Telangana High Court
The Municipal Corporation Of Hyderabad ... vs R.S.Rangadas And Another on 27 January, 2025
Author: P.Sam Koshy
Bench: P.Sam Koshy, N.Tukaramji
THE HONOURABLE SRI JUSTICE P.SAM KOSHY
AND
THE HONOURABLE SRI JUSTICE N.TUKARAMJI
CIVIL MISCELLANEOUS APPEAL Nos.106 and 215 of 2006
and CIVIL REVISION PETITION Nos.1210 and 1599 of 2006
COMMON JUDGMENT:(Per Hon'ble Sri Justice N.Tukaramji) We have heard Mr.B.Adinarayan Rao, learned counsel for the appellant/respondent No.1 and revision petitioner/petitioner in C.M.A.No.215 of 2006 and C.R.P.No.1210 of 2006 respectively. Also heard Mr.Srinivasa Rao Bodduluri, learned counsel for the appellant/petitioner and revision petitioners/respondent Nos.1 and 2 in C.M.A.No.106 of 2006 and C.R.P.No.1599 of 2006 respectively.
2. The appeals and revision petitions are against the common judgment dated 26.09.2005 in O.P.No.30 of 1996 and O.P.No.10 of 2000 passed by the learned XI Additional Senior Civil Judge, Fast Track Court, City Civil Court, Hyderabad. Thus, these matters are heard together and are being decided by this common judgment.
2 PSK,J & NTR,J Cma Nos.106 and 215 of 2006 and Crp Nos.1210 and 1599 of 2006
3. C.M.A.Nos.215 of 2006 and 106 of 2006 are filed assailing the decree and judgment dated 26.09.2005 in O.P.No.10 of 2000, on the file of XI Additional Senior Civil Judge, Fast Track Court, City Civil Court, Hyderabad.
4. C.R.P.Nos.1210 and 1599 of 2006 are filed challenging the decree and judgment dated 26.09.2005 in O.P.No.30 of 1996 passed by the XI Additional Senior Civil Judge, Fast Track Court, City Civil Court, Hyderabad.
5. C.M.A.No.215 of 2006 and C.R.P.No.1210 of 2006 are filed by the appellant/petitioner/contractor (hereinafter be referred as 'the petitioner/contractor'), whereas C.M.A.No.106 of 2006 filed by the respondent No.1-Municipal Corporation of Hyderabad and C.R.P.No.1599 of 2006 filed by the respondent Nos.1 and 2- Municipal Corporation of Hyderabad and its Chief Engineer (hereinafter be referred to as 'the respondent Nos.1 and 2').
6. The case facts in brief are that the Municipal Corporation of Hyderabad, through its Chief Engineer/respondent Nos.1 and 2 have called for tender for construction of Road Over Bridge at Begumpet level crossing at Hyderabad and on successful bid the 3 PSK,J & NTR,J Cma Nos.106 and 215 of 2006 and Crp Nos.1210 and 1599 of 2006 work was entrusted to the petitioner/contractor vide agreement No.3/CE dated 17.12.1981. However, the site was entrusted even before the date of agreement i.e. on 10.10.1981 and the construction work of bridge was completed by 20.10.1985. In regard to unagreed claims, the petitioner/contractor invoked arbitration clause and filed suit vide O.S.No.126 of 1989 for appointment of sole Arbitrator. Accordingly, the Arbitrator was appointed and after due proceedings, the arbitration award was passed on 28.01.1996 in favour of the petitioner/contractor granting Rs.89,19,792/- with interest at 18% per annum.
7. Thereupon, the petitioner/contractor instituted O.P.No.30 of 1996 with a prayer to declare the award as Rule of Court. In contrast, the respondent Nos.1 and 2 filed O.P.No.10 of 2000 with a prayer to set aside the award on the grounds of Arbitrator misconducted himself and by not referring to material documents biasedly passed the award.
8. The Court below on considering the claims of both the parties passed the impugned common judgment partly allowing the petition in O.P.No.30 of 1996 by making the award a Rule of Court excluding the claim for refund of cost of bearings at 4 PSK,J & NTR,J Cma Nos.106 and 215 of 2006 and Crp Nos.1210 and 1599 of 2006 Rs.8,27,640/-, correspondingly partly allowed the O.P.No.10 of 2000. Aggrieved by the dismissal of claim No.1, the petitioner/contractor preferred C.M.A.No.215 of 2006 and dismissal of the petition to make the award Rule of Court to that extent, filed C.R.P.No.1210 of 2006.
9. On the other hand, the respondent Nos.1 and 2 challenging the dismissal of their petition to set aside the rest of the award (i.e. Claim Nos.2, 4 to 11) filed C.M.A.No.106 of 2006 and correspondingly in awarding the Rule of Court filed C.R.P.No.1599 of 2006.
