West Bengal Housing Board vs The Civcon Construction Pvt. Ltd on 17 March, 2020

[Cites 18, Cited by 1]

Calcutta High Court

West Bengal Housing Board vs The Civcon Construction Pvt. Ltd on 17 March, 2020

Equivalent citations: AIR 2020 (NOC) 902 (CAL.), AIRONLINE 2020 CAL 195

1. The Award under challenge in this application under Section 34 of The Arbitration and Conciliation Act, 1996 (the Act) is of a learned Sole Arbitrator who was the former Chief Engineer, PWD and also of the Indo-German Basic Health Project, Department of Health and Family Welfare, Government of West Bengal on the date of delivery of the Award which was 30th September, 2010. The petitioner was the respondent in the arbitration proceeding.

2. The impugned Award is the culmination of disputes and differences which arose out of a project undertaken by the petitioner, which is a statutory body under the West Bengal Housing Board Act, 1972, for construction and installation of piles, beams, etc. up to the ground floor level of a multi-storeyed building at Kolkata. The respondent herein (claimant in the arbitration) was the successful bidder of a tender floated by the petitioner and a formal Work Order was issued by the petitioner to the respondent on 11th September, 2002. The disputes between the parties related to the laches of both sides in the completion of the projects beyond the agreed date. The respondent filed 22 claims and an amount of Rs.1,35,65,873/- in the arbitration out of which 12 claims were allowed by way of an amount of Rs.72,22,380/- to be paid by the petitioner to the respondent within three months from the date of the Award in default of which the petitioner would have to pay interest on the unpaid amount at 18% per annum till full payment. Of the 22 claims, counsel for the petitioner has primarily argued on Claim Nos. 5 and 8 as the amounts in these two claims (Rs.6,68,271/- and Rs.27,83,005/- respectively) are substantially higher than the other claims.

3. Mr. Subhabrata Dutta, learned counsel appearing for the petitioner assails the Award on the ground that the Award fails to disclose reasons for the findings arrived at by the learned Arbitrator. It is submitted that by failing to give reasons, the Award offends the fundamental policy of Indian law and is opposed to justice and morality. Counsel further submits that the Award is also patently illegal. Counsel places the relevant facts to impress upon the court that despite two extensions given to the respondent, the contract, which commenced on 4th October, 2002, was completed on 22nd May, 2004. The stipulated date of completion was 3rd October, 2003. Counsel submits that the respondent was wholly accountable for the delay in executing the work and also neglected to comply with the contractual obligations under the agreed terms of the contract. It is also submitted that the respondent failed to procure the construction materials within time which resulted in impeding the progress of the work. Counsel relies on the quantity of the work executed being recorded in a Measurement Book in accordance with which the petitioner prepared the Running Account (R.A.) Bills and payment was accordingly made to the respondent who received the same without objection.

4. Counsel challenges the Award on Claim Nos. 5 and 8. With reference to Claim No.5 relating to "claim for payment of additional boring for installation pile due to change in specification" for an amount of Rs.6,81,258.00/-, the case urged is that the rate for piles was agreed to be inclusive of the additional costs required for the extra length of boring between the existing ground level and the cut-off level by reason of which the respondent contractor was not entitled to raise additional claims for the extra length of boring work and which was also not permitted under the contractual terms. Counsel submits that in allowing this claim, the Arbitrator acted beyond the provisions of the contract and thereby against the mandate of Section 28(3) of the Act. With regard to Claim No.8 which was for a claim for payment of "welding of reinforcement bars in situ RCC bored pile" for an amount of Rs.33,34,466/-, counsel submits that the Arbitrator committed patent illegality in failing to consider Clause 16 of the Conditions of Contract under which prior approval of the petitioner was necessary for any work executed beneath the soil-level. Counsel submits that although the conditions of contract stipulated that all intersections need not be welded, the claim of the respondent contained in a letter dated 21st October, 2003 claiming that the respondent had already executed 1400 number of piles at the intersections of reinforcement bar, was accepted and allowed by the Arbitrator. According to counsel, the Arbitrator allowed Claim No.8 without any evidence which were produced by the petitioner and the Award is therefore in conflict with the public policy of India.

