Bangalore District Court
Larsen & Turbo Limited vs Geodesic Techniques Private Limited on 5 December, 2020
IN THE COURT OF THE LXXXIII ADDITIONAL CITY CIVIL
AND SESSIONS JUDGE AT BENGALURU CITY [CCH84]
:Present:
Sri N.Sunil Kumar Singh, B.Com., LL.B.,
LXXXIII Addl. City Civil & Sessions Judge,
Bengaluru
Dated on this the 5th day of December 2020
COM.A.S.No.80/2016
Plaintiff Larsen & Turbo Limited
(Construction Division)
No.19, Kumara Krupa Road,
1st and 2nd Floors,
Bengaluru560001.
Represented by its
Authorized Signatory
Mr. C.A. Venkatesh.
[By Sri. T.S, Advocate]
/v e r s u s/
Defendants: 1. Geodesic Techniques Private Limited,
No.4, 4th Cross, Peenya Industrial
Estate, 1st Stage, Peenya,
Bengaluru560058,
Represented by its Managing Director
Mr. Srinidhi Anantharaman.
[By Sri. P.D, Advocate]
2. Justice R.V.Raveendran (Retd.)
Sole Arbitrator,
No.8/2, Krishna Road,
Basavanagudi,
Bengaluru560004.
2
CT 1390_Com.A.S.802016_Judgment .doc
Date of Institution of the suit : 30/05/2016
Nature of the suit : Arbitration Suit
Date of commencement of :
recording of the evidence
Date on which the Judgment : 05/12/2020
was pronounced.
: Year/s Month/s Day/s
Total duration
04 06 05
JUDGMENT
This suit is filed by plaintiff against the defendants U/S.34 of the Arbitration & Conciliation Act 1996.
2. The facts in brief of the plaintiff's case is that plaintiff having been awarded EPC contract by Bengaluru International Airport Limited for expansion of Bengaluru International Airport Terminal and plaintiff is entitled to appoint subcontractor for the specialized work. Accordingly floated tender for structural steel roof work which included design, procurement, fabrication and erection on the East, West and South of existing terminal and canopy on the North and also for construction of structural steel mezzanine floor in the terminal. Along with the tender documents, plaintiff made available to all bidders, the details regarding concept and requirement of the work including basic design of the structure to enable the bidders to work out the quantity and 3 CT 1390_Com.A.S.802016_Judgment .doc cost of steel and other materials required and submit their bids. The financial proposal of defendant No.1 in sum of Rs.110 Crores came to be accepted by the plaintiff and issued letter of intent dated 29/9/2011. After issuance of such letter of intent, plaintiff issued amendment to the letter of intent on 15/10/2011. Several proposals issued to defendant No.1 by the plaintiff culminated in issuance of above said letter of intent together with tender documents.
3. Based on the proposal of defendant No.1 the quantity of steel was estimated at 7000 MT by excluding miscellaneous steel work and the lump sum contract price was fixed for 110 crores as agreed upon between plaintiff and 1 st defendant. Immediately after issuance of letter of intent all the concepts and basic drawings including STAAD model of the concrete structure was handed over to defendant No.1 vide letter dated 6/10/2011. But patently the concepts and basic drawings were the same which were issued to the bidders along with the tender documents. While issuing STAAD model by the plaintiff to the 1st defendant, the letter of intent was issued which integrated their model with the concrete columns. On receipt of the above said documents, defendant No.1 issued several requests for information which were promptly responded by the plaintiff. Later 1 st defendant prepared designs for approval of the plaintiff and Bengaluru International Airport Limited and after approval of the same, 4 CT 1390_Com.A.S.802016_Judgment .doc plaintiff have released shop drawings to its Bidar factory and to project site for fabrication on 26/12/2011.
4. It is evident from the records that there was delay on the part of 1st defendant in execution of the project work due to delay in submission of drawings for approval, procurement, fabrication or erection, despite of there being no delay on the part of plaintiff and other sub contractors. In April 2012, defendant No.1 ran into financial difficulties and was unable to proceed with the project work and supply of materials and resources and 1st defendant was not in a position to make payment or to issue letter of credit. In this regard a meeting was held on 2/4/2012 and as per the letter of defendant No.1 dated 3/4/2012, plaintiff accepted the request of 1 st defendant to procure materials including steel, consumables and resources for carrying on the work with overhead cost of 12.5% to be debited to the account of defendant No.1 as per the terms of agreement. These facts are deliberately suppressed by defendant No.1 in their claim statement submitted to the sole Arbitrator.