10. Learned counsel for the petitioner/contractor would contend that the Court below fell in error in setting aside the awarded amount under Claim No.1 and refusing to make that portion of the award as Rule of Court. He contested that the Court below ought not have interfered with the award without establishing any of the factor specified in Section 30 of the Arbitration Act, 1940. He pleaded that the tender was not called as lump sum but item-wise and the tenderer was prohibited to include rates or lump sum amount which is not part of the schedule, as per the Clause No.17 of the agreement. The schedule-A has specified the items, 5 PSK,J & NTR,J Cma Nos.106 and 215 of 2006 and Crp Nos.1210 and 1599 of 2006 as such, including the cost of bearings and fixings do not apply as per Clause No.8 of the special conditions, thus, the petitioner/contractor's claim is justified. The Court below should have held that in the case of conflict of Clauses of the agreement, the general principles of interpretation would be applicable, as such, Clause No.8 will not have application as it would be applicable in lump sum contract. The cost of bearings and fixtures is not included in schedule 'A' of the tender, treating the cost and fixation of bearings as other work. Therefore, such work should be treated as additional, and expenses are to be paid by the respondent Nos.1 and 2. For such reason, the findings of the Court below in regard to Claim No.1 are contrary to the terms of contract. Hence, the intervention of the Court below in regard to Claim No.1 is unsustainable and prayed for setting aside the rejection of the award in respect of Claim No.1 and to make the entire award as Rule of Court.
11. Learned counsel for the respondent Nos.1 and 2 would submit that the Court below failed to consider that the arbitration award was passed beyond the materials on record. The Arbitrator ought not to have allowed the claim No.2 on the 6 PSK,J & NTR,J Cma Nos.106 and 215 of 2006 and Crp Nos.1210 and 1599 of 2006 assumption of escalated rates as the completion of work was beyond the agreement period. Further, the amplified rates can be awarded only for balance of total value of work in the agreement i.e. Rs.1.28 crores minus Rs.93,81,848/-. In addition, the Court below should have taken into account the material supplied for the construction constitute 70% of the value, as such, confirming the award without considering the written submissions of the respondent Nos.1 and 2 is apparently improper. The Court below failed to observe that the Arbitrator erred in considering the work done even after 31.12.1983 while awarding the raised rates. The Arbitrator erred in accounting the total value of work beyond the estimated contract value by fixing 13.8%, excess over the estimated contract value, which is unacceptable as per Clause 59 of the contract. That apart, the petitioner/contractor failed to put the respondent Nos.1 and 2 on notice about the augmented rates for balance of work and should have implemented Clause No.69, which prohibits grant of interest, called upon by the petitioner/contractor. The Court below should have observed the Clause No.63 provides for settlement of rates for supplementary items of work and the petitioner/contractor is bound to execute supplementary agreement as per Clause No.6 of the general 7 PSK,J & NTR,J Cma Nos.106 and 215 of 2006 and Crp Nos.1210 and 1599 of 2006 conditions of agreement and the rates to be arrived as per the formula in that Clause. Further explained that, the schedule 'A' of the agreement is prescribing the approximate quantities subject to additions or deductions and for any added quantities the cost is supposed to be paid as per Clause No.6 of general conditions of the agreement. Therefore, the award is contrary to the agreement, for that reason, the arbitral award shall be set aside in toto and in consequence, the order as to making the award, Rule of Court.
12. We have carefully considered the submissions of the learned counsel and perused the materials on record.
13. In the above noted rival contest, the Points fall for determination are:
1) Whether setting aside the arbitral award dated 28.01.1996 so far as Claim No.1 by the Court below is sustainable?
2) Whether the arbitral award passed is liable to be set aside as contested by the respondent Nos.1 and 2?
3) Whether the impugned judgment is sustainable in the facts in law?
8 PSK,J & NTR,J Cma Nos.106 and 215 of 2006 and Crp Nos.1210 and 1599 of 2006 Point No.1 :
14. The petitioner/contractor sought relief by presenting claims towards (i) refund of cost of bearings; (ii) payment of extra percentage over rates of agreement; (iii) establishment and over-head charges; (iv) payment of interest on delayed payments;
(v) supplementary items in respect of works not covered by agreement; (vi) rates for the items executed over and above agreement quantities; (vii) general damages on account of loss of profit; (viii) to (xi) the bill amount due with interest and interest on the sums due, respectively.
15. The Arbitrator had rejected claim Nos.(iii) and (vii) i.e. establishment and over-head charges, general damages on account of loss of profit and allowed the other claims awarding Rs.89,19,792/- with interest at 18% per annum on all the claims from the date of completion of work till the date of realization. The petitioner/contractor has accepted the award.