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5. Counsel relies on Manager, Reserve Bank of India, Bangalore Vs. S. Mani reported in (2005) 5 SCC 100, Anand Brothers Private Limited Vs. Union of India reported in (2014) 9 SCC 212 and Damodar Valley Corporation Vs. Central Concrete & Allied Products Ltd. reported in (2007) 3 Arb. LR Cal 531, for the proposition that a finding of fact or a conclusion arrived at must be based on evidence. Counsel also relies on General Manager, Northern Railway Vs. Sarvesh Chopra reported in (2002) 4 SCC 45, State of Orissa Vs. Bhagyadhar Dash reported in (2011) 7 SCC 406 and Harsha Constructions Vs. Union of India reported in (2014) 9 SCC 246, on the point of "Excepted Matters" where payment for additional work done and related issues were specifically excluded from the scope of arbitration. Counsel also relies on Associate Builders Vs. Delhi Development Authority reported in (2015) 3 SCC 49 to urge that contravention of the terms of a contract would result in patent illegality and be against public interest. Associate Builders is also relied upon for the proposition that an Award based on little or no evidence would be an invalid Award.

6. Ms. Lopita Banerji, learned counsel appearing for the respondent contractor (claimant in the arbitration) supports the Award in respect of Claim Nos. 5 and 8 on the ground that the Arbitrator awarded the said claims based on the relevant evidence contained in the "Pour Cards", which were records of measurement and other details of the work done by the respondent and signed by the representative of the parties herein. According to counsel, the Pour Cards contained the measurement of the boring and piling length and were disclosed by way of a separate "Attachment" to the Award which has been disclosed in the present proceeding. Counsel relies on specific pages from the additional volume/attachment which would show that the Pour Cards were signed by both the parties proving that there was no dispute with regard to the measurements contained in the Pour Cards. The satisfaction of the Arbitrator that the additional work was executed by the respondent was based on these Pour Cards. Counsel relies on a schematic representation of Claim No.5 to show that the respondent/claimant was required to bore from the ground level to the cut-off level for a length of approximately 0.900 m. The pile length from the cut-off till the base level was approximately 23 m; the total length of the boring being 23.900 m. The average boring from the ground to cut-off level was more than 0.900 m, approximately 1.563 m in average. Counsel submits that besides the Pour Cards, the Arbitrator also considered the oral evidence and the specific admissions of the petitioner for allowing the claim for the extra boring length of 1229.6 m and accordingly, made an Award of Rs.6,68,271/- towards Claim No.5.

7. With reference to Claim No.8, counsel submits that the said claim involved tack welding at the intersection points of longitudinal and lateral reinforcement of piles for which the respondent claimed Rs.33,34,466/-. It is submitted that tack welding was a need-based requirement and the Bill of Quantities (BoQ) indicates that tack welding was to be done wherever found to be necessary. Moreover, the respondent requested for payment for this work in October 2003, to which there was no response from the petitioner. It is further submitted that the Engineer-in-Chief together with Additional Assistant Engineers were present at site during the execution of this work. According to counsel, the claim for spot welding for 1400 piles was made on 21st October, 2003 and the entire work was completed in April/May 2004. The respondent claimed for the additional work done again in June 2004. Counsel submits that the respondent incurred substantial costs for tack welding at each intersection which would not have been possible without the consent/approval of the Engineer-in-Charge and/or the representative of the petitioner. The petitioner however rejected the respondent's claim in June 2004 after allowing the respondent to do the entire work of tack welding at the relevant point of time. The petitioner also accepted the date of completion of the work as 22nd May, 2004 without any protest or raising any dispute in respect of the tack welding. Counsel submits that the issue of "Excepted Matters" would not arise in the instant case since the work done by the respondent was accepted by the petitioner.