5. On the request of 1st defendant, plaintiff also paid additional interim advance of 2.2 crores and on 2/4/2012 defendant No.1 admittedly completed 76.93% design work and only 12.857% and 2.23% of fabrication and erection work was completed. But plaintiff already paid to the defendant sum of Rs.31,17,35,050/ which is 1/3rd of the contract 5 CT 1390_Com.A.S.802016_Judgment .doc price. For the reasons best known to defendant No.1, they have failed to mobilize resources to complete the work to the extent of amount paid by the plaintiff which included advance amount of Rs.11 crores. However the running bill No.13 dated 16/8/2012 amounts due from defendant No.1 exceeded the amount covered by the running bill already submitted. It was noticed by the plaintiff that defendant No.1 started raising various untenable claims and making several allegations against the plaintiff and refused to cooperate in issuing request letters to the plaintiff for mobilizing resources, procuring raw materials and consumables which made the plaintiff to claim recovery of the amount due.
6. On the other hand plaintiff have appointed sub contractors and other specialized workers to carry on the following work which were entrusted to the defendant as detailed below:
(i) Kalzip India Pvt. Ltd ("Kalzip") for design and supply of roof sheeting, vide letter of intent dated 23/12/2011;
(ii) Vijaynath Interiors and Exteriors Private Limited ("Vijaynath") vide letter of intent dated 3/12/2011 and for roof steel erection including gutters; and
(iii) Mero Asia Pacific Pte Limited ("Mero Asia") for design, procurement, fabrication and erection of facade, Bullnose and roof skylight vide letter of intent dated 17/2/2012.6
CT 1390_Com.A.S.802016_Judgment .doc The above said work has to be carried on by the 1 st defendant with other sub contractors which is not carried out by the 1 st defendant. The stipulated date for commencement of the project was 4/10/2011 and it should be completed by 30/7/2012. The defendant No.1 themselves have submitted baseline schedules indicating the planned completion of project by 30/7/2012. Anyhow the 1 st defendant have completed the contract work on 31/8/2013 and no extension of time was sought by the 1st defendant to complete the project as per letter of intent issued by the plaintiff. Since there was abnormal claims by the 1st defendant after completion of the contract the matter was referred to the sole Arbitrator to adjudicate the matter in dispute between plaintiff and 1st defendant in accordance with law and Justice R.V.Raveendran, Former Judge of Hon'ble Apex Court of India was appointed as sole Arbitrator. Before whom the 1 st defendant herein being the claimant putforth his claim for sum of Rs.33,13,53,408/ payable by the plaintiff to the 1st defendant along with interest @ 18% per annum from the date of claim till realization. Likewise, plaintiff herein also putforth their counter claim before the sole Arbitrator on 10/2/2015 for sum of Rs.22,01,17,974/ payable by the 1 st defendant to the plaintiff along with interest @ 18% per annum and after providing opportunity to both the sides to adduce evidence, the sole Arbitrator heard the arguments of both the sides and adjudicated the matter on 6/2/2016 and directed the plaintiff herein to pay sum of Rs.5,32,83,419/ to 7 CT 1390_Com.A.S.802016_Judgment .doc the 1st defendant along with interest @ 18% per annum from the date of award till realization and rejected the counter claim of the plaintiff herein.
