M/S Alkarma vs M/S Mohan Lal Harbans Lal Bhayana & Co. on 29 August, 2012

[Cites 6, Cited by 1]

Delhi High Court

M/S Alkarma vs M/S Mohan Lal Harbans Lal Bhayana & Co. on 29 August, 2012

1. M/s. Mohan Lal Harbans Lal Bhayana & Co. ('MHB') has filed objections under Sections 30 and 33 of the Arbitration Act, 1940 ('1940 Act') in IA No. 8382 of 2000 to an Award dated 31st August 1999, passed by the sole Arbitrator in the disputes between the Plaintiff, M/s Alkarma ('ALK') and MHB arising out of an agreement dated 24th November 1988 and supplementary agreements dated 13th May 1990 and 22nd June 1993 between the parties concerning the execution of Aluminium works in the Twin Tower Project of the Standing Conference on Public Enterprises ('SCOPE') at Laxmi Nagar, Delhi.

Background Facts

2. SCOPE invited tenders for construction of a twin-tower office complex at Plot No. 2, Laxmi Nagar District Centre, Delhi. SCOPE appointed Bhardwaj Bhardwaj & Associates (P) Ltd. (hereinafter 'Architects') to prepare the drawings, specifications and schedule of quantities. Larsen & CS (OS) No. 2122 of 1999 Page 1 of 31 Toubro ('L&T') were awarded the contract for complete execution of the Twin Tower Office Complex. MHB was engaged as a contractor authorized to carry out and execute some of the ancillary works under the contract. Sub Head 8 (Sl. No. 8.1 to 8.8) pertaining to the Aluminium work was sub- contracted by MHB to ALK for the final price of Rs. 5,13,22,953.80. The bill of quantities ('BOQ'), specifications, drawings etc. which were furnished with the tender and duly signed by the parties formed part of the contract dated 24th November 1988 entered into between MHB and ALK. It was agreed that the actual payment would be based on the unit rates and the quantities of work executed.

Clauses of the Contract

3. Under Sub Head A, Clause 12 (b) of the agreement the Architects were to, from time to time, issue supplementary drawings/written instructions, details, directions and explanations, collectively referred to as 'Architects' Instructions'. ALK was to forthwith comply with and duly execute the works as per Architects' Instructions, provided always that in case of verbal instructions given to ALK they were to be confirmed in writing.

4. Sub Head B, Clause 7 provided for the termination of the contract. One of the contingencies was that if ALK, after having been given a notice in writing to rectify any defect of work, omitted to comply with the requirement of such notice for a period of seven days thereafter or delayed the execution of the work and "in the judgment of L&T/MHB (which shall be final and binding)" was unable to secure completion of the work by the stipulated date, or committed breach of any of the terms of the contract, MHB would terminate the contract. Upon such termination or rescission, the security deposit furnished by ALK would be forfeited. ALK was obliged to employ labour paid by MHB and to supply materials to carry out the work or any part of the work, and the determination of such cost by MHB CS (OS) No. 2122 of 1999 Page 2 of 31 was to be final and conclusive against ALK provided that the action was to be taken only after giving notice in writing to ALK. The unexecuted work could be given to another Contractor for completion and the cost thereof shall be borne by ALK through adjusting the security deposit and by way of reduction of any money due to ALK by MHB under the contract or any other contract whatsoever. In such an event ALK was deemed to have no claim for compensation for any loss sustained by it by reason of having purchased or procured any materials by entering into any engagement or made any advances on account or with a view to the execution of the work or performance of the contract. ALK was not entitled to recover any sum for any work not actually performed under the contract unless and until the Architects certified in writing and this was further approved by MHB/L&T. ALK was entitled to be paid the value to the extent certified in writing. For extension of time ('EOT') for completion of the work ALK was to apply in writing to the Architects and to L&T/MHB within ten days of the date of hindrances. The Building Committee of SCOPE was to be the final binding authority as regards such EOT.