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8. Counsel relies on Associate Builders Vs. Delhi Development Authority reported in (2015) 3 SCC 49, on several counts including that the Arbitrator is the final authority on the quantity and quality of evidence and unless the Arbitrator's approach is found to be arbitrary or capricious or so unfair and unreasonable that it shocks the conscience of the court, the Award should be sustained. Counsel places State of West Bengal Vs. Pam Developments Private Limited reported in (2017) 4 Cal LT 366, which held that an Arbitrator has the authority not only to interpret excepted clauses but also prohibitory clauses in the contract. Counsel relies on Pravesh Kumar Sachdeva Vs. State of Uttar Pradesh & Ors. reported in (2018) 10 SCC 628 and Kanchan Udyog Limited Vs. United Spirits Limited reported in (2017) 8 SCC 237, on the point of waiver of rights after a party has acquiesced to the act complained of. SLP (Civil) No: 26424 of 2018 Shashikant Ganpat Jogal Vs. The State of Maharashtr & Ors. is placed on the point of the primary duty of a party to disclose all material facts.

9. The impugned Award has been challenged with respect to allowing Claim nos. 5 and 8 in favour of the respondent/claimant on the ground that no discernible reasons are apparent in the Award. Claim 5 of the respondent/contractor for Rs. 6, 81, 258/- was for "payment of additional boring for installation pile due to change in specification". The arbitrator considered the rates framed by the claimant/respondent under the following heads:

a) Cut off length from existing ground level - 0.900 m.

b) Minimum length of pile i.e., from cut off level to founding level - 23.00 m

c) Total boring length of pile - 23.9 m.

d) Total concreting length of pile - 23.3 m.

The arbitrator thereafter proceeded to consider the contract stipulation of a minimum pile length of 23 m which was changed to an average pile length of 22.151m while the length between the ground level and cut-off level increased from the stipulated 0.900 m which caused an increase in the unpaid bore length compared to the paid bore length involving additional work. The arbitrator further took into account that the petitioner (respondent in the arbitration proceedings) had remained silent on the change in minimum bore length. The arbitrator finally settled for an average pile length of 22.151 m in place of 22.139 m and proportionate average length of boring to be 23.018 m in place of 23.005 m and concluded that the total boring length as per tender would be 1622 (piles) multiplied by 23.018 (proportionate average length of boring) which would come to 37,335.2 m total boring length executed by the respondent and the extra boring length to be 1229.6 m (with reference to the revised claim no.2). The figure of Rs 638.72 /m taken as the rate of boring was arrived at from item no.1 of the tender. Hence the total amount awarded was Rs 638.72 x 1229.6 = Rs.7,85,370.00/- which came to Rs. 6, 68, 271.00 after deduction of the contractual percentage of 14. 91%.

10. The measurements with regard to length of boring and piling would appear from the Pour Cards which form part of the separate Attachment to the Award. The evidence of Mr. Ashim Kumar Saha, Deputy Director of the petitioner further shows that these Pour Cards were produced in the arbitration proceedings and were signed on behalf of the petitioner. The relevant point is the conclusion of the arbitrator that the respondent/claimant had done the additional work and was hence entitled to payment was based on evidence which is contained in the separate Annexure to the Award. A few of the Pour Cards containing the particulars of the piles and the boring work done by the respondent bears the signature of the petitioner's representative. The arbitrator discounted the objections of the petitioner with reference to the additional work done was therefore based on evidence including the Pour Cards. The number of piles, total and average pile length, total boring length were all part of the measurement book which also forms part of the attachment to the Award. The submission that Claim no. 5 was allowed to the extent of Rs. 6,68,271/- without any evidence is hence unacceptable as found from the evidence, both oral and documentary, which forms part of the Attachment to the Award.

11. With regard to Claim no.8 which was Rs.33,34,466/- for "payment of welding of reinforcement bars in situ RCC bored pile" the Arbitrator considered the respondent/claimant's case that welding of all the points of intersection of longitudinal and lateral reinforcement of the pile which were not contemplated in the rate amounted to additional work for which the respondent was entitled to payment. The Arbitrator calculated the number of intersection points of each pile up to 1208 and that 95% of these points would be considered as additional work and that the rate for tack welding as per PWD Schedule of Rates, 1999-2000 being Rs.2 each per point, the claim awarded would be 1425 (piles) x 1208 x 95 x Rs.2 taken with the contractual percentage of 14.91% = Rs.27,83,005.00/-.