7. Aggrieved by the said award passed by the sole Arbitrator the plaintiff herein have preferred present suit on various grounds. Some of the main grounds are the impugned award passed by the sole Arbitrator is contrary to the facts of the case and evidence available on record before the sole Arbitrator which is liable to be set aside. The impugned award passed by the sole Arbitrator to the extent of claims allowed to defendant No.1 and disallowing the counter claim of plaintiff herein is opposed to the public policy as provided U/S.34(2)(a) (iii), (iv) of Arbitration & Conciliation Act. The impugned award passed by the sole Arbitrator is in conflict with public policy of India and substantive law which is in force for the time being. The interpretation of provisions of contract by defendant No.2 is contrary to the law, facts and probabilities of the case and the finding of sole Arbitrator is perverse and liable to be set aside. The impugned award cannot be given finality on account of being patently illegal will promote injustice to the plaintiff. The impugned award contain decisions beyond the scope of the agreement existed between parties to the suit. The sole Arbitrator is erred in holding that the subject contract being lump sum contract and the same does not provide for descoping of the mezzanine floor works. The learned Arbitrator has 8 CT 1390_Com.A.S.802016_Judgment .doc misinterpreted the clauses mentioned in the agreement and erred in accepting the contention of the defendant No.1 in allowing the claims made by the 1 st defendant. The sole Arbitrator has not relied upon the evidence and documents available on record in giving finding to allow the claim of the 1st defendant herein and disallowed counter claim of the plaintiff. The learned sole Arbitrator has committed grave error in rejecting counter claim of the plaintiff without any basis. The sole Arbitrator has erred in not appreciating the evidence produced by the plaintiff with regard to the detailed statement together with the Plant & Machinery Register bearing the acknowledgements of the 1st defendant. The sole Arbitrator has committed error in awarding interest @ 18% per annum on the award amount in favour of the 1 st defendant. The sole Arbitrator has erred in granting cost of Rs.12,00,000/ towards cost of litigation to the 1 st defendant. The impugned award of the sole Arbitrator suffers from inherent contradictions and same is liable to be set aside. Despite of allowing several counter claims of the plaintiff by the sole Arbitrator no such interest was awarded on the said counter claims and adjustment made by the sole Arbitrator towards payment to the 1st defendant is discrimination and the award shall be liable to be set aside. The finding given by the sole Arbitrator is opposed to the public policy, morality and justice and liable to be set aside. Hence it is prayed by the plaintiff to set aside the Arbitral Award passed by the sole Arbitrator on 6/2/2016.
9CT 1390_Com.A.S.802016_Judgment .doc
8. The brief averments of the statement of objections submitted by 1st defendant is that the suit filed by plaintiff U/S.34 of the Arbitration & Conciliation Act 1996 is not maintainable and it is liable to be dismissed. The defendant No. 1 has put his sweat and blood in the project and due to the delay and various other reasons attributed against the plaintiff, 1st defendant has faced severe financial crunch and by carrying on the project of plaintiff, the 1 st defendant is under financial pressure and by challenging the Arbitral Award passed by the sole Arbitrator on merits appreciating and evaluation of the evidence of both the sides cannot be re appreciated or reconsidered in the present suit. The present suit is filed by the plaintiff on the frivolous grounds with malicious intention. The grounds mentioned in the present suit by the plaintiff do not attract the provisions of Section 34 of Arbitration & Conciliation Act. The award passed by the sole Arbitrator is well reasoned with detailed findings on the basis of evidence adduced by both the sides. There is no such illegality committed by the sole Arbitrator while passing award and there is no patent illegality in passing such award or it is opposed to the public policy. The scope of interference in the Arbitral Award as provided U/S.34(2)(a) of Arbitration & Conciliation Act no such grounds are mentioned by the plaintiff in the present suit. The Arbitral Award is not in violation of statute of Indian law or it is not opposed to the justice or morality as contended by the plaintiff. Due to issuance of letter of intent dated 29/09/2011 to execute the 10 CT 1390_Com.A.S.802016_Judgment .doc design of corresponding fabrication work there was considerable delay on the part of plaintiff to permit the 1st defendant to carry on the work. It is admitted that there are three interface contractors were brought by the plaintiff as detailed below.
(i) Kalzip India Pvt. Ltd ("Kalzip") for design and supply of roof sheeting, vide letter of intent dated 23/12/2011;
(ii) Vijaynath Interiors and Exteriors Private Limited ("Vijaynath") vide letter of intent dated 3/12/2011 and for roof steel erection including gutters; and
(iii) Mero Asia Pacific Ple Limited ("Mero Asia") for design, procurement, fabrication and erection of facade, Bullnose and roof skylight vide letter of intent dated 17/2/2012.