5. Under Sub Head B, Clause 9 it was made clear that the contract was an item rate contract and that the rates unless otherwise provided in the description of various items of work shall be for completed items of works covering all materials, labour, carriage, royalties, fees, rent, sales tax, octroi etc., as well as general liabilities/obligations and risks arising out of the conditions of the contract. Under the said clause, no extra charges whatsoever consequent on any misunderstanding or otherwise were to be allowed. The rates of various items of works, were to hold good irrespective of the quarry or sources from which the materials were supplied.

6. Under Clause 30 of the Special Conditions of Contract ('SCC'), the rates to the different items "shall be for all heights, floors, depth, shapes and CS (OS) No. 2122 of 1999 Page 3 of 31 forms widths and lifts unless otherwise specified against the item". No extra payment was to be made for any shape work, pattern design circular/curved shape of structure including curvilinear walls, beams, slabs, windows etc. and for any additional labour, materials, equipment etc. on this account."

7. Under Clause 31 of the SCC, aluminium work was to be completed in all respects. It was specified that "all items of aluminium 'window/glazing with the item provision of openable windows, shall cover all types of openable windows except sliding windows". Nothing extra was to be paid on the above accounts. Fresh samples were to be got approved from the Architects/L&T/MHB whenever the type or make or source of any material was changed.

8. Under Clause 33 of the SCC, it was stated that the quantities indicated in the schedule of quantities were tentative. L&T/MHB had the right on the advice of Architects "to totally omit any item or increase/decrease any item or Schedule of Quantities without any limit, subject to that as a result of minimum increase and decrease in quantities given in the schedule of the agreement, substituting any extra items, the total variation shall not exceed 20% of contract value and that variation in each sub head or schedule of quantities is within 50% of the value of same sub head as per the agreement". ALK was to execute the work as required on the tendered rates and no extra claim of damages would be admissible.

9. Under Clause 34 of the SCC concerning 'Extra/Substituted Item', it was stated that if the contract at any stage involved the creation of any extra items/substituted items ('EI/SI'), ALK was to inform the Architects through L&T/MHB in writing before executing such items. Under this clause in such an event ALK was to send its rates claimed under the contract with copy to L&T/ MHB in accordance with Clause 12 of the agreement. Under CS (OS) No. 2122 of 1999 Page 4 of 31 Clause 35, it is stated that wherever 6mm plain glass had been specified or indicated in the schedule of quantities, 5.5 mm thick plain glass of the same specifications could be used.

10. The date of commencement of the contract was stipulated as 1st December 1988 and the period of completion was fifteen months thereafter, i.e., up to 28th February 1990 and the value of work for interim certificate/running account bill was Rs. 25 lakhs. Five per cent of the gross value of work including earnest money was to be retained as security deposit. Appended to the agreement were the 'Special Specifications for Anodized Aluminium work'. Aluminium work shall be deemed to include in various items complete work including fittings, fixtures, stays, locks, handles, special hinges floor springs, neoprene/rubber linings, gaskets etc. as directed and approved by the Architects through L&T/MHB. ALK was to prepare detailed drawings of proposal using suitable sections based on architectural designs, drawings and adequate to meet the performance and other specifications for the work after taking into consideration the varied profiles of aluminium sections being excluded by approved manufacturers. These drawings were to be submitted to the Architects through L&T/MHB for approval. In case it was proposed to provide any alternative to substitute any aluminium section which was specified for the curtain wall, it would be subject to the approval of the Architects through L&T/MHB.

11. Under sub-Clauses (a) & (b) of Clause 4 of the special specifications, it is provided that:

"(a) The curtain wall type or Exterior facade glazing cum paneling as per item No.8.1 to 8.2 of the schedule of quantities comprises of Anodized Aluminium framing, fixed glazing, openable windows and matching Anodized Aluminium cladding panels. The Architectural drawings shows the design configuration of the frame work, fixed glazing, openable windows and panel cladding with certain ......specification and CS (OS) No. 2122 of 1999 Page 5 of 31 performance parameters within which the work is required to be executed. The Aluminium frame work has to be fitted to a back up of steel box framing provided separately as a structural strengthening system to the Aluminium glazing cum paneling facade. The steel framing is not included in this item and paid separately.

