Bangalore District Court
Bengaluru Metro Rail Corporation Ltd vs Larsen & Toubro Limited on 28 October, 2022
IN THE COURT OF THE LXXXIII ADDITIONAL CITY
CIVIL AND SESSIONS JUDGE AT BENGALURU CITY
[CCH-84]
:Present:
Ravindra Hegde,
M.A., LL.M.,
LXXXIII Addl. City Civil & Sessions Judge,
Bengaluru
Dated on this the 28th day of October 2022
COM.A.S.No.141/2018
Plaintiff Bengaluru Metro Rail Corporation Ltd.,
A company incorporated under the
provisions of the Companies Act,
having its office at Bengaluru Metro
Rail Corporation Limited, BMTC
Complex, 3rd Floor, K.H.Road, Shanti
Nagar, Bengaluru-560027,
represented by its authorized
representative Mr.C.Munisamappa,
Chief Engineer, BMRCL.
(By Sri.A.K, Advocate)
// versus //
Defendant Larsen & Toubro Limited,
having registered office at L&T House,
Ballard Estate, Narottam Moraji Marg,
Mumbai-400001.
Represented by its Managing Director.
(By Sri.C.S, Advocate)
Date of Institution of the : 05/07/2018
suit
Nature of the suit : Arbitration Suit
2
CT 1390_Com.A.S.141-2018_Judgment.doc
Date of commencement of : --
recording of the evidence
Date on which the : 28/10/2022
Judgment was pronounced.
: Year Month/ Day/s
Total duration /s s
04 03 23
JUDGMENT
This arbitration suit under Section 34 of the Arbitration & Conciliation Act is filed by the plaintiff praying to set aside the award of the Arbitral Tribunal dated 30/4/2018, including awarding of cost of arbitration proceedings of the defendant and praying to allow counter claims made by the plaintiff before the Arbitral Tribunal.
2. The plaintiff was the respondent before the Arbitral Tribunal and defendant was the claimant.
3. The case of the plaintiff in brief is as under:
Plaintiff is a joint venture constituted for the construction of the Bengaluru Metro Rail. The defendant submitted its tender bid for construction of 3 elevated metro stations at Yeshwanthpur, Soap Factory and Mahalaxmi Stations and plaintiff accepted the tender by Letter of acceptance dated 5/6/2009. Agreement was also entered on 21/12/2009 for execution of the works. The contract period was for 22 months. The execution of the project is governed by various contracts entered into between the parties including General Conditions of 3 CT 1390_Com.A.S.141-2018_Judgment.doc Contract and Special Conditions of Contract. Work sites of Bengaluru Metro given to the defendant are situated at public place including road median, footpaths, off road areas and private properties. Before submitting Tender, Defendant had inspected the site and on inspection of the work site, defendant-contractor filed Annexure FT-14 certifying that it has conducted its survey and inspection. Anticipating issues like delay plaintiff provided for extension of time after 22 months, in the event of delay by either party. Plaintiff strictly stipulated that although it would consider grant of extension at the end of 22 months, it would not pay any compensation and that despite any grant of extension of time, contractor should always treat that time is the essence and should take all steps to complete the contract works at the earliest. It was a contractual condition, that not all drawings would be issued at once and that it would be issued depending upon the actual progress of work at site, well in time before commencement of the activity. Land was also to be given progressively, depending on the issues of demolition of structures. The contract required the defendant to complete the work within 22 months which was provided in five mile stations called as key dates. Any delay or insufficiency in deployment of resources like man power, machinery and materials etc would have a direct impact on the timely achievement of key dates. After execution of the contract,lands were handed over to the defendant as 4 CT 1390_Com.A.S.141-2018_Judgment.doc specified in letter of acceptance dated 5/6/2009. Majority of the portion of the construction of the 3 elevated stations came up on the median portion of the road and the land in this regard was handed over progressively. Remaining 15% portion of the land at the soap factory station was handed over late due to litigation pending in the Hon'ble High Court and thereafter in the Hon'ble Supreme Court till 10/5/2012. The general consultant conducted meetings at regular intervals and recorded minutes of meetings which were signed by defendant's representatives. The defendant had prepared and submitted base line programme showing as to how it plans to complete the project in time. The defendant was lagging behind in achieving the key dates. Delayed deployment of men and machinery caused delay in achievement of the key date. Under clause 8 of GCC, defendant made written request for extension of time by letter dated 15/2/2011 and the plaintiff granted the first extension of time until 31/5/2012 and made it explicitly clear that all other terms and conditions of the contact remain the same. On receipt of said letter the defendant did not specify that it was willing to accept the EOT only if the plaintiff do not insist on abiding by Cl.2.2 and Cl.8.3 of GCC and defendant was proceeded to execute the contract. The defendant sought EOT 2 to 5 and extention of time was granted till 31/3/2014. After seeking 5 extensions of time, defendant completed balance works only by 3/12/2014. The delay is attributable to the defendant. Plaintiff has 5 CT 1390_Com.A.S.141-2018_Judgment.doc settled all the RA bills certified by Engineer, but final bill is not yet been settled, as defendant failed to furnish required details and in the meantime, arbitration proceedings had commenced. Every item of work in the contract is covered in the Bill of quantities(BOQ) for which comprehensive rates are provided. For the work not covered in BOQ, under clause 27 of SCC payment is to be made at the rate agreed between the parties as reasonably determined by the Engineer. In the course of execution of the contract some NT works were awarded to the defendant and the rates for the items were determined in accordance with the relevant provisions of the contract. The defendant is entitle to certificate called as Taking Over Certificate on completion of project. Since defendant had not completed several snag works plaintiff had not issued certificate. Thereafter, defendant initiated arbitration proceedings and arbitral Tribunal was constituted. Defendant filed claim statement seeking 8 different reliefs including claim for Rs.57,49,64,363/- towards loss suffered on account of delay. Other reliefs included claim for variations, claim for accelerating progress of works, claim for compensation for wrongful deductions, claim for alleged delay in issuance of TOC and towards outstanding payment and towards interest. Plaintiff filed objection and denied the claim and also made counter claim. The liquidated damages was imposed, plaintiff has not released securities like bank guarantees provided by the defendant by exercising lien on 6 CT 1390_Com.A.S.141-2018_Judgment.doc such securities and the plaintiff has right of deduction over money, securities and deposits payable to defendant in accordance with the terms of GCC. 13 issues were framed and both the parties have given oral and documentary evidence. Tribunal has passed award by allowing most of the claims of defendant.
4. Being aggrieved by this award, plaintiff has filed present arbitration suit and contended that the award is directly in conflict with the public policy of India and it has been rendered without following judgments of superior courts and is in conflict with regard to the terms of the contract. The plaintiff has contended that the tribunal is creature of contract and is totally bound by the terms of the contract and as per Section 28(3) tribunal shall take into account the terms of the contract while passing the award and not following the judgment of the superior courts would render the award as opposed to fundamental policy of Indian law and is in conflict with the public policy of India. It is stated that the award is in conflict with public policy of India on various grounds including grounds of disregarding binding judgment of the Hon'ble Supreme Court in the case of ONGC v. Wig Brothers and for not following Section 73 of the Contract Act as well as Section 28(3) of the Arbitration & Conciliation Act. It is also contended that Tribunal after recording finding that clauses 2.2 and 8.3 bars compensation, has referred to the judgment of Hon'ble Supreme Court in case of Northern Railway v. Sarvesh 7 CT 1390_Com.A.S.141-2018_Judgment.doc Chopra and on improper understanding of said judgment has concluded that no damage clause would not restrict the defendant from claiming compensation, as the defendant has issued notice claiming compensation and this finding of the tribunal is per se incorrect and amounts to misapplication of provisions of Contract act. It is stated that this decision relied by the tribunal is not applicable to the present case and the tribunal has ignored vital evidence in arriving at its decision that there is notice issued by the claimant claiming compensation. It is stated that conclusion arrived by the tribunal is arbitrary, capricious and is also perverse and by ignoring the judgments of Hon'ble Supreme Court. It is stated that even in respect of quantification of damages the tribunal has committed serious jurisdictional errors and it granted 50% of the compensation claim on the untenable ground that the GC had concluded that the delay on account of the contractor and employer is 50:50, though such finding was only in respect of EOT I & II and for subsequent 3 extensions there were no such 50:50 delay finding by the GC, but the tribunal has failed to note this fact. It is stated that the defendant had claimed compensation on the basis of bald statement without producing any evidence to show actual loss suffered by it and Tribunal committed grave error in straightaway accepting the quantification made by the defendant, although it was not based on any legally admissible evidence. It is stated that plaintiff has 8 CT 1390_Com.A.S.141-2018_Judgment.doc demonstrated with reference to the minutes of meetings, that at no point of time progress of work was affected due to non availability of work front and slow progress of the work was only on account of inadequate deployment of resources by the defendant. It is stated that the tribunal has granted compensation to the defendant in a very casual manner and it lacks judicial approach. Plaintiff has also contended that in allowing of claim of Rs.11,12,201/- towards putty works, it is stated that the tribunal by relying on contents of minutes of meeting has held that the work was carried out as instructed by the Engineer and it is an extra item and this finding is not correct. It is also stated that in the claim of variation in granite works, substitution of Sadarahalli granite with coloured granite stone like river pink, Mexican green etc, rate of colour granite claimed was very much higher side and BOQ quote rate covers overhead charges and profit as well as transport charges and Tribunal has not given any reasons for allowing 20% overhead charges. It is stated that with regard to Paint there is claim of Rs.87,28,558/- and Tribunal without considered the material and contention of the plaintiff and also failed to follow clause 11.2 which refers to providing and applying to glass acrylic polysiloxame paint and therefore this finding is against Section 28(3) of the Act. It is stated that the tribunal granting Rs.8,12,594/- towards Race Way Works, is based on incorrect calculation and without verifying the correctness of claim. It is stated that 9 CT 1390_Com.A.S.141-2018_Judgment.doc the tribunal has wrongly granted Rs.90,76,807/- towards facilities provided to the engineer during the extended period of contract. The tribunal has failed to note that Rs.45,43,020/- is already been paid and 60% of the lumpsum amount is the expenditure already incurred by the defendant, which would continue for the entire contract work including the extended period and one time expenditure for maintenance does not require spending amount again for the same purpose. It is stated that as EOT 1, 2 were granted under clause 8.4.1 and remaining EOTs were granted under 8.4.3 due to the failure of the contractor, this period will have to be excluded while computation and therefore even if claimant is eligible for any additional sums, it would be for the first two EOTs only which is for 25 months from original date of completion. As such only Rs.20,65,000/- could be given and not Rs.90,76,807/-. It is stated that in respect of MS and SS railings the defendant had made a claim for Rs.29,08,241/- and Tribunal has not looked into the contents of the documents and not applied its mind. It is stated that though there was no contract for payment of compensation, grant of compensation for accelerating the progress of work by allowing 50% of the said claim is beyond the terms of the contract. It is stated that the tribunal has failed to note that in respect of other two stations the defendant had not completed the work though the contract was available and therefore it cannot be held that men and machinaries of the 10 CT 1390_Com.A.S.141-2018_Judgment.doc defendant No.1 idling for want of handing over of the soap factory land and that too cope up with the remain two stations the defendant was to employ or utilize the additional resources. It is also stated that in allowing claim for IPC 46 amounting to Rs.2,88,04,476/- Tribunal has not considered that bill was including certain unapproved items which are subject matter before the tribunal. It is stated that amount due for payment in the statement at completion after deleting the items already covered would be only Rs.28,43,729/-. It is stated that the grant of other claims by the tribunal is also opposed and it is contrary to the terms of the contract and is in conflict with the public policy of India. It is stated that the tribunal has rejected all the counter claims in very cursory manner. On all these grounds it is stated that the award is against the public policy and is liable to be set aside.