But the main point which has to be looked into is the delay in bringing the interface contractors to carry on the work along with 1st defendant by the plaintiff. The nature of work required to be carried on by the 1st defendant is the interface contractors getting appointed together with the 1st defendant to be worked. But the plaintiff has taken considerable time in appointing such interface contractors which delayed the project and delay can be attributed against the plaintiff. It is admitted that sub contractors appointed by the plaintiff have to work along with 1st defendant in carrying on entire portion of the work. It is admitted that work was commenced by the 1st defendant on 04/10/2011 and date of completion was 11 CT 1390_Com.A.S.802016_Judgment .doc stipulated on 30/07/2012. But actual completion of work was on 31/08/2013 and extension of time was not sought by the 1st defendant from the plaintiff. Since the delay was attributable against the plaintiff. It is denied that the sole Arbitrator has disallowed some of the counter claims of the plaintiff and not allowed interest on the said counter claims. After going through the evidence of both the sides and adjustments of payments to be made by each other statement was prepared and finally the Arbitrator has directed the plaintiff herein to pay sum of Rs. 5,32,83,419/ to the 1st defendant along with interest @ 18% per annum from the date of award till realization is not opposed to the public policy or perverse as contended by the plaintiff. Since none of the grounds mentioned in the suit can be considered to setaside the Arbitral Award and the Arbitral Award passed in accordance with law taking into consideration the evidence of both the sides. The Arbitrator has passed an award with valid findings which is not opposed to the public policy or exceeding the limits of the Arbitrator and same cannot be setaside. The grounds taken by the plaintiff in the present suit are not sufficient to setaside the Arbitral Award passed by the sole Arbitrator and sole Arbitrator has considered the legal aspects and passed the award. Hence it is prayed to dismiss the suit of the plaintiff with cost.
9. Heard arguments of both the sides and perused the LCR.
12CT 1390_Com.A.S.802016_Judgment .doc
10. The points that arise for consideration are:
1. Whether the plaintiff made out sufficient grounds to set aside the Arbitral Award passed by the sole Arbitrator dated 6/2/2016 U/S.34 of Arbitration & Conciliation Act 1996 ?
2. What order?
11. My finding to the above points are as follows:
POINT No.1 : Negative.
POINT No.2 : As per final order for the following:
REASONS
12. POINT No.1 : The case of plaintiff is that plaintiff having been awarded EPC contract by Bengaluru International Airport Limited for expansion of Bengaluru International Airport Terminal and plaintiff is entitled to appoint subcontractor for the specialized work. Accordingly floated tender for structural steel roof work which included design, procurement, fabrication and erection on the East, West and South of existing terminal and canopy on the North and also for construction of structural steel mezzanine floor in the terminal. Along with the tender documents, plaintiff made available to all bidders, the details regarding concept and requirement of the work including basic design of the structure to enable the bidders to work out the quantity and cost of steel and other materials required and submit their bids. The financial proposal of defendant No.1 in sum of Rs.110 Crores came to be accepted by the plaintiff and issued letter of intent dated 29/9/2011. After issuance of such 13 CT 1390_Com.A.S.802016_Judgment .doc letter of intent, plaintiff issued amendment to the letter of intent on 15/10/2011. Several proposals issued to defendant No.1 by the plaintiff culminated in issuance of above said letter of intent together with tender documents.
13. Based on the proposal of defendant No.1 the quantity of steel was estimated at 7000 MT by excluding miscellaneous steel work and the lump sum contract price was fixed for 110 crores as agreed upon between plaintiff and 1st defendant. Immediately after issuance of letter of intent all the concepts and basic drawings including STAAD model of the concrete structure was handed over to defendant No.1 vide letter dated 6/10/2011. But patently the concepts and basic drawings were the same which were issued to the bidders along with the tender documents. While issuing STAAD model by the plaintiff to the 1 st defendant, the letter of intent was issued which integrated their model with the concrete columns. On receipt of the above said documents, defendant No.1 issued several requests for information which were promptly responded by the plaintiff. Later 1 st defendant prepared designs for approval of the plaintiff and Bengaluru International Airport Limited and after approval of the same, plaintiff have released shop drawings to its Bidar factory and to project site for fabrication on 26/12/2011.
14. It is evident from the records that there was delay on the part of 1st defendant in execution of the project work 14 CT 1390_Com.A.S.802016_Judgment .doc due to delay in submission of drawings for approval, procurement, fabrication or erection, despite of there being no delay on the part of plaintiff and other sub contractors. In April 2012, defendant No.1 ran into financial difficulties and was unable to proceed with the project work and supply of materials and resources and 1st defendant was not in a position to make payment or to issue letter of credit. In this regard a meeting was held on 2/4/2012 and as per the letter of defendant No.1 dated 3/4/2012, plaintiff accepted the request of 1st defendant to procure materials including steel, consumables and resources for carrying on the work with overhead cost of 12.5% to be debited to the account of defendant No.1 as per the terms of agreement. These facts are deliberately suppressed by defendant No.1 in their claim statement submitted to the sole Arbitrator.