12. The Arbitrator noted the submission of the respondent (claimant) with reference to relevant documents that the petitioner, at no point of time, issued any instructions for restricting the quantum of spot welding and that the respondent contractor would not have spot welded each and every point of intersection on its own and incurred huge expenditure without the concurrence of the petitioner. The fact that the respondent had asked for payment for the spot welding work in October 2003 and had not received any response from the petitioner till the entire work was completed was also taken into account by the Arbitrator. The Arbitrator formulated two issues; i) whether welding of reinforcement cage was necessary as mentioned in item no.1 of the price schedule of the agreement, ii) whether all the intersections of "Helical Stirrups and main reinforcement" were required to be spot welded? The Arbitrator's finding was that welding of reinforcement cage would not mean that all intersections of lateral and longitudinal reinforcement were required to be spot welded. Based on these finding, the Arbitrator concluded that the rate may be taken as inclusive of run welding of longitudinal reinforcement of cages together with spot welding of a few of the intersections and should be considered to be restricted to 5% of the points that is 60 points of intersection in a pile of average length.

13. The second aspect considered was the quantum of the work done by the respondent contractor. The Arbitrator noted that the petitioner never controverted that the respondent had executed the work of spot welding at the intersections. To simplify matters, while the respondent contractor's contention was that spot welding at all intersections was carried out on the instructions of the petitioner and the respondent was hence entitled to be paid for this work, the petitioner's case was that the work done was included in the price schedule and was therefore not payable as additional work. The Arbitrator has referred to a letter written by the petitioner on 25th June, 2004, more than two months after the entire work was executed, although the request of the respondent for payment against the additional work for 1400 piles was made on 21st October, 2003. The respondent had written a second letter for payment on 14th June, 2004 prior to preparation of the final bill. The petitioner had disputed the payment by its letter dated 25th June, 2004 by stating that the respondent was never instructed to do tack welding and welding at every intersection. The Arbitrator found the letter dated 25th June, 2004 to be contradictory and questioned the stand of the petitioner in not maintaining a record of the number of points spot welding which was essential if the petitioner intended to dispute the quantum of work executed by the respondent. The unequivocal finding of the Arbitrator was that the respondent had spot welded all intersections at the behest of the petitioner and there was no documentary evidence to arrive at any other finding. The fairness of approach of the Arbitrator is demonstrated by the observation that the respondent contractor should not have continued with the work of spot welding of intersections after its letter written in October, 2003 remained unanswered and also in view of that fact spot welding of all intersections was not necessary. The Arbitrator accordingly restricted the claim of welding work to 1425 piles which were installed up to October 2003 and proceeded to award the claim on this basis.

14. The petitioner has taken a point with regard to Clause 16 of the Conditions of Contract which according to the petitioner was not taken into account by the Arbitrator in deciding claim no.5. Clause 16 of the Conditions of Contract provides that the Contractor shall give not less than five days notice in writing to the Engineer-in-Charge "before covering up or.........................placing beyond the reach or measurement any work in order that the same may be measured..................or placed beyond the reach of measurement and shall not cover up or place beyond the reach of measurement any work without the consent in writing of the Engineer-in-Charge or his subordinate...........and if any work shall be covered up or placed beyond the reach of measurement without such notice having been given or consent obtained the same shall be uncovered at the Contractor's expense, or in default there of no payment or allowance shall be made for such work or the materials, with which the same was executed".

The Arbitrator gave his finding on this clause with reference to the Pour Cards, which recorded the measurement of piles. The Arbitrator has noted that the minimum pile length of 23 m was changed to an average pile length of 22.151 m while the length between ground level and cut-off level was increased from the stipulated 0.900 m which caused an increase in unpaid bore length compared to the paid bore length resulting in the additional work. The Arbitrator also came to a finding that the petitioner remained silent on the issue of the change in minimum pile length and because of such change, the extra boring length executed by the respondent came to 1229.6 m. The evidence in this regard contained in the Pour Cards demonstrated that the measurements were signed by both the parties which, in turn, indicated that the petitioner had waived the conditions in Clause 16 of the Contract. The petitioner's acquiescence to the works done by the respondent and allowing it to complete the entire work before raising an objection under Clause 16 of the contract fits in with the principles enunciated in Pravesh Kumar Sachdeva and Kanchan Udyog Limited. [