5. The defendant has filed written statement and contended that present arbitration suit is filed by misrepresenting and suppressing material facts and it is only an attempt to re-argue the mater based on merits which is outside the scope of Section 34 of the Arbitration & Conciliation Act. It is stated that all the grounds of challenge raised by the plaintiff fall outside the ambit of Section 34 of the Act. It is stated that the grounds pertain either to a question of fact or an issue of interpretation of the contract both of which are within the exclusive domain of the Arbitral Tribunal. It is stated that even the issue 11 CT 1390_Com.A.S.141-2018_Judgment.doc which has been canvassed as an issue of law by the plaintiff, is in essence a question of fact. It is stated that the plaintiff's case appears to be that clauses 2.2 and 8.3 of the GCC prevent the Arbitral Tribunal from granting damages in light of the decisions of the Hon'ble Supreme Court in ONGC v. Wig Brothers and other decisions, but, plaintiff recognizes the exceptions carved out in Sarvesh Chopra case and therefore the issue is not as to whether the Arbitral Tribunal has erred in law but as to whether the facts before the Arbitral Tribunal fit within the four corners of Sarvesh Chopra case. It is stated that the plaintiff has pleaded its case by misconstruing Section 34 as an appellate provision. The defendant has stated that arbitral tribunal has partly allowed claims of the defendant and rejected the counter claims raised by the plaintiff after examining both oral and documentary evidence adduced by the parties. It is stated that the submission made by the plaintiff in relation to clause 2.2 and 8.3 of GCC and also the decisions in Wing Brothers has been considered by the tribunal in its award and the tribunal analyzed the same at length and has considered the submission made and the award is passed by appreciating the evidence on record. It is stated that in relation to land and GFC drawings, the exclusive pleadings along with evidence was submitted before the tribunal and the same has been considered and by appreciating the evidence and finding has been given. It is stated that issue of belated issuance of land and GFC 12 CT 1390_Com.A.S.141-2018_Judgment.doc drawings has been extensively mentioned by the defendant in its written arguments submitted to the tribunal and the same was considered by the tribunal. It is stated that issue of GFC drawings is evident from documents like Ex.C.1,6, 11 etc and also the evidence of RW.1. Defendant has stated that contention that the tribunal is bound by the terms of the contract by virtue of Section 28(3) of the Arbitration & Conciliation Act is not correct as, after amendment in 2015, Tribunal while making the award shall take into account the terms of the contract. It is stated that the decisions relied by the plaintiff are under the old regime i.e. prior to 2015 of amendment and are not applicable after amendment. The defendant has also stated that even the delay alleged by the plaintiff in relation to labour camp, casting yard, barricading of the site have been elaborately discussed by the tribunal by considering evidence placed before it and also the arguments advanced. The defendant has also stated that the delay alleged against the defendant and EOT is elaborately discussed in the award an same cannot be reopened in the petition under Section 34 of the Act. It is stated that the contention of the plaintiff that the defendant do not specify that it is willing to accept the EOT only if the plaintiff do not insist on abiding by clauses 2.2 and 8.3 of GCC has no basis and not relevant to claim compensation. It is stated that as per the decision in Sarvesh Chopra, putting the employer on terms is sufficient to claim compensation despite having clauses containing no 13 CT 1390_Com.A.S.141-2018_Judgment.doc damage. It is stated that the defendant has put the plaintiff on terms at the relevant time and the same was recorded by the tribunal. It is stated that the allegation of plaintiff that the defendant do not put the plaintiff on terms in relation to 3rd, 4th and 5th EOT is false and contrary to the evidence on record and the tribunal has considered each and every letter sent in relation to putting the plaintiff on terms and the same has been recorded in the award. The defendant has also stated that the tribunal after examining the evidence on record in relation to extra items concluded that the plaintiff did not determine the rate for extra item in terms of contract. It is stated that the commercial operations of the project commenced on 28/2/2014 and necessary inference is that pending works were pending only snag works and the contract stipulates for execution of snag works during defect liability period. It is stated that allegations that the plaintiff has got the works done by third party agencies is without any basis and accordingly the counter claim on that basis has been rejected and the plaintiff has failed to adduce sufficient evidence to show that delay is attributable to the defendant. It is stated that defendant has satisfied the tribunal that the delay is in issuance of land, GFC drawings and utilities is attributable to the plaintiff. It is stated that the plaintiff had never communicated the levy of liquidated damages to the defendant from 1/3/2014 to 3/12/2014 and the plaintiff levied the liquidated damages only after defendant initiated 14 CT 1390_Com.A.S.141-2018_Judgment.doc arbitration proceedings which clearly show that it is an afterthought. It is stated that the plaintiff has failed to adduce any evidence to show loss of productivity and there is no factual foundation for loss alleged to have been sustained by the plaintiff and the figures submitted are only imaginary figures without any basis. It is also stated that when there is LD clause in the contract employer is entitled to only damages under the LD and any other claim for the loss incurred cannot be sustained is held in the decision in Kailash Nath Associates and the plaintiff did not adduce any proof to show that the amount paid to staff. It is stated that the defendant had provided the basis for calculations for all the claims in Ex.C.285 and C.297 and plaintiff was given opportunity to inspect the documents, but the plaintiff has chosen not to inspect the documents and authenticity of these documents which are quantification documents are not challenged and accordingly the tribunal accepted the quantification submitted by the defendant and plaintiff cannot now contain that there is no basis for the quantification. The defendant has also stated that under Section 34 Court cannot go in to the merits of the case, nor reappraise evidence and re-examine the evidence, nor look into the sufficiency of the evidence. It is stated that the award should be read reasonably as a whole to find out its implication and meaning and court ought not to interfere with an award on the ground that the award has given somewhat cryptic but otherwise intelligible reasons. It is 15 CT 1390_Com.A.S.141-2018_Judgment.doc stated that the minor inconsistencies have to be overlooked if the award is otherwise fair, reasonable and not contrary to law. It is stated that the award is not opposed to the fundamental policy of Indian law as it does not violate the law prevalent in India and the tribunal had considered the decisions submitted by the plaintiff and held that the said decisions were inapplicable. It is stated that latest decision in Assam Electricity Board which is a three judge bench prevail over the decision of the Division Bench in Wig Brothers. It is stated that the decision in Wig Brothers do not deal with the enforceability of the exclusion clauses and the award was set aside in that case only on the basis that the arbitrator ignored the provision which bars the contractor to claim compensation in case of delay attributable to the employer. It is stated that in the present case the tribunal has discussed the applicability of clauses 2.2 and 8.3 of GCC and concluded that the same are not applicable and therefore the decision in Wig Brothers is not applicable to the case as held by the tribunal. It is stated that the contention of the plaintiff that the Engineer had received the notice claiming compensation from defendant and had in categorical terms rejected the claim for compensation with specific reference to no damage clauses is contrary to the evidence on record. It is stated that the defendant had not only informed the plaintiff that it would claim all the financial implications in the extended period of contract and he has also submitted the claim for additional 16 CT 1390_Com.A.S.141-2018_Judgment.doc cost periodically 17/8/2011 till 23/7/2012 as seen from the records like Ex.C.77 and Ex.C.125. It is stated that there are various correspondences to this fact which were on record before the tribunal. On perusal of these correspondences the tribunal has come to the conclusion that the defendant had put the plaintiff on notice and plaintiff's silence for more than a year, made the defendant believe that it will be entitled to additional costs in the extended contract period. It is stated that the plaintiff was under a duty to speak at the relevant point of time, hence silence for more than a year amounts to acceptance since there was a duty to speak. The contention that there was no whisper anywhere by the arbitral tribunal about the reply letters sent by the plaintiff in respect of granting of EOT is also wrong. It is stated that the tribunal in the award has categorically considered each of the correspondences relied upon by both the parties. It is stated that once the plaintiff accepted the performance of the defendant after the defendant puts the plaintiff on terms, the defendant is entitled for compensation in light of the principles laid down in Sarvesh Chopra. The defendant has also denied the contention that the tribunal has granted 50% of compensation solely based on recommendations given by the GC and it is stated that this 50% compensation is not based only on the recommendations of GC, but also by considering other aspects and the tribunal has considered in its award the 17 CT 1390_Com.A.S.141-2018_Judgment.doc correspondence had between the parties and also considered each of the event of the delays caused by each of the party, while determining the issue of quantum of compensation and therefore on the basis of its finding and coupled with the GC's recommendations the tribunal arrived at the figure of 50% while granting claim pertaining to delay damages. It is stated that the defendant had provided the basis for calculations for all the claims in Ex.C.285 and C.297 which are not disputed by the plaintiff and quantification made in these documents were not challenged and therefore the tribunal has accepted the quantification submitted by the defendant and no fault could be found with. It is stated that the defendant has clearly estsablished that delay in handing over of land and issuance of GFC drawings by the plaintiff affected the progress of the work. Regarding putty work it is stated that in the claim pertaining to putty works the parties had submitted extensive pleadings along with evidence before the Tribunal and the tribunal has at length considered the submission extensively and considered the evidence and given the finding. It is stated that CW.1 had clearly established the fact that the contractual clauses merely provide for removal of rust, dirt, scales, smokes, splashes, mortar droppings etc and this was considered by the tribunal and the finding of the Arbitrator is a plausible view on the interpretation of contract and the same cannot be interfered. It is stated that the tribunal has applied its 18 CT 1390_Com.A.S.141-2018_Judgment.doc mind while concluding that the defendant is entitled to a sum of Rs.11,12,201/- towards the executing of putty work as an extra item and the same cannot be interfered. Regarding granite work, defendant has denied the contention of the plaintiff and stated that the grounds raised by the plaintiff being factual in nature, same cannot be re-agitated and it is stated that the tribunal had firstly considered all the materials on record and the clauses in the contract while arriving at its decisions and it appreciated the facts of the case based on material available on record and the tribunal has observed that the plaintiff has failed to consider 20% of the costs towards overhead and profits as per clause 27.2 (e) of GCC and on this basis the tribunal has considered the claim in favour of the defendant. It is stated that since the defendant was unable to elucidate the costs pertaining to transportation alone, the tribunal had declined to grant the transportation costs and this itself would show that the tribunal while deciding the claim has considered and applied its mind. Regarding Acrylic Polysiloxane paint also, defendant justified the finding of the learned Arbitral Tribunal and stated that the tribunal has analyzed at length the submissions made by parties and considered the records and this finding cannot be interfered as is based on facts. It is stated that since the defendant had applied paint on external surfaces after erection of Grid, the same needs to be measured and paid separately. It is stated that the petitioner has considered 19 CT 1390_Com.A.S.141-2018_Judgment.doc the arguments of both the parties and interpreted the provisions of the contract in favour of the defendant based on the decisions and finding is a plausible interpretation to the provisions of the contract and it cannot be interfered. It is stated that the claim pertaining to Raceway Works, parties had submitted extensive pleadings along with evidence before the Arbitral Tribunal. Regarding raceway works, defendant has stated that the tribunal has awarded Rs.8,12,594/- by perusing the materials on record. Regarding facilities provided to the Engineer during the extended period also, defendant has stated that the tribunal has given extensive reasoning while arriving at its decision which cannot be interfered under Section 34. It is stated that the tribunal has noted that the claimant would not have taken into consideration the extended period while putting lumpsum quotation and Tribunal has rendered its decision based on the surrounding circumstances and the intention of the parties. It is stated that pertaining to break up of 60% towards office and machinery and 40% towards maintenance and the subsequent calculation the same is opposed by the defendant. It is stated that 50% of the delay occasioned to the project is attributable to the defendant and hence portion of the claim is payable and the delay of the defendant did not impact the project and in the absence of any impact, all the sums awarded the said claim is payable. It is stated that regarding MS and SS railing, tribunal has come to the conclusion that clause 19.3 of the 20 CT 1390_Com.A.S.141-2018_Judgment.doc SCC is applicable and hence awarded a sum of Rs.29,08,241/- in favour of the defendant and the tribunal has adopted judicial approach while deciding the claim and the same cannot be interfered. Regarding acceleration of progress of work, it is stated that the plaintiff has failed to take note of Section 70 of the Indian Contract Act and as the work done by the defendant is not for charity, claim cannot be rejected for the sole reason that there is no contractual provision. It is stated that the defendant had informed the plaintiff that additional cost would be incurred to accelerate the work and plaintiff did not deny it through any correspondence and as the work are not done gratuitously the defendant is entitle for cost for the work done and there is no contravention of Section 28(3) of the Act. The contention of the plaintiff, by relying on Ex.R.81, that works in soap factory area were not complete is also stated to be without any merits and it is stated that upon handover of key portions of the land pertaining to the soap factory in May 2012, the plaintiff approached defendant to accelerate works at the track level so as to enable subsequent operations such as testing, signaling, telecommunications installation etc and to assist plaintiff, the defendant agreed to accelerate track related work and provided a micro programme towards the end and mobilized additional men, machinery and resources and achieved completion of the track level works by 12/11/2012 i.e. 6 months from the date of handover of the land. It is stated 21 CT 1390_Com.A.S.141-2018_Judgment.doc that the Tribunal has considered all these facts and has passed award and held that the claimant i.e. the defendant has established that it had incurred additional expenses on account of acceleration of work. It is stated that with regard to wrongful deduction, tribunal after perusing the clause 3.4.4 of Employers Requirement- scope of work come to the conclusion that the said work do not come within the purview of the said provision and therefore the deduction of Rs.16,22,578/- is not justified. Regarding IPC 46, it is stated that the contention that defendant has claimed for the sums certified by the plaintiff alone is evident from para 25.4 of the award and there is no duplication of claims pertaining to compensation for wrongful deduction, claim for acceleration and claims towards the delay in issuance of taking over certificate etc as alleged by the plaintiff and this claim comprises of two parts. It is stated that this ground was not raised by the plaintiff at any stage of the arbitration and the same cannot be now raised as a new ground and the merit of the case cannot gone into under Section 34. Regarding counter claim of the plaintiff which are rejected the defendant has supported the award and stated that the tribunal has adopted a pragmatic and judicial approach while dealing with the counter claims of the plaintiff and has also considered all the materials on record and factual circumstances. It is stated that Cost awarded by the tribunal is in consonance with Section 31-A of the Act and 22 CT 1390_Com.A.S.141-2018_Judgment.doc cannot be interfered. On all these grounds, the defendant has prayed to dismiss the arbitration suit.