16. Nonetheless, the respondent Nos.1 and 2/employer principally agitated the award on the ground of the Arbitrator had gone beyond the terms of agreement.
9 PSK,J & NTR,J Cma Nos.106 and 215 of 2006 and Crp Nos.1210 and 1599 of 2006
17. Before proceeding to valuate the merits, it would be appropriate to call upon the settled position of the Court's jurisdiction under Sections 30 and 33 of the Arbitration Act, 1940.
18. On this aspect, the Honourable Apex Court in M/s. S.D.Shinde Tr. Partner vs. Government of Maharashtra and others 1 in Para Nos.23 and 24 held as follows:
23. It is axiomatic that courts, while adjudging whether an arbitration award calls for interference has to be conscious that the arbitrator is the sole judge of facts; unless an error of law is shown, interference with the award should be avoided. In Bijendra Nath Srivastava v Mayank Srivastava 2, it was observed, "If the arbitrator or umpire chooses to give reasons in support of his decision it would be open to the court to set aside the award if it finds that an error of law has been committed by the arbitrator umpire on the basis of the recording of such reasons. The reasonableness of the reasons given by the arbitrator cannot, however, be challenged. The arbitrator is the sole judge of the quality of the evidence and it will not be for the court to take upon itself the task of being a judge of the evidence before the arbitrator. The court should approach an award with a desire to support it, if that is reasonably possible, rather than to destroy it by calling it illegal. [See Champsey Bhara & Co v Jivraj Baloo 1 2023 (INSC) 751 2 1994 Supp (2) SCR 529 10 PSK,J & NTR,J Cma Nos.106 and 215 of 2006 and Crp Nos.1210 and 1599 of 2006 Spq and Wvg. Co. Ltd. (AIR 1923 PC 66); Jivrajbhai Ujameshi Sheth v Chintamanrao Balaji (1964 (5) SCR
480); Sudarshan Trading Co v Govt of Kerala (1989 (2) SCC 38); Raipur Development Authority v Chokamal Contractors (1989 ((3) SCR 144); and Santa Sila Devi v Dhirendra Nath Sen (1964 (3) SCR 410)."
24. It is also noteworthy that the scope of jurisdiction of a court, under Section 30/33 of the Act, never extended beyond discerning if the award disclosed an "error apparent on the face of the award" which is an "error of law apparent on the face of the award and not an error of fact. The error of law can be discovered from the award itself or from a document actually incorporated therein." (Refer to Trustees of Port of Madras v Engineering Constructions3). In the facts of the present case, the award did not, facially disclose any error of law; damages were awarded in accordance with principles embodied in law, and the findings were based on the evidence placed before the tribunal. The ruling of the trial courts and the High Court is nothing short of intense appellate review, which is impermissible in law and beyond the courts' jurisdiction.
19. In the light of above settled propositions, the case facts on hand need assessment. In claim No.(i), the petitioner/contractor prayed for refund of Rs.8,27,640/- towards the cost of bearings contending that the respondent Nos.1 and 2 deducted the cost of bearings without any basis.
3 1995 (Supp 2) SCR 672 11 PSK,J & NTR,J Cma Nos.106 and 215 of 2006 and Crp Nos.1210 and 1599 of 2006
20. Before the Arbitrator, the claim of the petitioner/contractor was that the respondent Nos.1 and 2 invited lump sum tender on Item-wise rate basis incorporating (31) conditions and the Schedule 'A' covered 27 items. Clause 17 of Tender Notice reads as follows:
"17. Tenderers offering a percentage deduction from or increase on the estate amount and, those not submitted in proper form or in due time will be rejected. Rates of lump sum amounts for items not called for shall not be included in the tender. No alteration, which is made by the tenderer in the contract form, the conditions of contract, the drawings, specifications, or quantities accompanying same will be recognized; and if any such alterations are made, the tender will be void."
In the Schedule 'A', Clause (a) reads as follows:
"(a) The quantities here given are those upon which the lump sum tender cost of the work is based, but they are subject to the alterations, omissions, deductions or additions as provided for the condition of this contract and do not necessarily show the actual quantities of work to be done.
The unit rates noted below or those governing payments for extra or deductions for omissions according to the conditions of the contract, as set forth in the preliminary specification of A.P.D.S.S. and other conditions or specifications of this contract."
12 PSK,J & NTR,J Cma Nos.106 and 215 of 2006 and Crp Nos.1210 and 1599 of 2006
21. As part of Special Conditions for Tenders for Departmental Design in Clause (8), it is specified that the lump sum amount quoted must include the cost of bearings for the bridge and the bearings will not be supplied by the Department.