15. On the request of 1st defendant, plaintiff also paid additional interim advance of 2.2 crores and on 2/4/2012 defendant No.1 admittedly completed 76.93% design work and only 12.857% and 2.23% of fabrication and erection work was completed. But plaintiff already paid to the defendant sum of Rs.31,17,35,050/ which is 1/3rd of the contract price. For the reasons best known to defendant No.1, they have failed to mobilize resources to complete the work to the extent of amount paid by the plaintiff which included advance amount of Rs.11 crores. However the running bill No.13 dated 16/8/2012 amounts due from defendant No.1 exceeded 15 CT 1390_Com.A.S.802016_Judgment .doc the amount covered by the running bill already submitted. It was noticed by the plaintiff that defendant No.1 started raising various untenable claims and making several allegations against the plaintiff and refused to cooperate in issuing request letters to the plaintiff for mobilizing resources, procuring raw materials and consumables which made the plaintiff to claim recovery of the amount due.
16. On the other hand plaintiff have appointed sub contractors and other specialized workers to carry on the following work which were entrusted to the defendant as detailed below:
(i) Kalzip India Pvt. Ltd ("Kalzip") for design and supply of roof sheeting, vide letter of intent dated 23/12/2011;
(ii) Vijaynath Interiors and Exteriors Private Limited ("Vijaynath") vide letter of intent dated 3/12/2011 and for roof steel erection including gutters; and
(iii) Mero Asia Pacific Pte Limited ("Mero Asia") for design, procurement, fabrication and erection of facade, Bullnose and roof skylight vide letter of intent dated 17/2/2012.
The above said work has to be carried on by the 1 st defendant with other sub contractors which is not carried out by the 1 st defendant. The stipulated date for commencement of the project was 4/10/2011 and it should be completed 16 CT 1390_Com.A.S.802016_Judgment .doc by 30/7/2012. the defendant No.1 themselves have submitted baseline schedules indicating the planned completion of project by 30/7/2012. Anyhow the 1 st defendant have completed the contract work on 31/8/2013 and no extension of time was sought by the 1 st defendant to complete the project as per letter of intent issued by the plaintiff. Since there was abnormal claims by the 1st defendant after completion of the contract the matter was referred to the sole Arbitrator to adjudicate the matter in dispute between plaintiff and 1st defendant in accordance with law and Justice R.V.Raveendran, Former Judge of Hon'ble Apex Court of India was appointed as sole Arbitrator. Before whom the 1st defendant herein being the claimant putforth his claim for sum of Rs.33,13,53,408/ payable by the plaintiff to the 1st defendant along with interest @ 18% per annum from the date of claim till realization. Likewise, plaintiff herein also putforth their counter claim before the sole Arbitrator on 10/2/2015 for sum of Rs.22,01,17,974/ payable by the 1st defendant to the plaintiff along with interest @ 18% per annum and after providing opportunity to both the sides to adduce evidence, the sole Arbitrator heard the arguments of both the sides and adjudicated the matter on 6/2/2016 and directed the plaintiff herein to pay sum of Rs.5,32,83,419/ to the 1st defendant along with interest @ 18% per annum from the date of award till realization and rejected the counter claim of the plaintiff herein. Aggrieved by the said Arbitral Award, present suit is filed by plaintiff 17 CT 1390_Com.A.S.802016_Judgment .doc claiming that Arbitral Award is opposed to public policy as provided U/S.34 of Arbitration & Conciliation Act.
17. On going through the award passed by the sole Arbitrator and on hearing both the sides and on going through the evidence and documents produced before the sole Arbitrator by the parties in the present suit. It is not in dispute that the plaintiff was awarded EPC contract by Bengaluru International Airport Limited for expansion of Bengaluru International Airport Terminal and plaintiff was entitled to appoint subcontractor for the specialized work and accordingly the plaintiff has floated tender for structural steel roof work which included design, procurement, fabrication and erection on the East, West and South of existing terminal and also canopy on the North side. It is also not in dispute that the tender documents of plaintiff made available to the bidders and details of concept and requirement of work including basic design of structure was provided to enable the bidders to work out the quantity and cost of steel and other materials required for the work and to submit their bids. It is also not in dispute that the financial proposal of defendant No.1 for sum of Rs.110 Crores came to be accepted by the plaintiff and plaintiff has issued letter of intent to the 1st defendant on 29/9/2011. It is also not in dispute that after issuance of such letter of intent, plaintiff issued amendment to the letter of intent on 15/10/2011 and as per the said amendment several proposals issued to the 18 CT 1390_Com.A.S.802016_Judgment .doc 1st defendant by the plaintiff culminated in issuance of above said letter of intent together with tender documents.