6. Now the points that arise for consideration of this court are:
1) Whether the plaintiff has made out any ground to set aside the award passed by the Arbitral Tribunal on 30/4/2018, in the dispute between the parties, under Section 34 of the Arbitration & Conciliation Act?
2) What order?
7. Heard learned senior counsel for the plaintiff. Heard learned counsel for the defendant. Written arguments are also filed.
8. Perused records.
9. My answer to the above points are :
POINT No.1 : Partly in the affirmative.
POINT No.2 : As per final order for the
following:
REASONS
10. Point No.1: Present arbitration suit is filed
praying to set aside the Arbitral Award passed by the Arbitral Tribunal consisting of three learned Arbitrators. Present plaintiff was the respondent before the learned Arbitral Tribunal and defendant was the claimant. The admitted facts of the case are that the defendant had submitted Tender for three elevated metro stations namely Yeshwanthpur, Soap Factory and Mahalaxmi Stations in reach 3 and same was accepted by the plaintiff and Letter 23 CT 1390_Com.A.S.141-2018_Judgment.doc of acceptance (LOI) was issued on 5/6/2009 and the contract value was arrived at Rs.1,01,87,38,487/- and the same was signed on 21/12/2009. The time stipulated for completion of the project was 22 months from the date of LOI and defect liability period was 12 months from the date of taking over. It is an admitted fact that the project of constructing of 3 metro stations which was tendered to the defendant was not completed within the period of 22 months and both parties have given different reasons for the same. The contract contains several causes including procedure for seeking extension of time for completion of the work. Five extension of time were granted by the plaintiff. Though there is serious difference between the parties regarding completion of work, it is an admitted fact that work is completed. Present defendant-contractor by making several claims has initiated arbitration and appointed his Arbitrator and the plaintiff has also appointed his Arbitrator and both arbitrators appointed third arbitrator and thereby, learned Arbitral Tribunal is constituted. Arbitral Tribunal by considering the evidence and materials placed before it, has passed Award on 30/4/2013 which is under challenge in this Arbitration suit. In the award, claim of the present defendant was partly allowed. The entire counter claim of the present plaintiff was rejected by the Arbitral Tribunal.
11. Though the plaintiff has prayed to set aside the impugned award as is opposed to the public policy of India 24 CT 1390_Com.A.S.141-2018_Judgment.doc and prayed to allow the counter claim, on considering the arguments advanced by the learned senior counsel for the plaintiff, serious dispute raised by the plaintiff is with regard to awarding of Rs.28,74,82,181/- towards loss suffered on account of delay which is decided in issue No.1(d) and awarding Rs.88,73,838/- towards accelerating the progress of the work as considered in issue No.1(b) and also awarding of Rs.90,76,807/- for the facilities provided to the Engineer during the extended period of contract which is part of issue No.1(a). In the arbitration suit, even with regard to other claims which are considered by the learned Arbitral Tribunal and the counter claims which are rejected, plaintiff has challenged the award.
12. On looking to the award, the learned Arbitrator in issue No.1(a) has considered the claim of the claimant for Rs.4,28,00,584/- towards various claims as mentioned in para 5 of the claim statement. Claim of the claimant i.e. the present defendant for execution of piling works, sanitary and plumbing works, claim towards putty works, claim towards variation in the granite works pertaining to BOQ Item No.13, Acrylic Polysiloxame Finish Paint, claim towards yellow tiles, claim towards execution of extra item of Raceway works and claim towards facilities provided to the Engineer during extended period of contract and also claim towards MS and SS railings are covered in Issue No.1(a). The learned Arbitral Tribunal in page No.195 to 217 has considered these claims of the defendant 25 CT 1390_Com.A.S.141-2018_Judgment.doc contractor and considered the documents placed before it with regard to the same and found that claim towards execution of piling works quantified at Rs.40,01,811/- claim towards Yellow tiles for Rs.4,96,564/- are not acceptable and rejected the same.
13. In other claims, towards variation in Sanitary and Plumbing works, Tribunal considered the contention that Contractor was instructed to use 250 mm dia UPVC pipes instead of 200 mm dia UPVC pipes and, as 250 mm dia UPVC pipes were not available, contractor was permitted to use 250 mm dia PVC pipes. By considering the documents produced and by considering relevant clause in the special conditions of contract, Tribunal has held that these two pipes are not similar and there was no item in BOQ for 250 mm dia PVC pipes and therefore, Engineer could not have invoked clause 27.2 of SCC for fixing rate and has allowed the claim of Rs.18,54,051/- for Sanitary and Plumbing works. Regarding Putty works the learned Arbitral Tribunal by considering contention of both the parties has found that the Contractor had intimated the employer that putty is to be treated as extra item and had also intimated about the estimated cost and details in Ex.C91 and had reiterated the claim in other letter and the respondent employer was put to notice with regard to this item of work and therefore, claimant is entitle for the claim towards putty work which comes to Rs.11,12,201/-. Regarding variation in the Granite works pertaining to BOQ 26 CT 1390_Com.A.S.141-2018_Judgment.doc item No.13, learned Arbitral Tribunal has noted that Sadarahalli granite was provided at all levels and black granite at counters, but instructions were given to put different granite in place of Sadarahalli granite and black granite for counter and this is a variation and that same is accepted by the plaintiff. Tribunal, by considering the correspondence between the parties and found that it is an extra item as per clause 27 of the SCC and found that claimant is justified in making the claim. The learned Arbitral Tribunal by considering the rival contention has accepted the claim partly and found that the transport expenses @217/- per sq. meter cannot be awarded and has ordered for deduction of the same in the claim of Rs.1,38,09,757/-. These findings of the learned arbitral tribunal are based on facts placed before it and cannot be said to be against public policy or patently illegal.
14. In Acrylic Polysiloxame finish paint, learned Arbitral Tribunal by considering the contention of claimant and by considering the clauses in the agreement has found that Acrylic Polysiloxame finish paint referred in BOQ is further explained in terms of specification and the contention of the plaintiff that, item clearly covers procurement cannot be accepted and has held that the clause in the agreement cannot be read in isolation and all the clauses are to be read together and accepted the contention of the claimant. The learned Arbitral Tribunal has held that they do not accept the reasoning of the 27 CT 1390_Com.A.S.141-2018_Judgment.doc Engineer and there is no factual dispute with regard to the quantification and the dispute is with regard to the interpretation and as interpretation of the claimant was accepted by the tribunal, they allowed the claim. Interpretation of the terms of the contract is always within the jurisdiction of Arbitral Tribunal. Unless such interpretation is glaringly faulty the court under Section 34 cannot interfere in such an award. When two views are possible the view that was taken by the learned Arbitral Tribunal cannot be questioned and the court cannot impose its view in place of the view of the Arbitrator as held in many celebrated judgments. Therefore, this finding of the learned Arbitrator regarding Acrylic Polysiloxame finish paint and awarding Rs.87,28,558/- cannot be interfered even if different view is also possible.
15. Regarding the claim for extra item of Raceway works, claim for Rs.8,12,594/- has been accepted by the learned Arbitral Tribunal. In para 19.1 of the award the tribunal has referred to the documents and found that raceway works was not contemplated under the contract, but in the GFC drawing the instructions were given to perform raceway related electrical works and the claimant has put on notice the respondent that providing raceway works is not within their scope of work and the respondent has to pay an additional amount and had also sought the approval of the Engineer to carry out the raceway related electrical works and submitted estimated value of 28 CT 1390_Com.A.S.141-2018_Judgment.doc Rs.13,36,089/-. Plaintiff has contended that it is an extra item of work falling under clause 27 of SCC and the learned Arbitral Tribunal has considered as to whether this extra item of work is coming within clause 27 of SCC or outside of clause 27 and has found that there is no comparable item in the BOQ or KPWD-SOR and held that claimant is held to be entitle for Rs.8,12,594/- as prayed. This finding is also based on facts and interpretation of clauses of SCC and which is within the domain of Learned arbitral Tribunal.
16. With regard to MS and SS railings the claim for Rs.29,08,241/- is accepted by the learned Arbitral Tribunal. Regarding MS and SS railings it is stated by the claimant that railing works pertaining to all 3 stations under the respective BOQ section was studied in line with the available GFC drawings and it was found that there was significant variance between the BOQ and available GFC drawings. The respondent has contended that price variation is not available. The tribunal by considered provision of clause 19.3 of the GCC and found that this clause provides for price variation. The tribunal has considered the contention of the claimant and also the respondent and found that the contention of the respondent is not convincing and that the respondent has failed to show as to why clause 19.3 of GCC is not available to the claimant. By considering both the contentions has accepted the contention of the claimant i.e. present 29 CT 1390_Com.A.S.141-2018_Judgment.doc defendant and awarded Rs.29,08,241/-. This portion of the award is by considering rival contention of the parties and by application of particular clause of GCC regarding price variation on particular work and this finding is possible view of the learned Arbitrator and cannot be questioned under Section 34.