(b) The curtain wall shall adequately withstand with load under Delhi conditions acting inward and outward. The deflection of any framing member shall not exceed I/176 of the span nor shall be panel deflection exceed I/60 of the span. The curtain wall shall provide thermal expansion and contraction of components as will be caused by the maximum ambient temperature variations in Delhi without causing buckling, stress on glass, failure of joint Sealants, undue stress on structural elements or other detrimental effects and will include all Neoprene wedges, gaskets, nibs, beads, sealants, taps, fixtures etc. complete as required and approved by Architects/ L&T/MHB".

12. The other specifications as regards the curtain wall were:

"For use in Anodized Aluminium items like doors, windows curtain wall, glazing cum panelling, hand rails etc. the Sections as proposed in Architectural drawings and shop drawings manufacturer shall be assessed and approved by Architects/ L&T/MHB taking into consideration the design requirements nature of competent, overall size of glazing door, windows, etc. however as a guide these sections will normally (but not restricted to) have weight varying between:

        i.      Fixed Glazing 2 Kg/mt.
        ii.     Side hung windows .85 Kg/ to 1.5 Kg per metre.
        iii.    Doors, 1.4 Kg to 2.5 Kg per metre.
        iv.     Doors with 12mm glass 3 Kg. to 4 Kg. per metre.
        v.      Curtain wall glazing - 2 Kg - 3 Kg per metre.
        vi.     Extruded exterior wall facing panelling - 7-10 Kg. per Sq. mt.
        vii.    Aluminium Handrail 1 to 2 Kg. per metre."

13. The schedule of quantities specified under Sub Heading 8.1 were:

"Providing and fixing suitably to steel pack up framing fixed to straight-curviliner building structure, anodized aluminum curtain wall type glazing cum panelling vertical/inclined as per Architects design in bronze colour/approved colour (anodizing CS (OS) No. 2122 of 1999 Page 6 of 31 with Electro colour process with minimum anodic coating of 25 microns) of approved aluminium sections of profile extruded as suitable for such glazing with adequate weight of sections and to withstand wind velocity and provide complete waterproofing with the system to the full satisfaction of the Architect, Curtain wall glazing cum panelling shall include provision of upto 25% area of openable top hung or side hung window shutters and the work is to be complete fixing of 6mm thick Heat Reflecting Glass/Tinted Glass and aluminium panelling with matching anodized shape Beading, neoprene gaskets and lining at junction of aluminium glazing with steel frame backing by neoprene/rubber and necessary sealants to provide complete waterproof facade with necessary arrangements to withstand contractions/expansion in the structure/steel frame backing and providing of glass/aluminium panel cladding is not included in the item and paid for separately as per item No.8.2."

First Supplementary Agreement

14. On 13th May 1990 a supplementary agreement was entered into between MHB and ALK taking into account the fact that ALK had not been able to complete its work in terms of the agreement dated 24th November 1988 due to delay in construction of structure work. It was agreed between the parties that escalation and compensation would be payable by MHB. MHB was to compensate for increase in prices of all aluminium work up to 13th May 1990. ALK would be paid an extra amount as under:

"(i) ... the actual difference of rates increased based on the modified rates of the company between the periods 18.10.88 and 13.5.90, of the actual quantity of aluminium used in the building and in addition to this a lump sum amount of Rs.25,00,000.00 will be released in stages on a pro-rata basis of the value of work executed for aluminium, except on glass. No further increase in prices of aluminium, will be payable separately till the work is completed beyond the provisions made above. The Clause 44 of the agreement on page 46 is no longer valid or operative hereafter.