18. It is also not in dispute that based on the proposal of 1st defendant the quantity of steel provided to the work was estimated to 7000 MT excluding miscellaneous steel work and lump sum contract price was fixed at 110 crores which was agreed upon between plaintiff and 1st defendant herein. It is also not in dispute that on receipt of letter of intent the 1 st defendant has carried out work from 3/12/2012 and accepted for execution of the project work. But 1 st defendant claimed that due to delay in submission of drawings for approval and also procurement, fabrication and erection materials there was delay in commencement of work till April 2012 and 1st defendant has financial difficulty in execution of the project. But plaintiff contended that the delay of procuring, fabrication and erection materials by the 1 st defendant is due to financial constraint of the 1st defendant. For which meeting was held on 2/4/2012 and as per the letter of 1st defendant dated 3/4/2012, plaintiff accepted to procure materials including steel, consumables and resources for carrying on the work with overhead cost of 12.5% to be debited to the account of 1st defendant as per the terms of agreement. The plaintiff contended that these facts are deliberately suppressed by the 1st defendant in his claim put forth before the sole Arbitrator.
19CT 1390_Com.A.S.802016_Judgment .doc
19. It is contended by the plaintiff that they have paid 2.2 crores as the interim advance on 2/4/2012 to the 1 st defendant and admittedly 1st defendant has completed 76.93% design work and only 12.857% and 2.23% of fabrication and erection work was completed. But plaintiff claimed that they have paid sum of Rs.31,17,35,050/ to 1 st defendant which is 1/3rd of the contract price. But for the reasons best known to the 1 st defendant, they have failed to mobilize the resources and materials to complete the contract work and plaintiff have paid the advance amount of Rs.11 crores and when the 1st defendant has submitted running bill No.13 dated 16/8/2012, 1st defendant claiming untenable claims making several allegations against the plaintiff herein and refused to cooperate in issuing request letters to the plaintiff for engaging resources and procuring raw materials and consumables. But it is claimed by the 1 st defendant that the plaintiff has delayed in appointment of sub contractors and other specialized workers to carry on the following work.
(i) Kalzip India Pvt. Ltd ("Kalzip") for design and supply of roof sheeting, vide letter of intent dated 23/12/2011;
(ii) Vijaynath Interiors and Exteriors Private Limited ("Vijaynath") vide letter of intent dated 3/12/2011 and for roof steel erection including gutters; and
(iii) Mero Asia Pacific Pte Limited ("Mero Asia") for design, procurement, fabrication and erection of facade, 20 CT 1390_Com.A.S.802016_Judgment .doc Bullnose and roof skylight vide letter of intent dated 17/2/2012.
20. Anyhow the work was carried on by the 1 st defendant and completed the construction work on 31/08/2013 as per the terms of agreement. But plaintiff claimed that the 1st defendant has not sought for extension of time to complete such contract work. It is the claim of plaintiff that there was abnormal delay in completing the work by the 1st defendant and after completion of work 1st defendant has putforth abnormal claims. Thus the matter was referred to the sole Arbitrator before whom the 1 st defendant herein has putforth claim of Rs.33,13,53,408/ payable by the plaintiff along with interest @ 18% per annum for having concluded the contract work. Likewise the plaintiff herein also putforth counter claim before the sole Arbitrator in sum of Rs.22,01,17,974/ along with interest @ 18% per annum payable by the 1st defendant to the plaintiff. Anyhow after adducing evidence of both the sides the sole Arbitrator adjudicated the matter after allowing some of the counter claims and also allowing some of the claims made by the 1st defendant herein and adjudicated the matter by preparing the statement of adjustment made towards each claim of plaintiff and 1st defendant and finally held that the plaintiff herein are liable to pay sum of Rs.5,32,83,419/ along with interest @18% per annum to the 1st defendant from the date of such award till realization.