17. In issue No.1(c) the claim for Rs.16,22,578/- towards compensation for wrongful deduction has been considered by the Arbitral Tribunal. It is noted by the tribunal that respondent was not justified in deducting amount in terms of the contract, the tribunal has noted that the road surfacing and improving the existing roads was not within the scope of work of the claimant and the claimant was only required to fill up pathole and the said work was done by the claimant and it was intimated to the respondent. The tribunal has noted that deduction was made by the respondent on the ground of payment to KRIDL to carry out the resurfacing work which was not even part of the work of the plaintiff. As such the tribunal has found that the payment made to KRIDL cannot be deducted in the amount payable to the respondent and as such the deduction made by the respondent is held to be unsustainable and the tribunal has held that claimant is entitle for reimbursement of the same deducted wrongly by the respondent. This finding also will not come within the scope of challenge under Section 34 of the Act.
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18. Regarding interim payment certificate (IPC) No.46 the tribunal has noted that IPC46 was certified for payment on 8/12/2014, but payment was not made. The tribunal has noted that payment which are certified by the Engineer are to be made and there is no provision preventing the employer from settling the admitted payment. Tribunal has also noted that as the certificate has been issued and commercial operation are continued there is no justification for withholding such payment and accordingly allowed the same. This finding of the tribunal is also proper and even is not much disputed by the plaintiff in this petition.
19. Learned Arbitral tribunal has rejected the claim in respect of piling work ,claim towards Yellow tiles, claim towards delay in issuance of taking over certificate and claim towards interest and also rejected the prayer for declaratory relief and all these rejections are not part of challenge in the present petition.
20. Learned Arbitral Tribunal has directed the respondent to release the complete amount of performance bank guarantee and retention money bank guarantee submitted by the claimant to the respondent. Tribunal has found that the work is completed and take over certificate and performance certificate have been issued the entire performance money bank guarantee and retention money bank guarantee are required to be returned. The contention of the respondent employer that there is a counter claim and on that ground these amounts can be 31 CT 1390_Com.A.S.141-2018_Judgment.doc released is not accepted by the tribunal and the tribunal has ordered for release of the same and this is also not seriously challenged and finding is on the facts of the case appears to be correct and proper.
21. The Arbitral Trubunal has rejected all the counter claims made by the present plaintiff-Employer. One of the counter claim of the plaintiff was that it suffered loss of productivity valued at Rs.6,44,36,374.34 due to extension of time for completion by the claimant and another counter claim was for Rs.16,43,59,896/- towards levy of liquidated damages and there was also claim for Rs.3,65,74,498/- on account of failure of claimant to complete the restoration of road and other work. Tribunal on issue No.6, 8 and 9 which are regarding these counter claims has considered the material placed before it and has held that as regard liquidated damages claimed, the respondent has not even given any notice of such claim at the time of granting extension of time and claim was made only after initiating arbitration and therefore it lacks bonafide. The tribunal has also noted that as Extension of Time was granted, it cannot be said that the respondent has proved that the present case comes within the four corners of time as the essence of contract. The learned Arbitral Tribunal has also considered that for all the extensions, cause was mainly failure of the employer in not providing site and providing GFC drawings etc. The tribunal has also noted that even for liquidated damages no 32 CT 1390_Com.A.S.141-2018_Judgment.doc such loss suffered has been established by the respondent. The tribunal has noted that for levy of damages the clause 8.5 of the contract contains such clause, but the same is not invoked at the relevant point of time by the respondent. Regarding the claim on account of failure of the claimant to complete the road and other works the tribunal has noted that resurfacing of the existing road did not follow within the scope of claim though the claimant had seeking a proposal in 24/8/2011 as per Ex.C.79, but the respondent without noticing the letter has stated that it has entrusted the work to KRIDL. The tribunal has noted that without providing sufficient opportunity in terms of clause 13, work was carried out through another agency and claim was made against claimant which is not acceptable. By considering all these, Tribunal has rejected all the counter claims made by the respondent. On considering the findings of the Tribunal on these counter claims, finding of the tribunal in rejecting the counter claim cannot be said to be against public policy or is against the fundamental principles of Indian law or patently illegal. EOT 1 to 5 given in this case show that most of the time, for the delay caused by the employer EOT has been given for completion of the work. When that is the case, claimant cannot be held to be liable for these counter claims which are mainly connected with the delay in completion of the work. Therefore, rejection of counter claims by the tribunal 33 CT 1390_Com.A.S.141-2018_Judgment.doc cannot be challenged in the present petition under Section
34.
22. Coming to three findings on which serious dispute has been raised by the claimant, one of such finding is of granting Rs.90,76,807/- towards facilities provided to the Engineer during the extended period of contract. In para 20 of the Award in page 212 to 215, tribunal has considered this claim of the defendant and held that the claimant is entitle for Rs.90,76,807/-. Tribunal has found that the work was to be completed within 22 months and work was not completed in time and admittedly, extension was granted. Lumpsum amount given for providing facility to the engineer of Rs.45,43,020/- was only for 22 months and as there was delay for the reasons attributable to the Respondent, claimant was forced to extend the facilities for the Engineer during this extended period in terms of clause 8.8.17. On this ground, claimant has made this claim by considering delay of 34 months. Respondent-Employer contested this claim by referring to clause 13 and contended that as the contractor have to maintain site office through out the contract period, the contractor cannot make extra claim and extended period is part of the contract period.
23. Tribunal has noted that there is no dispute about continuation of facilities to the Engineer beyond 22 months and that there is no dispute with regard to the quantum. This observation is seriously disputed by the 34 CT 1390_Com.A.S.141-2018_Judgment.doc learned senior counsel for the Plaintiff. The learned senior counsel has argued that the quantification is seriously disputed as some of the facilities provided to the engineer are not recurring expenses. The learned counsel for the respondent has argued that when the tribunal considered that there is 50% fault of the contractor for the delay in completion of the work and has also considered the claim for compensation for delay by 50% by the contractor by stating that the contractor had contributed 50% to the total delay, tribunal ought not to have allowed the entire claim in favour of the defendant and this finding suffers from patent illegality.
24. The tribunal has held that the facilities provided beyond 22 months cannot be considered as within the contract period as per clause 1.5 of GCC, as this clause do not refer to any extended period. The tribunal by considering that the contract period do not include the extended period and by considering that 34 months was the extended period, has allowed the claim made by the claimant for Rs.90,76,807/- and held that, claimant cannot be said to have taken note of the possible extension of period while quoting lumpsum amount for these facilities. Tribunal by considering that the extended period was about 34 months has allowed the claim. When a particular claim is upheld by the tribunal by interpreting particular provision of the contract and by considering the facts before it and has awarded particular amount, court under Section 35 CT 1390_Com.A.S.141-2018_Judgment.doc 34(2) of the Arbitration & Conciliation Act cannot question the quantum of amount awarded by the Tribunal, unless the amount so awarded is shocking the conscience of the court. Admittedly towards the facilities provided to the Engineer, Rs.45,43,020/- was quoted in lumpsum in the contract. Now the period extended by another 34 months. By considering the said fact, tribunal appears to have awarded entire claim of Rs.90,76,807/-. Present plaintiff who has disputed the entire claim, cannot now dispute the quantum of amount that is awarded. When claimant is held to be entitle for this payment, quantum decided by the tribunal cannot be questioned casually under Section 34. Contention of the plaintiff that while awarding delay damages, Tribunal has considered 50% of delay as that of the contractor and for that reason, even in providing facilities, 50% of the amount is to be put on the claimant, cannot be accepted. For the work to be completed, facility to the Engineer is to be provided by the contractor as per the terms of the contract for which, payment is to be made by the employer. When extension of time was given mainly for the reason of delay caused by the employer, finding of tribunal based on the facts placed before it, in allowing the claim for facilities provided to the engineer during the extended period of contract cannot be said to be against the public policy of India or is patently illegal or is perverse. When Tribunal by considering facts came to a particular decision, court cannot interfere with such finding, even if 36 CT 1390_Com.A.S.141-2018_Judgment.doc different view is also possible. Therefore, this finding of the tribunal also cannot be said set aside.
25. In Issue No.1(b) towards accelerating the progress of work claim for Rs.1,77,47,677/- has been considered by the Arbitral Tribunal. This is one more finding which is seriously disputed by the plaintiff in the present arbitration suit. On looking to the finding of the learned Arbitral Tribunal, in para 22 of the award, Tribunal has considered the provisions which permit accelerating progress of the work and also the work done by the contractor, as per the instructions of the Employer to so accelerate the progress of work in Soap Factory Station which was delayed due to non availability of main portion of the land. Tribunal has noted the correspondence had between the parties. The tribunal has noted that as per Ex.C143 by letter dated 11/11/2012 claimant informed the Engineer about earlier completion which is 18 days ahead of the programme and the claimant sought for approval of the additional cost incurred in this regard. The tribunal has noted that the claimant has successfully completed the activities 20 days ahead of the schedule at the request of the respondent by using additional man power and material resulting in additional cost. Though the claimant has initially sought for payment of Rs.2,25,15,965/-, later he revised it to Rs.1,77,47,677/-. Respondent employer has opposed the claim and contended that only in respect of small portion of land measuring 1261 sq.ft which is 15% of 37 CT 1390_Com.A.S.141-2018_Judgment.doc the normal area, there was delay in handing over for construction work and it was handed over on 10/5/2012 and the delay was due to pendency of writ appeal before the Hon'ble High Court and that claimant has not used any additional man power and material and even work of other two stations were also not completed by that time.
26. The tribunal by considering the evidence has found that land which was not handed over played a vital role in completion of the work and on account of non handing over of the land, work to certain extent was delayed. By considering Ex.C.147 which was received by the respondent and respondent has not denied the acceleration of the work, tribunal has held that claimant has established incurring of additional expenses on account of acceleration of work. However, as due to writ appeal pending before Hon'ble High Court, portion of land could not be handed over, Tribunal has found that entire burden cannot be put on the respondent employer and as the respondent was in helpless condition on account of litigation pending before the Hon'ble High Court, by considering that the compensation cannot be at the cost of public sector, has held that the claimant contractor is entitle for 50% of this claim and accordingly has held that the claimant is entitle for Rs.88,73,838/- towards accelerating the progress of work. On considering the finding of the learned tribunal, it has considered the correspondence and the material placed before it and also 38 CT 1390_Com.A.S.141-2018_Judgment.doc even considered the condition of the respondent and has accordingly awarded only 50% of the claim made by the claimant. The tribunal has also noted that even the claimant contractor while making claim though he had submitted the additional claim of Rs.2.25 crore has reduced the same and had claimed only Rs.1,77,47,677/-. Out of which, only 50% has been awarded by the tribunal. When the claimant had made such claim before the employer and the same is not denied and the respondent employer had not refused specifically the claim of the claimant by any correspondence, allowing of this claim partly cannot be said to be without considering the material placed and is without evidence or is against the terms of the contract or that it is against the fundamental principles of Indian law and is against the public policy. Therefore this award with regard to compensation for acceleration of progress of work allowed by the tribunal cannot be said to be unjust or not proper.
