. Bala Subramania Foundry and Ors., , Union of India v. Unit Construction Co. (P) Ltd. and Anr., and U.P. Hotel v. Uttar Pradesh State Electricity Board, .
19. After hearing the counsel for the parties and considering the materials on record we are unable to accept the contention raised by Mr. Kapoor. By reading the award passed by the Arbitrator we are unable to agree with Mr. Kapoor that the same is an unreasoned and non-speaking award. Mr. Kapoor has contended that the award only contains arguments advanced by the parties before the Arbitrator and without recording any finding the Arbitrator straightway passed the lump sum award. We have perused the award and we find that the Arbitrator has not passed an unreasoned award as contended by Mr. Kapoor.
20. The question as to what is meant by a reasoned award is not required to be examined by us. The Supreme Court has already laid down the law on this question. In this connection reference can be made of the decision in the case of Jajodea (Overseas) Pvt. Ltd. v. IDC of Orissa Ltd., reported in 1993(1) Arb LR 334. It was held in that case: "A speaking or reasoned award in one which discusses or sets out the reasons which led the Arbitrator to make the award. Setting out the conclusions upon the questions of issues that arise in the arbitration proceedings without discussing the reasons for coming to these conclusions does not make an award a reasoned or speaking award." Reference can also be made to the decision of the Supreme Court in the case of Union of India v. Hindustan Motors Ltd., where it was held that a reasoned award is one in which the rational basis of the award is revealed in the narration.
21. Besides recording the arguments of the parties the Arbitrator recorded his reasons and findings in support of the award. The portion of the award in which the Arbitrator recorded his reasons and findings have been quoted by us hereinbefore. Whether the reasons are good reasons or can be interfered with by the Court, that is a different question altogether. But it cannot be said that the award is either an unreasoned award or a non-speaking award. Whether the reasons ultimately culminated into a perverse award as alleged by the respondent State or not, is a question that we shall examine hereinafter.
22. Mr. Kapoor has contended that as held by the Supreme Court in the case of Firm Madanlal Roshanlal Mahajan (supra) an unreasoned award of Arbitrator cannot be challenged by raising a contention that it is vitiated by errors of law on the face of the award. Relying on the case of M/s. Sudarsan Trading Company (supra) Mr. Kapoor has submitted that where no reasons are given in the award, it is not open to the Court to probe the mental process of the Arbitrator and speculate as to what impelled the Arbitrator to arrive at his conclusion. He has also relied on the decision in the case of Arosan Enterprise Ltd. (supra) and contended that: an error of law on the face of the award can be found, only when the award is a reasoned one. Since in our view the award passed by the Arbitrator in the case before us was not an unreasoned award, the authorities relied on by Mr. Kapoor do not in any manner help the case of appellant before us.
23. Mr. Kapoor has also submitted that the learned Judge not only probed the mental process of the Arbitrator to speculation as to what had impelled the Arbitrator to pass the lump sum award, but also substituted his own decision by interpreting the contract. By placing reliance on the case of M/s. Sudarsan Trading Company (supra) Mr. Kapoor has submitted that once there is no dispute as to the contract, what is the interpretation of that contract, is matter for the Arbitrator and on which Court cannot substitute its own decision. Mr. Kapoor has contended that while dealing with the unreasoned award, the learned Judge has investigated into the merits of the case, although such a process was not at all open in view of the decision of the Supreme Court in the case of Bungo Steel Furniture (supra). His further submission is that as held by the Supreme Court in the case of Indu Engineering & Textile (supra) in an unreasoned award errors of construction of an agreement of law in arriving at a conclusion were not amenable to correction under the law.
24. In the case before us admitted position was that in terms of Clause-2 of the notice inviting tender the Circle price schedules as published in the printed book were to form part of the tender documents and even before acceptance of the tender this fact was known to the appellant who submitted declaration so as to accept said Circle price schedules as part and parcel of the contract in case the tender was accepted.
25. In the printed Circle price schedules the rate of white washing had clearly been mentioned as Rs. 47. 50 per % sq.m. The tender was floated for a specified amount which was calculated after taking into consideration all the items taken together. The calculations were made on the basis of the rates mentioned against the items. Item No. 49C of the tender document was for white washing the surface thoroughly (three coats) for the estimated area of 42,000 sq.m. and the total price for the white washing was mentioned in the tender as Rs. 19,950/-. In the rate column the rate was mentioned as 'Rs. 47.50 per sq.m.'.
26. According to the printed price schedules of the Circle it should have been 'Rs. 47.50 per % sq.m.' The calculation however, as will appear from the total figure, was made by taking the rate as Rs. 47.50 per % sq.m. The inadvertent omission of the sign % in between the words 'per' and 'sq.m.' was overlooked by the concerned department.
27. However, even before any dispute was raised about the rate, the department had prepared the final bill by making the calculations for white washing charges at the rate of Rs. 47.50 per % sq.m. Only after preparation of the final bill and examination thereof, the appellant started contending that the rate would be Rs. 47.50 per sq.m. and not Rs. 47.50 per % sq.m. It appears, this was the main dispute between the parties. The difference between the amounts, one calculated by the department and the one claimed by the appellant, was no small amount, it was Rs. 2078,802/-, when the dispute ultimately went to the Arbitrator for adjudication, the necessary documents including the tender documents and circle price schedules were produced.
28. It is just apparent on the face of the award that the Arbitrator did not consider any of such important documents while coming to the conclusion that the sign % had not stood omitted in the price schedule to the tender document because of any typographical mistake as claimed by the State.
29. The most important fact is that there was no requirement of interpreting the contract for finding out as to whether the printed Circle schedule rates were parts of the contract or not. Admitted position was that such Circle schedule rates were parts of the contract into between the parties. This being the position. The apparent conclusion of the Arbitrator that the appellant/claimant was entitled to the white washing charges at the rate of Rs. 47.50 per sq.m. is nothing but a conclusion arrived at without any legal basis therefore.
30. It is also apparent from the award that the Arbitrator allowed the whole claim of Rs. 20,78,802/- claimed by the appellant as against white washing charges.
31. The learned Judge, as we find, was fully justified in holding that there was no sufficient legal basis for the Arbitrator to allow the claim of the rate for white washing as made by the appellant/claimant. We are clearly of the view that the award passed by the Arbitrator was a perverse one.
32. For the aforesaid reasons we do not find any force in the submissions made by Mr. Kapoor. We agree with the learned Judge that the portion awarded by the Arbitrator illegally for white washing charges, is not severable from the award which was a lump sum one. Although issues had been framed the Arbitrator did not adjudicate the dispute issue-wise. Thus the whole award stood vitiated and liable to be set aside. We therefore, do not find any infirmity in the impugned order.
The appeal is dismissed. There will be no order as to costs. Urgent xerox certified copies of this judgment may be supplied to the parties on compliance with usual formalities.
T. Chatterjee, J.
I agree.