21CT 1390_Com.A.S.802016_Judgment .doc
21. On going through the Arbitral Award and documents produced by both the sides, the Arbitrator has considered each and every claim of the plaintiff and 1 st defendant herein and some of the claims of 1 st defendant and some of counter claims of plaintiff herein were rejected and after valid finding adjudicated the matter by awarding suitable amount payable by the plaintiff to the 1 st defendant for execution of contract work in terms of the agreement which was existed between plaintiff and 1 st defendant. But aggrieved by the said award passed by the sole Arbitrator, the plaintiff has preferred the present suit on various grounds wherein the plaintiff has contended that the sole Arbitrator has passed impugned award which is contrary to the fact and probabilities of the case on record. It is also contended by the plaintiff that the impugned award passed by the sole Arbitrator to an extent of claim allowed to the 1 st defendant and disallowing the counter claim of the plaintiff is opposed to the public policy as provided U/S.34(2)(a) (iii), (iv) of Arbitration & Conciliation Act. It is also contended by the plaintiff that the said award is opposed to the substantive law which is in force at the relevant point of time and interpretation of provisions of contract by the sole Arbitrator when compared to the facts and probabilities of the case are perverse and liable to be set aside. It is also argued by learned counsel for plaintiff that the Arbitrator would have not given finality on account of being patently illegal which promote injustice to the plaintiff. It is also contended that the 22 CT 1390_Com.A.S.802016_Judgment .doc interest awarded on the claim of 1 st defendant is exceeding the limits of the sole Arbitrator and litigation cost awarded in sum of Rs.12,00,000/ to the 1st defendant is perverse and there is discrimination on the part of sole Arbitrator while passing such award. But on going through the award passed by the sole Arbitrator, sole Arbitrator has discussed each and every point for having claimed the amount by the 1 st defendant and also the counter claim made by plaintiff and given valid finding for allowing such claims and also at the same time disallowing some of the claims of 1st defendant and counter claims of plaintiff herein. But 1 st defendant has contended that there was financial pressure on the 1 st defendant while executing the contract work and there was some delay in execution of the contract due to non providing of subcontractors by the plaintiff to carry on work by the 1 st defendant and anyhow the contract was completed by the 1 st defendant and there was no patent irregularity while considering the claim of both the sides by the sole Arbitrator. The scope of interference in the Arbitral Award provided U/S.34(2)(a) of Arbitration & Conciliation Act is limited and no sufficient grounds are taken by the plaintiff to re appreciate the evidence and documents placed before the sole Arbitrator by both the parties to the suit. On going through the Arbitral Award there is no such violation of statute of Indian Law or it is opposed to the justice or morality as contended by the plaintiff.
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22. After considering evidence of both the sides and on perusal of documents admittedly some of the counter claims of plaintiff was allowed by the sole Arbitrator and some of the claims made by the 1st defendant was disallowed and finally after adjudicating the matter held that the plaintiff is liable to pay sum of Rs.5,32,83,419/ along with interest @ 18% per annum which cannot be held as opposed to the public policy or perverse as contended by the plaintiff. None of the grounds mentioned in the suit are substantiated by the plaintiff in the present suit and arbitration award cannot be set aside on the said grounds relied upon by the plaintiff.
23. While arguing learned counsel for plaintiff has relied upon decisions reported in (2019) 15 SCC 131 which is the case of Ssangyong Engineering and Construction Company Limited v/s National Highways Authority of India, 2019 SCC online SC 1656 which is the case of Dyna Technologies Pvt. Ltd, FOA(OS) (COMM) 107/2018 & CMs 20269/2018 & 495639/2019 which is the case of Infrastructure Private Limited v/s Jindal Biochem Private Limited. I have gone through the principles laid down in the said decisions which are not applicable to the present facts and circumstances of this case. Since none of the grounds mentioned in the present plaint are not proved on behalf of the plaintiff while arguing the matter on merits. Thus principles laid down in the above said decisions are not 24 CT 1390_Com.A.S.802016_Judgment .doc applicable to the present facts and circumstances of this case. One of the main ground which is taken for consideration by the plaintiff is that the interest awarded by the sole Arbitrator in favour of the 1st defendant and not allowing such interest in favour of the plaintiff while considering the counter claim is unreasonable and unjustified. But admittedly as per Section 31 (7) of the Arbitration & Conciliation Act the Arbitrator has got discretion to consider the interest to be awarded reasonably taking into consideration the facts and circumstances the case and in the present case also the Arbitrator has considered the evidence and documents of both the sides and reasonable interest @ 18% per annum was granted to the 1st defendant on award amount from the date of award till realization cannot be held as unreasonable or unjustified. On going through the Arbitral Award there is no such inadequate reasoning due to which it can be held that the award passed by the sole Arbitrator is opposed to the public policy, morality or justice as contended by the plaintiff.