27. Most important portion of the award, which has been seriously disputed by the Plaintiff-Employer is awarding of Rs.28,74,82,181/- which is the claim towards compensation for delay caused in work. Even before the Learned arbitral Tribunal, this claim was hotly contested and this is a major claim. The learned senior counsel for the plaintiff by relying on clause 2.2 and 8.3 of GCC, has vehemently argued that in the presence of specific clause in the contract stating that, contractor is not entitle for 39 CT 1390_Com.A.S.141-2018_Judgment.doc damages or compensation on account of any delay caused by the employer and that for any such delay in not handing over of site, contractor will be entitle to only reasonable extension of time and no monitory claim whatsoever shall be entertained, finding of the Tribunal is against the terms of Contract and is liable to be set aside. It is argued that the finding of the Tribunal regarding delay damages is not only against the terms of the contract, but is also against well established decisions of the Apex Court. On the other hand, the learned counsel for the defendant has vehemently argued that the award of the tribunal on delay damages is not illegal and it is within the jurisdiction of the learned Arbitral Tribunal and interpretation of a particular claim in the agreement or work is left to the learned Arbitral Tribunal and the Arbitral Tribunal has considered even the decision cited by either side and then came to a particular conclusion such conclusion cannot be interfered under Section 34 of the Arbitration & Conciliation Act. It is also argued that in the presence of the decision of Hon'ble Supreme Court in Sarvesh Chopra, Arbitral Tribunal was justified in awarding of delay damages. It is also argued that the main cause for the delay is that of the employer in not providing GFC drawings, not providing site etc which has been considered by the tribunal and the award of compensation for delay caused by the respondent is well justified and the award cannot be set aside.
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28. On going through the award, in para 27, the tribunal has considered contentions of the parties in between page No.231 to 253 of the award. The tribunal has found that contract is for completion of the project within the period of 22 months from 17/6/2009, but for variety of reasons same could not be completed and extension of time was granted by the respondent and commercial operation commenced on 28/2/2014 and take over certificate was issued in December 2014. Tribunal has also noted that as per clause 8.4.1 of the GCC, contractor may apply for extension of time for completion of work for the cause mentioned in that clause like force majeure, work held up for not being given possession of or access to the site, instruction of the engineer to suspend work etc. Tribunal has noted that five extensions were totally granted as the work could not be completed within the time schedule. Tribunal has considered each of the extension that was sought and each of the extension that was granted by the respondent on the recommendation of Engineer. Application for first EOT was sought in the letter dated 15/2/2011 produced as Ex.C.42, in which the claimant had specifically stated the cause for delay, stating that there was delay in handing over of the stretches due to chartered utilities, delay in release of GFC drawings, delayed clearance for working piles and increased depth of piling and delay due to force majeure. Then there was correspondence between the parties. The claimant had in letter seeking 41 CT 1390_Com.A.S.141-2018_Judgment.doc EOT 1 stated that cost implication to this effect would be submitted shortly. Engineer has denied the allegation of delay caused by the respondent employer and drawn the attention of the claimant to clause 8.3 of GCC which would provide that contractor is not entitle to damages or compensation.
29. The tribunal has noted that in the first EOT, claimant had immediately on receipt of first EOT has put the employer to notice with regard to entitlement of additional cost. Tribunal considered that contractor has reserved its claim for financial implication and notified the employer about its claim for delay damages while seeking extension. After this first extension letter, there are several correspondences in which respondent denied that it is alone responsible for the delay and has also brought to the notice of the contractor that as per clause 8.3 for delay by the employer contractor is not entitle for compensation. Even thereafter there was correspondence made by the contractor on 2/4/2011 reiterating that it will be seeking extension of time along with financial implication duly notified and finally the GC has recommended extension of time by considering that cause for delay is 50:50 of the employer and the contractor and the contractor is entitled to be compensated by virtue of price variation clause for part of the period. Letter of the GC dated 28/4/2011 show that it has recommended for extension without levy of any liquidated damages as per clause 8.5 of GCC and without 42 CT 1390_Com.A.S.141-2018_Judgment.doc entitlement to the contractor, any damages or compensation as per clause 8.3 of GCC. In terms of the same, employer has granted extension of time by letter dated 22/7/2011.
30. The second EOT was sought on 24/3/2012, but in the letter for second EOT, it is mentioned that the contractor is entitle for extension of time with price variation clause. This second EOT was also granted by the employer on the recommendation of the GC and in the letter dated 1/8/2012 provided extension upto 30/4/2013 and stated that other terms and conditions remained as it is. In the application for second EOT the claimant had only stated that they are seeking extension of time with price variation clause and had not stated about reserving claim for financial implication for completion of the work. Subsequently third EOT was applied on 9/4/2013 in which extension is sought under clause 8.4.1. Price variation condition or condition of making claim for financial implication is not mentioned in the third EOT. Third EOT is also undisputedly granted on the recommendation of the GC. In the letter of the GC it is specifically sated that time may be granted as per the clause 8.4.3 without admitting any claim from the contractor. Similarly fourth EOT was claimed by letter dated 25/9/2013 by the contractor till 31/12/2013 as per clause 8.4.1 in which no such notice for claiming price variation or financial implication is reserved. Then comes the fifth EOT which is dated 22/1/2014 in 43 CT 1390_Com.A.S.141-2018_Judgment.doc which the extension was sought upto 31/3/2014 and extension has been given without penalty and PVC frozen. These are the 5 EOTs by which extension of time was given for completion of the project.
31 The learned Arbitral Tribunal has considered clauses of the contract and also the extension of time granted and the delay which is cause for non completion of the work within the stipulated period of 22 months which made the claimant to approach for extension of time and then the Engineer recommending extension and the respondent employer giving extension of time totally 5 times. The tribunal has noted that in extension No.1, claimant has on receipt of first EOT has put the respondent on notice with regard to its entitlement for additional cost. The tribunal has also mentioned that in the second EOT also claimant has put the respondent on notice with regard to its claim and the respondent in turn has stated that the second EOT is in terms of clause 8.3. The tribunal has also noted about the third extension, fourth extension and fifth extension that are granted. In most of the letters that are sent seeking extension of time, claimant had referred to delay in handing over of the land, delay due to hindrance in land handing over due to chartered utilities and diversion of utilities and delay in issuance of GFC drawings and the discrepancies therein and also delay in approval of extra item of work and delay in approval of shop drawing etc. In all the EOT sought by the claimant, delay are stated to be 44 CT 1390_Com.A.S.141-2018_Judgment.doc due to the delay in these aspects. Tribunal has considered several correspondences and found that there was delay in handing over of the land. Though the employer has contended that it was having duty to progressively hand over the land for the work and it has not effected the progress of the work, tribunal has considered the delay and even the EOT granted by the respondent and found that there was delay in handing over various portion of the land to the claimant. Then the tribunal has considered about chartered utilities which were the duty of the respondent employer to divert and has found that even the chartered utilities like BESCOM lane, live power cable, BSNL cable were not shifted in total and the land was not finally free from hindrance. Even the delay in issuance of GFC drawing also the tribunal has noted the delay caused by the employer which has lead to non progress of the work as per the time schedule. Delay in approval of extra item of work is also contended by the claimant, but the learned tribunal has noted that this delay is not established and the same is not acceptable. With regard to approval of shop drawing, the tribunal has noted that though there is no significant delay there is some delay in the approval to be given by the respondent. Causation established by the claimant is also considered by the tribunal and found that the claimant had used computer programme for planning activity for more than 10 years and found that the respondent has 45 CT 1390_Com.A.S.141-2018_Judgment.doc committed breach on account of delay in handing over GFC drawings, delay in approval of extra items etc.
32. After considering that in these aspects there is delay by the respondent which is cause for delay in completion of the project, tribunal has also considered the contention of the respondent that on the point of casting yard, barricading work, batching plant, labour camps, mobilization of hydraulic rigs there is delay caused by Claimant. The tribunal has considered that Geo Technical Engineer was not available till 30/09/2009 as required under the contract condition. Hence, Tribunal found that claimant has also contributed for the delay.
33. After considering these facts, learned Arbitral Tribunal, has considered the legal points and the implication of clause 2.2 and 8.3 of GCC. Tribunal has noted that as per these clauses, contractor will not be entitle for compensation for delay in handing over of the site and he is entitle for only reasonable extension of time and no monitory claim whatsoever shall be entertained on this account. There is also no dispute between the parties that, as per clause 2.2 and 8.3 of GCC, contractor is entitle for only extension of time in the presence of certain situation like delay in handing over of the site etc by the employer and that contract clearly provides that no compensation is payable to the contractor.
34. Before the learned Arbitral Tribunal, several decisions were cited by either side and the tribunal has 46 CT 1390_Com.A.S.141-2018_Judgment.doc considered those decisions and has found that as per the judgment in ONGC v. Wig Brothers and the decision in Ramanath International v. Union of India, payment of compensation is barred, when contract specifically contained no damage clause for delay. Then the tribunal has considered the judgment relied by the Contractor- claimant in Northern Railways v. Sarvesh Chopra and Ramachandra Reddy v. Union of India wherein, Hon'ble Supreme Court has considered the payment of compensation even in the case in which there is no provision for payment of damages. By relying on these decisions, learned Arbitral Tribunal has found that the claimant is entitle for claim of compensation, despite clause 2.2 and 8.3 of GCC, on the ground that the claimant had put the respondent on notice with regard to claim of compensation. Then the tribunal by noticing that there are also lapses on the part of the claimant has awarded 50% of the claim amount which comes to Rs.28,74,82,181/- by partly allowing the claim for delay damages. The tribunal has also noted that the claim is supported by Ex.C.297 and Ex.C.295 and head office overhead is supported by Ex.C.285 and Ex.C.295, additional amount payable is supported by Ex.C.297. Tribunal has noted that the respondent was directed to inspect the bulky document, but has not chosen to do the same and hence Ex.C.297 requires to be accepted. The tribunal by considering that both the parties have committed breach of terms of the 47 CT 1390_Com.A.S.141-2018_Judgment.doc contract and the compensation is payable in the terms of law laid down by the court of law and held that the claimant is entitle to be awarded only 50% of the claim for compensation. This finding of the tribunal is a serious point of dispute in the present arbitration suit.
35. Learned counsel for the defendant has referred to various decisions including the decision in Associate Builders v. Delhi Development Authority reported in (2015) 3 SCC 49 to support the Award. In this decision, Hon'ble Supreme Court in para 27 has held that "..Coming to each of the heads contained in saw pipes judgment, we will first deal with the head 'fundamental policy of Indian law'. It has already been seen from Rensagar judgment that violation of the Foreign Exchange Act and disregarding orders of superior courts in India would be regarded as being contrary to the fundamental policy of Indian law. To this it could be added that the binding effect of the judgment of a superior court being disregarded would be equally violative of the fundamental policy of Indian law..." In para 31 the Hon'ble Supreme Court has held that "....a decision which is perverse or so irrational that no reasonable person would have arrived at the same is important and requires some degree of explanation..." The Hon'ble Supreme Court by considering another decision held in para 32 that "...If there is some evidence on record which is acceptable and which could be relied upon, 48 CT 1390_Com.A.S.141-2018_Judgment.doc howsoever compendious it may be, the conclusions would not be treated as perverse and the findings would not be interfered with..."
36. The learned counsel for the defendant has argued that the finding of the tribunal is by relying on the decision of Hon'ble Supreme Court and also is based on facts and the evidence placed before it and therefore as held in this decision, same cannot be interfered. The learned counsel has also referred to Section 28(3) of the Arbitration & Conciliation Act which has been considered in para 32 of this judgment. As rightly submitted by the learned counsel, as per Section 28(3) as appearing earlier, the tribunal was to decide the matter in accordance with the terms of the contract, but after amendment, tribunal is obliged to take into account the terms of the contract. Therefore, there is a serious departure from earlier requirement of deciding the matter in terms of the contract and now the tribunal is required to take into account the terms of the contract. This is so held in the decision of Ssangyong Engineering and Construction Company Limited v. National Highways Authority of India, reported in (2019) 15 SCC
131.