(ii) To meet all further increase on any material or labour except glass till the work is completed, M/s Al Karma will be paid 80% of the value of escalations admissible as per annexure enclosed based on consumer price index."

CS (OS) No. 2122 of 1999 Page 7 of 31

15. ALK was to provide a performance guarantee bond for Rs. 20 lakhs from a nationalised bank to cover any breaches and assuring performance in the conditions of the agreement and supplementary agreement which was to be valid up to 31st December 1991 or after one year of the actual completion whichever was later.

Second Supplementary Agreement

16. A second supplementary agreement was entered into between the parties on 22nd June 1993. It was stated that the second supplementary agreement became necessary "in order to clarify certain ambiguities in the said supplementary agreement dated 13.05.1990 and also taking into account further delays in the completion". ALK was to submit on or before 30th June 1993 a performance/security guarantee for Rs. 20 lakhs which was to be valid for a similar period as furnished by M/s L&T to SCOPE. In the event the guarantee had to be invoked, it was to be done by MHB under knowledge and approval of L&T. MHB would recover mobilization advance of Rs. 20 lakhs from ALK's running account bills on pro-rata basis till the advance was fully recovered. MHB was to revise the unit rates of all the items of work which involved the usage of extruded aluminium sections by applying the formula: "Revised unit price = Original unit price + (Quantity of Aluminium section used per unit of item of work in Kg. x Rs.15/-)."

17. It was stated that in view of the above revision, the compensation hitherto paid by MHB to ALK at the rate of Rs. 15000 per metric tonne "stands withdrawn and the amount will be adjusted on the agreed bases hereinabove." MHB was to further compensate ALK for escalation on material, labour and petroleum, oil and lubricants with effect from 13th May 1990. As per the formula set out ALK was to be paid only 80% of the total amount towards escalation as calculated and it was to be paid on quarterly CS (OS) No. 2122 of 1999 Page 8 of 31 intervals and computed based on CPWD Clause 10 CC procedures. sub- Clause (xi) of the supplementary agreement provided that "all the above revision in rates and compensation are in full and final settlement of all the issues between MHB and Alkarma for the completion of the work. No further escalation or compensation of whatsoever manner shall be payable to Alkarma other than the above." The second supplementary agreement provided that any differences between the parties would be referred to arbitration of Regional Manager, L&T whose decisions shall be final and binding on the parties.

18. On 24th September 1994 MHB rescinded the contract since ALK could not complete the work within the extended time of 31st December 1993. This was done after issuing show cause notices (Ex.C-26 and Ex.C-27).

Arbitral Proceedings

19. MHB thereafter filed statement of claims before Shri D.B. Mody, Regional Director of L&T on 7th December 1994. There were eight items of claims.

20. Claim No. 1 was for a declaration that the rescission of the contract was valid. Claim No. 2 was for the sum of Rs. 83,71,072 paid as charges to M/s Aluminium & Light Industries Company ('Alico') which was due to failure of ALK to adhere to its undertaking and demand to engage Alico for the works. Claim No. 3 was for a sum of Rs. 12,90,926 on account of forfeiture of security deposit in terms of Clause 7(a) of the contract. Claim No. 4 was for Rs. 20,00,000 on account of encashment of performance guarantee. Claim No. 5 was for Rs. 4,84,31,047 on account of balance work got executed through M/s Crystal Corporation ('Crystal') in terms of the agreement dated 31st October 1994 entered into with Crystal. Claim No. 6 was for Rs. 25,66,000 on account of overhead establishment and staff for CS (OS) No. 2122 of 1999 Page 9 of 31 nine months. Claim No. 7 was for interest at 24% per annum, pendente lite and future on claim amounts and Claim No. 8 was for Rs. 2,20,000 towards cost of arbitration.