15. The present proceeding rests on the sole ground that the Award is liable to be set aside for failing to disclose the reasons in support of the claims awarded. The impugned Award, read without the documents contained in the Attachment, may have fallen within the infirmity envisaged under Section 31(3) of the Act read with the grounds contemplated under Section 34(2)(b)(ii) and 34(2-A), namely, an Award in contravention with the fundamental policy of Indian law and being vitiated by patent illegality appearing on the face of the Award. The findings read without the supporting documents, may appear to be abrupt but read in conjunction with the "Attachment" referred to in the second last page of the Award as;

"Separate bound volume containing copies of records as mentioned in sl.3 of this Award i.e., minutes of sittings, appointment letter of the sole Arbitrator, notice from the arbitrator intimating date and time of publication of Award and Order no.15 dated 15.1.2007 issuing rule on an application from the respondent under Section 16(2) & 16(3) of Arbitration and Conciliation Act, 1996."

and the relevant documents contained in the Attachment, the findings become clear and the factual backdrop against which the findings were given become easy to understand. Even otherwise, the body of the Award mentions these records and documents under the heading "List of other Record" which lists 30 documents including correspondence between the parties as well as these Pour Cards submitted on 17.02.2010 with copy to the petitioner (item no. xxix). The Pour Cards also find mention in the cross-examination of the petitioner's witness at Q.217 and Q.236 which record that the original Pour Cards were produced by the petitioner's witness. The copies of the Pour Cards are containing the data of piles executed from the sizable portion of the Attachment. The measurement of the work executed by the respondent with reference to Claim no.5 is contained in the Measurement Book which is also a part of this Attachment. Besides referring to the Pour Cards, the Arbitrator has also referred to specific correspondence between the parties for coming to the findings. Each of the findings has been given with reference to the stand of the petitioner/respondent as evident from letters written by it. None of the findings can be said to be perverse as being contrary to the evidence before the Arbitrator or such that no reasonable man could have arrived at in the face of the evidence before him. The extent to which the Arbitrator has engaged in the factual particulars of the matter would be evident from the manner in which the Arbitrator as reduced Claim no.8 from Rs.33,34,466.00/- to Rs.27,83,005.00/- by restricting the amount of work done/piles installed up to October 2003. The reason given for such reduction is that the claimant/respondent should not have continued with the work of spot welding of intersections when its letter seeking payment for additional work written on 21.10.2003 was not responded to by the petitioner. The Arbitrator therefore rejected the claim for the work done beyond October 2003. The awarding to the sums for Claim nos.5 and 8 are also supported by painstaking calculations taking into account various factors including PWD rates for 1999- 2000, contractual terms and the executed work as reflected from the Pour Cards and measurement books. The conclusions drawn from the letters dated 2nd June, 2004 and 25th June, 2004 of the petitioner to the respondent accepting the date of completion as 22nd May, 2004 and rejecting the claim for payment of the respondent only after the entire work was completed, are by no means arbitrary or one which defies logic. The said letters demonstrate that by accepting the work executed by the respondent, the petitioner waived its rights under the contractual terms.

16. It is now a settled position of law that a court in a section 34 jurisdiction can only upend an Award if the court finds that the Award is bereft of reasons or is so unfair and unreasonable that it shocks the conscience of the court. An Award may also be set aside if it rests on evidence and conclusions therefrom which no reasonable person could possibly have arrived at. Judicial decisions have also reinforced that the Arbitrator is the ultimate master of the quality and quantity of evidence and unless the Arbitrator's approach is found to be arbitrary or capricious, a court will not reopen the facts which have been argued before the Arbitrator. This curtailment of the court's powers has now been engrafted in section 34 itself (reference explanation 2 and the proviso to Section 34(2-A). It has also been settled that excepted clauses cannot be taken as sacrosanct and are open to interpretation by the Arbitrator. There is also nothing in the Award which makes it patently illegal with such patent illegality appearing on the face of the Award. In the considered view of this court, the impugned Award is replete with reasons and the contention of the petitioner that the Arbitrator has not disclosed the evidence for coming to the findings cannot be accepted. The ground of challenge namely that the findings arrived at are not supported by any evidence is belied by the minutiae discernible from the award and the painstaking manner in which the arbitrator has buttressed his findings with reference to the relevant documents including the tender documents, the annexures to the claim, the Statement of Fact (referred to as 'SOF' in the Award) and the 'Pour Cards' recording the measurements of the piles.