37. The learned counsel has also relied on the decision reported in 2021(4) RCR (Civil) 206 (Delhi Airport Metro Express Private Limited v. Delhi Metro Rail Corporation Limited) in which in para 23 the Hon'ble Supreme Court has held that "...the courts are mandated 49 CT 1390_Com.A.S.141-2018_Judgment.doc to strictly act in accordance with and within the confines of Section 34, refraining from appreciation or re-appreciation of matters of fact as well as law...." In para 25 the Hon'ble Supreme Court has held as under
"....This court has in several other judgments interpreted Section 34 of the 1996 Act to stress on the restraint to be shown by courts while examining the validity of the arbitral awards. The limited grounds available to courts for annulment of arbitral awards are well known to legally trained minds. However the difficulty arises in applying the well-established principles for interference to the facts of each case that come up before the courts. There is a disturbing tendency of courts setting aside arbitral awards, after dissecting and reassessing factual aspects of the cases to come to a conclusion that the award needs intervention and thereafter, dubbing the award to be vitiated by either perversity or patent illegality, apart from the other grounds available for annulment of the award. This approach would leads to corrosion of the object of the 1996 Act and the endeavours made to preserve this project, which is minimal judicial interference with arbitral awards. That apart, several judicial pr4onouncements of this court would become a dead letter if arbitral awards are set aside by categorizing them as perverse or patently illegal without appreciating the counters of the said expressions..."
It is also held in para 26 that, "....patent illegality should be illegality which goes to the root of the matter. In other words, every error of law committed by the Arbitral Tribunal would not fall within the expression 'patent illegality'. Likewise, contravention of law not linked to public policy or public interest is 50 CT 1390_Com.A.S.141-2018_Judgment.doc beyond the scope of the expression 'patent illegality'...."
By relying n this decision, learned counsel for the defendant has argued that in the present case also by considering the factual aspects, tribunal has held that the delay is caused by employer and by considering the clauses in the agreement and also the decisions has awarded the delay damages and the decision is on facts and also on interpretation by the arbitral tribunal which cannot be interfered.
38. In another decision reported in 2012 SCC Online Calcutta 13228 (State of West Bengal and another v. N.Bhakat & Company and another) the Hon'ble High Court has held that "...parties consciously kept the court of law outside the purview. Unless one would successfully contend, the award was perverse being based on no evidence, it was absurd, shocking the conscience of the court, it would run contrary to the well settled principles of law of the land, the court must not interfere..." It is also held in para 26 that "...The arbitrator being a technical person having technical knowledge on the subject, considered the issue minutely and adjudicated the same and awarded partial amount justifying the same with reasons that would hardly be available for judicial view...". In another decision reported in 2017 SCC Online Delhi 6470 (Pawan Hans Helicopters Limited v. IDEB Projects Private Limited) it is held in para 25 that. "... Thus on a plain 51 CT 1390_Com.A.S.141-2018_Judgment.doc reading of the impugned award as a whole, it is clear that the Arbitrator had found PHHL to be principally responsible for the delays and therefore had awarded damages to IDEB limited to the increase in the cost of materials while rejecting IDEB's claims on other counts..." In another judgment reported in (2012) 1 SCC 594 (P.R.Shah Shares and Stock Brokers Private Limited v. B.H.H Securities Private Limited and others) the Hon'ble Supreme Court in para 23 has held that "...But an arbitral tribunal can certainly use its expert or technical knowledge or the general knowledge about the particular trade in deciding a matter. In fact, that is why in many arbitrations, persons with technical knowledge, are appointed as they will be well-versed with the practices and customs int eh respective fields...."
On the basis of these decisions it is argued that the present arbitral tribunal is having all the technical and legal skills and the finding of the tribunal cannot be simply interfered.
39. Apart from these decisions, with regard to limited scope for interference in the Award by the court under section 34, defendant is mainly relying on the decision of Hon'ble Supreme Court in (2002) 4 SCC 45 (Genral Manager, Northern Railways and another v. Sarvesh Chopra). On the basis of this decision, even the Arbitral Tribunal has proceeded to award delay damages 52 CT 1390_Com.A.S.141-2018_Judgment.doc inspite of GCC clause 2.2 and 8.3 specifically providing that no compensation is payable. In this decision, Hon'ble Supreme Court in para 15 has held as under, "....Thus it appears that under the Indian law, inspite of there being a contract between the parties where under the contractor has undertaken not to make any claim for delay in performance of the contract occasioned by an act of the employer, still a claim would be entertainable in one of the following situations (i) if the contractor repudiates the contract exercising his right t do so under Section 55 of the Contract Act (ii) the employer gives an extension of time either by entering into supplemental agreement or by making its clear that escalation of rates or compensation for delay would be permissible (iii) if the contractor makes it clear that escalation of rates or compensation for delay shall have to be made by the employer and the employer accepts performance by the contractor in spite of delay and such notice by the contractor putting the employer on terms..."
40. On the basis of third condition in above paragraph, learned Arbitrator has held that inspite of contract containing a clause that no compensation is payable for delay by the employer, the contractor would be entitle for compensation if the contractor has put the employer on terms while seeking extension of time. On the basis of this decision, it is argued before the learned Arbitral Tribunal and before this court that as contractor has specifically put the employer to the notice of its claim for compensation for the delay, contractor is entitle for compensation in spite of clause 2.2 and 8.3. Even the learned Arbitral Tribunal, on the basis of this decision has 53 CT 1390_Com.A.S.141-2018_Judgment.doc held that inspite of such clause, employer is liable to pay delay damages.
41. Defendant has also referred to decision in Assam State Electricity Board and others v. Buildworth Private Limited reported in (2017) 8 SCC 146. In this decision, Hon'ble Supreme Court in par 18 has referred to this decision in Sarvesh Chopra by stating that even the High Court adverted to the decision in support of the principle that if a party to a contract does not rescind it by invoking section 55 and 56 of the Contract Act 1872 and accepts the belated performance of reciprocal obligations, the other party would be entitled to make a claim for damages. However on looking to the decision, Hon'ble Supreme Court has only referred to consideration of this decision by Hon'ble High Court and has not relied on it for its decision and this decision was not even on claim for delay damages, but regarding awarding claim for price escalation.
42. The learned counsel for the defendant has referred to a decision of the Hon'ble High Court of Calcutta reported in MANU/WB/1044/2016 (State of West Bengal v. Pam Developments Private Limited) in which the single judge of the Hon'ble High Court has considered the decision in Sarvesh Chopra. The learned counsel for the defendant has also relied on the decision of the Division Bench, between the same parties, reported in 2017 SCC 54 CT 1390_Com.A.S.141-2018_Judgment.doc Online Calcutta 13272. In this appeal Division Bench of Hon'ble High Court in para 61 has held under, "... The moot question that arises is whether any amount awarded by an arbitrator on account of damages in respect of a head of claim covered by a prohibitory or no damage clause in the agreement would be liable to be set aside in a challenge under Section 34 of the 1996 Act as being contrary to the substantive law in force in India or as being in conflict with the public policy of India or on the ground of it being patently illegal or falling foul of the judicially acknowledged tests of perversity or shocking to the conscience. The ancillary issue which arises is whether the dictum at paragraph 15 of Sarvesh Chopra is relevant in assessing a challenge to an arbitral award under Section 34 of the 1996 Act and if so would there be no exception beyond the three as recognized in such dictum...." On this point the Hon'ble High Court in para 73 has held, "... But the more important facet of the dictum in Sarvesh Chopra is that a no-damage clause is by no means the end of the matter in respect of a claim made under a prohibited head; there could be exceptions to the prohibition. Once so much is apparent from the dictum, the next aspect would be whether such dictum provides room for only such of the exceptions as noticed therein. Even if the dictum is read in such strict sence - which it ought not to be, since a judgment is not read as a statute or an edict on stone - the essence of the dictum is that even a prohibitory clause and its application is open to interpretation. Once it is recognized that it may be permissible to interpret the efficacy of a prohibitory clause or its application or applicability in a particular situation, that would make such matter fall within the exclusive domain of the arbitrator. The arbitrator may make a mistake and may rule against the applicability of a prohibitory clause in a particular 55 CT 1390_Com.A.S.141-2018_Judgment.doc set of circumstances; but that, by itself, would not be amenable to correction by a court in a challenge under Section 34 of the 1996 Act, unless it is found to be in conflict with the pubic policy of India or, under the newly incorporated Section 34(2-A) on the ground of patent illegality or the judicially acknowledged strict grounds of perversity or shocking to the conscience of the court..."
43. On going through this decision, no doubt, it supports the contention of defendant and deals with awarding compensation inspite of contract having no damages clause. However, learned counsel for the plaintiff has referred to the decision of Hon'ble Supreme Court in Civil Appeal No.1126-1127 of 2019 dated 22/1/2019 (State of West Bengal v. Pam Developments Private Limited) which is an appeal against the judgment of the Division Bench of the Hon'ble Calcutta High Court. In this decision the Hon'ble Supreme Court has disposed the matter by consent of both the parties and left all the questions of law open. On the basis of this decision, the learned counsel for the plaintiff has argued that the decision in Pam Developer is not a binding precedent, as all the questions of law are left open.
44. To contend that time was not the essence of the contract, learned counsel for the defendant has also relied on the decision of Hind Construction Contractors by its sole Proprietor Bhikamchand Mulchand Jain (dead) by LRs v. State of Maharastra reported in (1979) 2 SCC 70.
45. As against these decisions, learned senior counsel for the plaintiff has relied on the decision reported in 56 CT 1390_Com.A.S.141-2018_Judgment.doc (1988) 3 SCC 82 (Continental Construction Company v. State of Madhya Pradesh) in which the Hon'ble Supreme Court in para 5 has held, "...The Arbitrator is not a conciliator and cannot ignore the law or misapply it in order to do what he thinks is just and reasonable. The arbitrator is a tribunal selected by the parties to decide their disputes according to law and so is bound to follow and apply the law, and if he does not he can be set right by the court provided his error appears on the face of the award..."
In para 7 the Hon'ble Supreme Court has held, "... This being a general question, in our opinion, the District Judge rightly examined the question and found that the appellant was not entitled to claim for extra cost in view of the terms of the contract and the arbitrator misdirected himself by not considering this objection of the State before giving the award..."
In this decision, Hon'ble Supreme Court has held that when contract stipulates that no compensation is payable, such term of the contract is to be upheld and grant of compensation by Arbitrator contrary to the terms of the contract is not permissible.
46. In another decision reported in (1991) 4 SCC 93 (Associated Engineering Company v. Government of Andhra Pradesh and another) judgment of Hon'ble High Court was confirmed by the Hon'ble Supreme Court, in which the Hon'ble High Court had held that no compensation is payable when three is a specific bar in the contract. It is held in para 8 that "...In the absence of any provision in the contract, the arbitrator had no jurisdiction to make an award for escalation. This 57 CT 1390_Com.A.S.141-2018_Judgment.doc contention of the government was accepted by the High Court..." and the same is upheld by the Hon'ble Supreme Court in para 24 and 25 as under:
"24. The arbitrator cannot act arbitrarily, irrationally, capriciously or independently of the contract. His sole function is to arbitrate is to arbitrate in terms of the contract. He has no power apart from what the parties have given him under the contract. If he has traveled outside the bounds of the contract, he has acted without jurisdiction. But if he has remained inside the parameters of the contract and has construed the provisions of the contract, his award cannot be interfered with unless he has given reasons for the award disclosing an error apparent on the face of it.