24. On the other hand learned counsel for 1 st defendant also relied upon some of the decisions reported in (2003) 5 SCC 705 which is the case of Oil & National Gas Corporation Limited v/s Saw Pipes Limited, (2011) 5 SCC 758 which is the case of J.G. Engineers Private Limited v/s. Union of India and another, (2012) 1 SCC 594 which is the case of P.R.Shah Shares & Stock Brokers Private 25 CT 1390_Com.A.S.802016_Judgment .doc Limited v/s. B.H.H Securities Private Limited, (2015) 3 SCC 49 Which is the case of Associate Builders v/s Delhi Development Authority, (2015) 14 SCC 21 which is the case of National Highways Authority of India v/s ITD Cementation India Limited, (2007) 13 SCC 43 which is the case of K.N.Sathyapalan (dead) by LRs v/s State of Kerala and another. I have gone through the principles laid down in the said decisions, even though the principles laid down in the said decisions are applicable to some of the facts and circumstances of this case, the principles laid down in the said case are distinguishable and wholly not applicable to the facts and circumstances of the case on hand. Hence the finding given by the sole Arbitrator in resolving the dispute between parties to the present suit cannot be considered as erroneous or opposed to the public policy.
25. On perusal of award passed by the sole Arbitrator and evidence available on record it is pertinent to note that the sole Arbitrator has considered the evidence of both the sides on going through the documents produced and suitable award was passed in accordance with law and there are no sufficient grounds to setaside the Arbitral Award passed by the sole Arbitrator as provided U/S.34 of the Arbitration & Conciliation Act. This court cannot examine the legality of award passed by the sole Arbitrator by going through the evidence and documents produced before the Arbitrator by 26 CT 1390_Com.A.S.802016_Judgment .doc the plaintiff and 1st defendant herein and this court cannot reappreciate the evidence and documents placed before the sole Arbitrator by both the parties to the suit. If the findings given by the sole Arbitrator is opposed to the public policy or exceeding the limits of the Arbitrator while passing such award or the award passed by the Arbitrator is not considering the clauses mentioned in the agreement as provided under section 34 of Arbitration & Conciliation Act then only this court can setaside the same. On perusal of Arbitral Award there is no such patent irregularity or opposed to the justice or morality and award passed is unfair or unreasonable as contended by the plaintiff.
26. In view of the above said discussion, I am of the opinion that plaintiff has not at all made out any cogent grounds to prove that impugned Arbitral Award is opposed to public policy or the Arbitrator has exceeded the limits in passing such award. Further the plaintiff has not at all made out cogent grounds to set aside the Arbitral Award and no grounds made out to show that learned Arbitrator was perverse, unfair or unreasonable in passing such award. The plaintiff has utterly failed to prove and establish that the award passed by the sole Arbitrator falls within any of the provisions prescribed U/S.34 of Arbitration & Conciliation Act 1996. On the other hand in the arguments of 1 st defendant's side they have specifically pleaded that the sole Arbitrator has considered all the material aspects and applied provisions of 27 CT 1390_Com.A.S.802016_Judgment .doc law to the facts and circumstances of this case and passed an award which is not opposed to public policy as contended by the plaintiff. The materials placed before this court clearly discloses that the 1st defendant is also not entitled for some of the claims which they have putforth before the sole Arbitrator. Thus the present suit is deserves to be dismissed. Accordingly I hold point No.1 as negative.
27. POINT No.2 : In view of my discussion on point No.1 above, I proceed to pass following:
ORDER The suit filed by the plaintiff U/S.34 of Arbitration & Conciliation Act 1996 is hereby dismissed.
In view of the circumstances of this case, the parties are directed to bear their own costs.
Draw decree accordingly.
Office is hereby directed to return LCR to the Arbitral Tribunal.
[Dictated to the Judgment Writer; transcript thereof corrected, initialed and then pronounced by me, in the Open Court on this the 5th day of December 2020] [N. Sunil Kumar Singh] LXXXIII Additional City Civil Judge.
BENGALURU.