Additional Condition (6) reads as follows:
6. Tenderers offering a percentage deduction from or increase in the estimate amount and these not submitted in the prescribed form in due time will also be rejected. Rates of lumpsum amounts for items not called for shall not be included in the tender. No alterations which is made by the tenderer in the tender form or in the time allowed for carrying out the work or in the conditions of contract, the drawings specifications or quantities accompanying the same or containing, other conditions of any sort will be recognised and, if any such alterations are made, the tender will be void.
22. The Tender Notice, Schedule 'A', Special and Additional Conditions were mutually agreed by the petitioner/contractor, respondent No.2/Chief Engineer and affixed their signatures. Clause 17 of Tender Notice is clarifying that rates or lump sum amounts in regard to the items not called for, shall not be included in the tender and the special condition is prescribing that the lump sum amount quoted must include the cost of bearings for the bridge. This stipulation cannot be stretched to read that the 13 PSK,J & NTR,J Cma Nos.106 and 215 of 2006 and Crp Nos.1210 and 1599 of 2006 petitioner/contractor is prohibited to include the amounts in lump sum is not included in the schedule.
23. Clause 17 of Tender Notice, Additional Condition (6) and Preamble of Schedule 'A" are referring to rates of lump sum amount against the petitioner/contractor's claim that the tender was an item-wise basis.
24. A harmonious reading of the averments in Clauses are evidencing that the quote of lump sum amount would include cost of bearings. But in the Tender, it has been specified that the items, which are not called for, shall not be included in the Tender. Therefore, as the Bearing in the bridge is an item called for as part of lump sum amount, it would be an item in the tender. As such, the petitioner/contractor would have included the cost of bearings in the lump sum amount proposed in Tender. For the aforesaid, the claim of the petitioner/contractor for considering the bearing as an item not called for, not covered in Schedule 'A' but made use in execution of contract shall be reimbursed with costs, is unacceptable.
14 PSK,J & NTR,J Cma Nos.106 and 215 of 2006 and Crp Nos.1210 and 1599 of 2006
25. That apart, as per the Clause (8) of the Special Condition, the petitioner/contractor has to bear the expenses of bearings as part of lump sum quoted amount and as the bearings were supplied deducting that portion by the respondent Nos.1 and 2 has to be held within the scope of agreement. Reading beyond terms of contract would certainly be a ground to hold that the Arbitrator had exercised excess of jurisdiction. In this view, it shall be held that the Court below had considered this issue in right perspective. In effect, the conclusion recorded in the impugned common judgment on this aspect deserves affirmation. Point No.2:
26. In regard to other claims, though the respondent Nos.1 and 2/employer contested that the material evidence has not been properly considered by the Arbitrator, failed to make out any specific case and in the impugned common judgment the Court below categorically observed that the contentions raised by the respondent Nos.1 and 2 are pointing to reassessment and re-appreciation of the cause determined by the Arbitrator. Further, there is no specific circumstance evidencing the Arbitrator's misconduct in determining the reference. In absence 15 PSK,J & NTR,J Cma Nos.106 and 215 of 2006 and Crp Nos.1210 and 1599 of 2006 of error apparent, the Arbitral award shall be final on both facts and law and intervention is impermissible without substantive material indicating dissolute exercise of jurisdiction by the Arbitrator and mere availability of an alternative view is not a ground to review the award under Sections 30/33 of the Arbitration Act, 1940.
27. Furthermore, the Court below by citing the settled propositions in the authorities held that "Regarding quantum of interest, this Court feels that the rate @ 18% p.a. on the award amount (except on claim No.1) from the date of completion of work. But the above rate of interest is permissible, till date of decree only."
28. To note, the interest granted by the Arbitrator on delayed payments has been affirmed by the Court below in the impugned common judgment by reading Section 73 of the Indian Contract Act, 1872. Therefore, the contentions raised by the respondent Nos.1 and 2 against the award, interest granted and the findings of the Court are failing on merit.
16 PSK,J & NTR,J Cma Nos.106 and 215 of 2006 and Crp Nos.1210 and 1599 of 2006 Point No.3 :
29. For the foregoing reasons, we are of the considered view that the Court below has rightly exercised its jurisdiction within the scope of Sections 30/33 of the Arbitration Act, 1940 in ascertaining the contentions raised by the petitioner/contractor and the respondent Nos.1 and 2. In the absence of impropriety or illegality, the impugned common judgment deserves affirmation and is accordingly confirmed.
30. Resultantly, C.M.A.Nos.106 and 215 of 2006 and C.R.P.Nos.1210 and 1599 of 2006 are dismissed. There shall be no order as to costs.
As a sequel, pending miscellaneous applications if any, stands closed.
_______________ P.SAM KOSHY, J _______________ N. TUKARAMJI, J Date : 27.01.2025 svl