25. An arbitrator who acts in manifest disregard of the contract acts without jurisdiction. His authority is derived from the contract and is governed by the Arbitration Act which embodies principles derived from a specialised branch of the law of agency. He commits misconduct if by his award he decides matters excluded by the agreement. A deliberate departure from contract amounts to not only manifest disregard of his authority or a misconduct on his part, but it may tantamount to a mala fide action. A conscious disregard of the law or the provisions of the contract from which he has derived his authority vitiates the award..."
47. To support its contention that, when there is bar for compensation in contract, arbitrator cannot award the same, plaintiff has relied on the decision of Hon'ble Supreme Court reported in (1999) 9 SCC 610 (C.H.Ramalinga Reddy v. Superintending Engineer and another). In this decision it is held that where the contract plainly barred the appellant 58 CT 1390_Com.A.S.141-2018_Judgment.doc from making any claim, it was impermissible to make an award in respect thereof and the court was entitled to intervene. In para 18 it is held, "....In the case before us, the arbitrator was required to decide the claims referred to him having regard to the contract between the parties. His jurisdiction, therefore, was limited by the terms of the contract. Where the contract plainly barred the appellant from making any claim, it was impermissible to make an award in respect thereof and the court was entitled to intervene..."
48. In another judgment reported in (1999) 8 SCC 122 (Steel Authority of India v. JC Budharaja) wherein similar clause like clause 8.3 of GCC of the present case was operating, Hon'ble Supreme Court in para 15 has held, "....It is settled law that arbitrator derives the authority from the contract and if he acts in manifest disregard of the contract, the award given by him would be arbitrary one. This deliberate departure from the contract amounts not only to manifest disregard of the authority or misconduct on his part, but it may tantamount to mala fide action..." It is also held in para 17, "...It is to be reiterated that to find out whether the arbitrator has traveled beyond his jurisdiction and acted beyond the terms of the agreement between the parties agreement is required to be looked into. It is true that interpretation of a particular condition in the agreement would be within the jurisdiction of the arbitrator. However, in cases where there is no question of interpretation of any term of the contract, but of solely reading the same as it is and still the arbitrator ignores it and awards the amount despite the prohibition in the agreement, the award would be arbitrary, capricious and without jurisdiction. Whether the arbitrator has acted beyond the terms of 59 CT 1390_Com.A.S.141-2018_Judgment.doc the contract or has traveled beyond his jurisdiction would depend upon facts, which however would be jurisdictional facts, and are required to be gone into by the court. Arbitrator may have jurisdiction to entertain claim and yet he may not have jurisdiction to pass award for particular items in view of the prohibition contained in the contract and, in such cases, it would be a jurisdictional error..."
49. The decision reported in (1999) 9 SCC 283 (Rajasthan State Mines & Minerals Limited vs. Eastern Engineering Enterprises and another) is also cited by the plaintiff. In this decision it is held in para 22, "...It is specifically agreed that the contractor will not be entitled or justified in raising any claim or dispute because of increase in cost of expenses on any ground whatsoever. By ignoring the said terms, the arbitrator has traveled beyond his jurisdiction as his existence depends upon the agreement and his function is to act within the limits of the said agreement. This deliberate departure from the contract amounts not only to manifest disregard of the authority or misconduct on his part but it may tantamount to malafide action..."
50. Decision reported in (2007) 2 SCC 453 (Ramanath International Construction Private Limited v. Union of India) is also relied by the plaintiff. In this decision wherein similar point was involved in which, Arbitrator had held that where the work was delayed on account of delays attributable to the employer, grant of extension of time by the employer for completing the work does not exonerate the employer from the liability to pay damages for breach on account of the delay caused by the employer unless the employer establishes that the contractor has consented to accept the extension of time alone, in satisfaction of his 60 CT 1390_Com.A.S.141-2018_Judgment.doc claims for the delay. On those findings, Hon'ble Supreme Court has considered clause 11(C) which had similar clause like 8.3 providing no compensation and held in para 12 as under.
"...The contract thus provides that if there is any delay, attributable either to the contractor or the employer or to both, and the contractor seeks and obtains extension of time for execution on that account, he will not be entitled to claim compensation of any nature on the ground of such delay, in addition to the extension of time obtained by him. Therefore the claims for compensation as a consequence of delays that is claim 24 of the Hangar Contract and claims 13 to 16 of the Road Contract are barred by clause 11(c)..."
51. The decision of Union of India v. Chandalavada Gopalakrishna Murthy and others reported in (2010) 14 SCC 633 is also relied by the plaintiff wherein in para 7 the Hon'ble Supreme Court has held, "....A similar question raised before the court was considered by a three Judge Bench of this court in Ch.Ramalinga Reddy v. Superintending Engineer. This court held in that case that if the contract is extended under the terms of the contract, compensation cannot be awarded by the arbitrator. The aforesaid judgment has been followed in another decision of this court in Northern Railway v. Sarvesh Chopra..."
52. In one more decision of Hon'ble Supreme Court in Oil and Natural Gas Corporation v. Wig Brothers Builders and Engineers Private Limited, reported in (2010) 13 SCC 377, Hon'ble Supreme Court in para 7 has held by considering the relevant clauses of the contract that, 61 CT 1390_Com.A.S.141-2018_Judgment.doc "In view of the above, in the event of the work being delayed for whatsoever reason, that is, even delay which is attributable to ONGC, the contractor will only be entitled to extension of time for completion of work but will not be entitled to any compensation or damages. The arbitrator exceeded his jurisdiction in ignoring the said express bar contained in the contract and in awarding the compensation of Rs.9.5 lakhs"
and held that, the award of the arbitrator in violation of the bar contained in the contract has to be held as one beyond his jurisdiction requiring interference.
53. On going through all these decisions relied by either party, many of these decisions are even considered by the learned Arbitral Tribunal in the award. Arbitral Tribunal has also found that as per clause 2.2 and 8.3 of GCC for any delay in handing over the site or any delay on the part of the employer, contractor will be entitled to only reasonable extension of time and is not entitle for any compensation. The learned Tribunal has even reproduced relevant portion of clause 2.2 and 8.3 of GCC, which contain no damge clause. In the present case on facts, by considering various grounds of delay as mentioned in several letters of EOT submitted by the contractor to the employer, Tribunal has held that there is delay caused by the employer. The tribunal has also noted that on some aspects even there are lapses on the part of the contractor, which contributed for delay. These findings of the tribunal is based on the facts and on consideration of the documents and evidence placed before the Arbitral Tribunal. Therefore, finding as to cause for delay and as to for whose 62 CT 1390_Com.A.S.141-2018_Judgment.doc fault delay is caused etc cannot be re-agitated under Section 34 of the Arbitration & Conciliation Act, as court cannot re- appreciate evidence and cannot place its view as against the possible view that has been expressed by the learned Arbitral Tribunal, with regard to reasons for the delay in completion of the project and the circumstances which led to, seek extension of time.
54. Crux of the matter is, when delay is attributable to the employer as held by the tribunal, whether the employer would be liable to pay compensation or delay damages. As mentioned above clause 2.2 clearly bars payment of any damages or compensation for delay in handing over of the land and even for any other reason. As per clause 8.3 for delay by the employer or the Engineer to hand over contractor, the site necessary for execution of works or any part of the works or to give necessary notice to commence the works or to provide necessary drawing or instructions or clarifications or to supply any material, Plant or machinery which under the contract is the responsibility of the employer, shall in no way affect the contract or entitle the contractor to damages or compensation, but in any such case, the engineer shall extend the time period for the completion of the contract, as in his opinion is reasonable. Therefore, clause in the contract clearly bars the contractor from claiming any damages and the employer is not liable to pay any compensation or damages.63
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55. Such clauses in the agreement which bars payment of damages for the delay caused by the employer are upheld in many decisions cited by the learned counsel for the plaintiff. In the decision of C.H.Ramalinga Reddy, Ramanath International and also in ONGC v. Wig Brothers, when such similar clauses were present in contract, Hon'ble Supreme Court has set aside the award which had awarded compensation for delay. Even the tribunal has noted those decisions and found that as per those decisions, compensation cannot be paid. However, Tribunal has by considering the decision in Sarvesh Chopra, referred above, has proceeded to award delay damages to the contractor. On looking to the award, finding of the Tribunal on entitlement of Claimant for compensation from Employer for delay caused is entirely based in decision in Sarvesh Chopra. Learned senior counsel for the plaintiff has serious objection for relying on this decision for deciding entitlement for compensation.
56. On going through the entire decision, as rightly argued by the learned senior counsel for the plaintiff, decision in Sarvesh Chopra is not on the point as to whether inspite of having a clause barring payment of compensation or damages for the delay caused by the employer, Contractor is entilte for compensation. This decision is on the point as to, whether excepted matter could be referred to the arbitration and whether particular dispute is an excepted matter. The Hon'ble Supreme Court in this decision, has held 64 CT 1390_Com.A.S.141-2018_Judgment.doc for the reasons mentioned in the decision that particular dispute in claim 3,4 and 5 were excepted matters. The Hon'ble Supreme Court has upheld the decision of single judge of Hon'ble High Court of Delhi who has held that the claim No.3 to 6 which were excepted matters were not liable to be referred to arbitration. Therefore on looking to the facts of the case before the Hon'ble Supreme Court and finding of the Supreme Court, point as to, whether compensation could be claimed by the contractor, inspite of having a clause in the contract that employer is not liable to pay any damages or compensation to the contractor for the delay caused by employer, was not for consideration before Hon'ble supreme Court.
57. In Sarvesh Chopra decision, Hon'ble Supreme Court in para 15 has considered Section 55 and 56 of the Indian Contract Act which deal with contract in which, time is essence of the contract and held that, it appears that in Indian law though the contractor had undertaken not to make any claim for delay in performance of the contract occasioned by an act of the employer, still a claim would be entertainable if the contractor had intimated the employer about such claim and employer accepts performance inspite of such notice by the contractor. This finding of the Hon'ble Supreme Court do not appear to be ratio decidendi of the decision in Sarvesh Chopra, as this point as to whether contractor can claim delay compensation if he has put the employer to notice while seeking extension, was not the point 65 CT 1390_Com.A.S.141-2018_Judgment.doc involved in the case and is not the basis for decision in Sarvsh Chopra.