17. Anand Brothers elaborated on the contextual significance of the expression "finding" involving a determination by a judge of a fact supported by the evidence in the record. The reason for the reliance on this decision would have been relevant if the findings of the Arbitrator in this case were not supported by reasons or were found to be dehors the evidence on record. Anand Brothers clarified that even an erroneous finding would nonetheless be a finding since what is important is that a finding pre-supposes application of mind. On perusing the Award and the findings arrived at by the Arbitrator, there is no reason to hold that findings do not disclose that the Arbitrator applied his mind to the materials before him.

18. In Pam Developments, a Division Bench of this Court discussed the effect of 'No Damage' or prohibitory clauses in government contracts and restricted the ratio of Sarvesh Chopra (which has been relied upon by the petitioner) to section 20 of the old Act of 1940 under which the court retained a residuary authority to adjudicate whether a dispute could be referred to arbitration. The Division Bench further held that prohibitory clauses were open to interpretation by the arbitrator. The argument of the petitioner that the respondent contractor was not entitled to make certain claims cannot therefore be seen as an absolute bar on the strength of excepted matters. The dictum in Pravesh Kumar Sachdeva and Kanchan Udyog lend credence to the facts in the present case; of the petitioner acquiescing to the extra work done by the respondent thereby foregoing the right available to it, compounded by the fact of the petitioner having accepted and taken the benefit of the work done is estopped by conduct to object to the same. In Harsha Constructions, the disputed clause which was held to be non-arbitrable was concerned with an appeal available to the dissatisfied contractor in relation to the final rate offered by the Engineer of the employer. The Supreme Court accordingly held that no finality had been reached regarding the rates when the arbitrator decided the issue. The Supreme Court in Bhagyadhar Dash was of the view that the clause in question was never intended to be an arbitration agreement as the State Government had deleted the arbitration clause from the Standard Conditions of Contract by way of a Memorandum in 1981. The Court therefore held in this backdrop that it would be a travesty of justice to read another clause providing for determination of rates as a provision for arbitration. The proposition in Damodar Valley Corporation, S. Mani and Anand Brothers of reasons forming the basis of a conclusion has been reinforced in numerous decisions. The said proposition would however be relevant if the Award impugned is one which falls short of this requirement. Associate Builders, shown by both the parties before this Court, has been relied on for the master-y of evidence being within the domain of the arbitrator and for the test of perversity, namely such a decision that no reasonable person could take into account. The petitioner has also stressed on this decision on an award being falling under the patent illegality condition under section 34 for being contrary to the terms of the contract.

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19. A relevant question which would arise is whether a lack of facility with the English language would render an Award susceptible to challenge as unintelligible and thereby insufficient. This court is of the view that as long as the findings refer to the relevant evidence and a reasonable conclusion is drawn from such evidence, an Award should be sustained even if the reasons fall short of an expected standard of articulation in the particular language in which the Award is written.

20. Although the petitioner has urged only claim nos.5 and 8, the other claims have been included in two Notes of Submissions. The reason for challenging the other claims awarded is also on the ground that the Arbitrator has not demonstrated the reasons for coming to the conclusions in the other claims. This ground is belied from a reading of the Award which shows that the Arbitrator has gone into commendable details with reference to each and every claim, including detailed arithmetical calculations for allowing or rejecting the claims. The Attachment to the Award contains a bunch of records which constitutes the evidence adduced by the parties and the reasons for the findings of the Arbitrator are based on such records. The challenge made to the other claims is, therefore, rejected for the same reason as Claim nos.5 and 8.

21. In view of the above discussion, this Court finds no reason to interfere with the impugned Award or the findings of the learned Arbitrator on any of the available grounds under Section 34 of the 1996 Act. A.P. No. 810 of 2010 is accordingly dismissed without any order as to costs.

Urgent Photostat certified copy of this Judgment, if applied for, be supplied to the parties upon compliance of all requisite formalities.

(MOUSHUMI BHATTACHARYA, J.)

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