58. On the other hand, subsequent decision of the Hon'ble Supreme Court in Wig Brothers which is reported in 2010 is directly on the point. In Wig brothers, it is clearly held that in view of clause 5(a) of the contract barring claim for damages at the time of extension of time, if work is delayed for whatever reasons and including delay attributable to the ONGC i.e employer, contractor will not be entitle for any compensation or damages and will be entitle to extension of time only and that, the finding of the Arbitrator awarding compensation in violation of the bar contained in the contract is held to be beyond jurisdiction. This finding of the Hon'ble Supreme Court in the decision in Wig Brothers is ratio decidendi of the case and would be binding precedent. Apart from this, even in C.H.Ramalinga Reddy decision, referred above, which is decision of three Judges Bench of Hon'ble Supreme Court, is also on similar point wherein the Hon'ble Supreme Court has held that where the contract plainly barred the appellant from making any claim, it was impermissible to make an award in respect thereof. It is also held that the jurisdiction of the arbitrator is limited by the terms of the contract. Therefore, these decisions relied by the plaintiff would make it very clear that no damage clause for the delay appearing in clause 2.2 and 8.3 are binding clauses of the contract and not a mere statement.66
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59. As per the decisions, starting from Continental Construction Company till Wig Brothers, relied by the plaintiff, when contract specifically bars payment of compensation to the contractor for delay caused by the employer, the contractor is not entitle for compensation and such clause in the contract cannot be ignored while passing the award and such award in violation of the terms of the contract, as held in Wig Brothers is beyond the jurisdiction of the arbitrator and it requires interference. The decision in Sarvesh Chopra is on different facts and is not on the point involved in the present case. Learned Arbitral Tribunal without going through the facts of the said decision, has erroneously applied the same to the present case, which is not permissible. As held in Wig Brothers, such finding of the learned Arbitral Tribunal by ignoring or violating terms of contract is a jurisdictional error which requires interference. Even i also do not permit such claim for compensation n the decision in Chandalavada Gopalakrishna, referred above, it is stated in para 7 that, in the decision in Ramachandra Reddy and even in Sarvesh Chopra it is held that compensation cannot be awarded by the Arbitrator if contract is extended under the terms of the contract. Therefore, decision in Sarvesh Chopra as considered in subsequent decisions by the Hon'ble Supreme Court, including decision in Nicholas Piramal India Limited, do not support such claim for compensation. Moreover, even in Sarvesh Chopra 67 CT 1390_Com.A.S.141-2018_Judgment.doc decision which is the basis for finding of the arbitrator, the decision in Ramalingareddy and also the decision in State of UP v. Associate Engineer and Continental Construction are all referred with approval. Therefore the decision in Sarvesh Chopra will not entitle the contractor to claim compensation in violation of specific terms of the contract prohibiting such claim for compensation.
60. Apart from this, in the decision in Sarvesh Chopra in para 15 (iii) it is mentioned that, if contractor makes it clear that escalation of rates or compensation for delay shall have to be made by the employer and the employer accepts performance by the contractor in spite of delay and inspite of notice, then the contractor is entitle for compensation. Even if this observation is held to be applicable to present case, same is not properly applied by the Arbitral Tribunal. On looking to EOT sought by claimant on 5 times, only in EOT-1, claimant contractor had stated that he is seeking extension of time and that cost implication would be submitted to the employer later. In application for second EOT dated 24/3/2012, contractor had requested for grant of EOT as per clause 8.4 of GCC with price variation clause. In EOT 3, 4 and 5 also no notice of reserving claim for compensation was given. Employer is not informed that contractor will be seeking EOT subject to payment of damages or compensation in EOT 2 to 5. Even first EOT application stating that the losses are not attributable to the contractor and they are 68 CT 1390_Com.A.S.141-2018_Judgment.doc beyond the control and only after BMRCL fulfilled the obligation, they will be seeking final extension along with financial implication, cannot be said to be a clear notice of the contractor seeking escalation of rate or compensation for delay. On reading request for EOT 1 to 5, none of them are putting specific condition that only if compensation for delay is given, they would proceed with the work and they are seeking extension of time with the condition that escalation of rate or compensation for delay would be made by the employer. Therefore, this requirement of putting the employer on notice about such claim for compensation itself is not clearly present in any of the applications given for EOT. Though there is some reference to the financial implication in EOT-1, EOT-2 to 5 do not contain any such reservation of making claim for compensation. However, learned Arbitral Tribunal has mentioned that in EOT-2 also there is notice by the employer which is not found in the EOT application. Regarding EOT 3 to 5 even the Arbitral Tribunal has not mentioned in the award that there is such claim for compensation reserved by the contractor. Apart from this, after receiving request for EOT, GC and the plaintiff have considered the contention of the contractor and have given EOT, but while doing so, in none of the documents of EOT, employer had agreed to pay any compensation for the financial implication on the contractor and it is specifically mentioned that extension of time is given under clause 8.3 or that other conditions of contract 69 CT 1390_Com.A.S.141-2018_Judgment.doc continues to apply. Clause 8.3 do not permit compensation to the claimant. Even from this angle, even if the decision in Sarvesh Chopra is said to be applicable, requirement mentioned in the decision is not complied in the present case. For all these reasons, decision in Sarvesh Chopra cannot be applied to the present case and even requirement mentioned in that decision are not present, in this case.
61. The learned counsel for the defendant has tried to justify the finding of the learned Arbitral Tribunal regarding delay damages by referring to the decision in Pam Developments Private Limited referred above. As mentioned above, decision of Division Bench of Bombay High Court has went in appeal to the Hon'ble Supreme Court and before the Hon'ble Supreme Court, matter was disposed by consent and questions of law are kept open. Therefore decision of the Bombay High Court which states that inspite of contract barring the delay damages, contractor is entitle for compensation cannot be applied to the present case. In another decision of Hon'ble Supreme Court in Assam State Electricity Board which is latest decision of 2017 cited by the defendant, decision in Sarvesh Chopra is referred in different context of stating that High Court has referred to the with reference to Section 55 and 56 of the Contract Act. This decision is also not on the point in issue of the present dispute and the same is not applicable.70
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62. The learned counsel for the defendant by referring to the decision in All India Power Engineer Federation and others v. Sasan Power Limited reported in (2017) 1 SCC 487 has argued that Contract barring claim for compensation which is inconsistent with Section 73 of the Contract Act itself is not effective and is to be ignored. In this decision the Hon'ble Supreme Court in para 17 has held that the terms of an instrument of pledge, such as there is in this case, giving an unqualified power of sale, are inconsistent with the provisions of Section 176 of the Contract Act, and, therefore, by virtue of Section 1 of that Act must give place to the express provisions of the Act. The learned counsel has argued that when there is specific section in contract in providing compensation like Section 73, 63 and 55, clauses like 2.2 and 8.3 of the GCC barring contractor from claiming compensation are void. This point was not raised before the learned Arbitral Tribunal and cannot be permitted to be raised for the first time in this suit. Moreover in most of the decisions referred above, similar clauses of the contract were involved and in none of those decisions, including decision in Sarvesh Chopra, validity of such clauses are questioned and such clauses are not held to be void. Hence this contention of the learned counsel which is raised for the first time in the course of arguments cannot be accepted.
63. For all these reasons, awarding of delay damages to the defendant by the Arbitral Tribunal, in the 71 CT 1390_Com.A.S.141-2018_Judgment.doc presence of clause 2.2 and 8.3 of GCC is beyond the jurisdiction of the tribunal as held in the decision in Wig Brothers. As held in the decision in Associate Builders, 'binding effect of the judgment of a superior court being disregarded would be equally violative of the fundamental policy of Indian law'. Therefore, this finding of the learned Arbitral Tribunal on issue No.1(d), awarding Rs.28,74,82,181/- is beyond the jurisdiction of the Arbitral Tribunal and is in violation of terms of the contract particularly clause 2.2 and 8.3 of the GCC. As such this finding of the learned Arbitral Tribunal is required to be set aside as is against fundamental policy of Indian law and is thereby, against the public policy of India.
64. As discussed above, out of several findings on different issues given by the Tribunal, decision on issue No.1(d) is held to be not proper and require to be set aside. In the decision reported in (2021) 9 SCC 1 (Project Director, National Highways NO.45E and 220, National Highways Authority of India v. M.Hakeem and another) the Hon'ble Supreme Court in para 31 has held that "....Thus there can be no doubt that given the law laid down by this court, Section 34 of the Arbitration Act, 1996 cannot be held to include within it a power to modify an award..." In this decision, Hon'ble Supreme Court has held that section 34 of Arbitration & Conciliation Act do not give power to modify the award.72
CT 1390_Com.A.S.141-2018_Judgment.doc
65. Learned counsel for the defendant has referred to the decision of the Hon'ble Supreme Court reported in (2011) 5 SCC 758 (J.G.Engineers Private Limited v.
Union of India and another). In this decision the Hon'ble Supreme Court has held in para 25 that, "....It is now well settled that if an award deals with and decides several claims separately and distinctly, even if the court finds that the award in regard to some items is bad, the court will segregate the award on items which did not suffer from any infirmity and uphold the award to that extent. As the award on items 2,4,6,7,8 and 9 was upheld by the civil court and as the High Court in appeal did not find any infirmity in regard to the award on those claims, the judgment of the High Court setting aside the award in regard to claims 2,4,6,7,8 and 9 of the appellant, cannot be sustained. The judgment to that extent is liable to be set aside and the award has to be upheld in regard to claims 2,4,6,7,8 and 9..."
Therefore as held in this decision, if there are several claims on which the award is passed and the court under Section 34 finds that allowing of one of the claim is bad in law and is to be set aside, entire award need not be set aside and the claim which are to be upheld need not be set aside.
66. On this point, learned counsel for the defendant has also relied on another decision of Hon'ble Bombay High Court reported in 2010(1) Bombay CR 529 (R.S.Jiwani and others v. Ircon International Limited) in which doctrine of severability has been considered. In the decision reported in MANU/KE/3188/2021 (Navayuga 73 CT 1390_Com.A.S.141-2018_Judgment.doc Engineering Company Limited v. Union of India) the decision in J.G.Engineers Private Limited is referred and Hon'ble High Court has also considered decision in National Highways Authority of India v. M.Hakeem referred above. After considering those decisions, in para 14, Hon'ble High Court has held, that the award can be set aside in part.
67. In the present case, though there were several claims made before the learned Arbitral Tribunal by the contractor, Arbitral Tribunal has allowed many claims and has rejected few claims. The counter claim made by the Employer is also rejected by the Arbitral Tribunal. Against this Award, employer has filed present Arbitration suit under Section 34 praying to set aside the award. Though the plaintiff has disputed the award on all front, main dispute is with regard to awarding of delay damages of Rs.28,74,82,181/-, awarding of Rs.90,76,807/- towards facilities provided to the Engineer and awarding Rs.88,73,838/- towards accelerating the progress of the work. This court under Section 34, on looking to the award has found that allowing of different claims, except delay damages, is proper and justified and to be upheld. Similarly, finding with regard to rejection of counter claim is also held to be proper and cannot be set aside. However, with regard to claim towards delay damages, awarding of Rs.28,74,82,181/- is found to be against the specific terms of the contract and also the binding decision of the Hon'ble 74 CT 1390_Com.A.S.141-2018_Judgment.doc Supreme Court and is found to be a jurisdictional error committed by the Tribunal and is against fundamental policy of Indian law and is therefore, against public policy and requires to be set aside. Since, only one claim awarded by the learned Arbitral Tribunal is against public policy and is required to be set aside, entire award need not be set aside. Under such circumstances, arbitration suit challenging the award is to be partly allowed and the award with regard to awarding of Rs.28,74,82,181/- towards delay damages is to be set aside by confirming other parts of the award. Accordingly point No.1 is answered.
68. POINT No.2 : For the discussion made on above point, following order is passed:
ORDER Arbitration Suit filed under Section 34 of the Arbitration & Conciliation Act by the plaintiff employer is partly allowed on following terms.
The award of the learned Arbitral Tribunal dated 30/4/2018, as regards awarding of Rs.28,74,82,181/- on the basis of its finding on issue No.1(d) towards loss suffered by the contractor on account of delay is set aside.75
CT 1390_Com.A.S.141-2018_Judgment.doc Arbitration suit challenging award with regard to other findings and award on other claims and counter claims is dismissed.
[Dictated to the Judgment Writer; transcript thereof corrected, signed and then pronounced by me, in the Open Court on this the 28th day of October 2022] [Ravindra Hegde] Digitally signed LXXXIII Additional City Civil by RAVINDRA Judge.
RAVINDRA SANTHARAMA BENGALURU.
SANTHARAMA HEGDE
HEGDE Date:
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2022.10.29
03:54:28 -0400