21. On 19th December 1994 ALK submitted before the learned Arbitrator its counter-statement of facts. It also filed ten counter-claims. Counter Claim No. 1 was for Rs. 1,77,77,968 on account of work done but not paid. Counter Claim No. 2 was for Rs. 12,90,926 on account of refund of security deposit. Counter Claim No. 3 was for Rs. 20 lakhs on account of illegal encashment of bank guarantee by MHB. Counter Claim No. 4 was for Rs. 1,41,29,508 on account of proportionate amount of the Award for delay damages on pro-rata basis. Counter Claim No. 5 was for Rs. 3,40,966 on account of reimbursement of the charges paid to Alico for the services rendered. Counter Claim No. 6 was for Rs. 62,88,940 on account of overheads and establishment of staff for the extended period of contract. Counter Claim No. 7 was for Rs. 2,97,67,311 on account of compensation for loss of profits due to prolongation of contract. Counter Claim No. 8 was for Rs. 66,97,645 on account of loss of interest. Counter Claim No. 9 was for interest at 24% per annum pre-suit, pendente lite and future and Counter Claim No. 10 was for Rs. 4 lakhs towards the cost of arbitration. MHB filed its rejoinder on 15th February 1995.

22. ALK challenged the appointment of Mr. D.B. Mody as Arbitrator and made a request to him to resign. Thereafter ALK filed a petition in this Court in which by an order dated 17th October 1997 Shri C. Rama Rao, a retired Director General (Works), CPWD was appointed as the sole Arbitrator. Before the new Arbitrator, ALK filed an amended counter-claim dated 20th March 1998.

23. During the course of the proceedings before the High Court in OMP No. CS (OS) No. 2122 of 1999 Page 10 of 31 33 of 1995 one Shri A.C. Panchdhari, retired Director General of Works, CPWD was appointed as Local Commissioner ('LC') for conducting the measurements of the interim work done by ALK on the twin tower complex. The LC submitted his report on 19th April 1995. Consequent upon the said report, Counter Claim No. 1 was amended by ALK and the amount claimed was reduced to Rs.94,91,546.96 as per the final bill prepared by ALK in terms of the LC's report.

24. Counter Claim No. 6 on account of over-heads was modified by ALK to Rs. 16,61,787. An additional Counter Claim No. 11 was made for "extra cost for using heavier section in aluminium frame work to act as structural member because of deletion of the steel back up frame in Item 8.1 of the work order after award of the work by the Architect". It was claimed that intimation had been sent in regard to the use of the heavy section of aluminium on 25th March 1994. A sum of Rs. 2,70,08,326.61 was claimed on this score.

25. On 20th May 1998 MHB replied to the Counter Claim No. 11. In the said reply it was stated that the work as per the report of the LC was incomplete and defective and not in line and level. It was claimed that MHB had incurred heavy expenses in rectification of works which had been carried out by Crystal with Rs. 75 lakhs being spent on labour element alone; Rs. 89 lakhs for replacement of aluminium section as per the specifications given by Alico to withstand the wind pressure whereas MHB had in the 9th RA bill paid a sum of Rs. 863.32 per sq. m., Rs. 814.83 and Rs. 718.97 respectively with the understanding that ALK would be completing the work and such interim payments did not confirm the expenses of the works. It was pointed out that Alico had been paid Rs. 15 per kg per sq. m. for over the rate of Rs. 1095.52 per sq. mt. as per the agreement dated 22nd June 1993. It was pointed out that ALK would be CS (OS) No. 2122 of 1999 Page 11 of 31 entitled to such payment if at all for the quantity of work executed beyond 22nd June 1993. The total quantity as per joint measurements was 21470.11 sq.mt. as against the agreement Item No. 8.1 but on inspection by Alico, MHB had to remove 7743.49 sq.mts. of curtain wall and replace the same with proper sections as suggested by Alico. Further 13595.39 sq.mts. was rectified for which additional payments had to be made to Crystal. Copies of the bills of Crystal and the summary of the expenditure incurred on removal and rectification was enclosed. Accordingly, it was submitted by MHB that the rate claimed by ALK was highly exaggerated.

26. A counter-reply was filed by ALK on 18th July 1998 denying that the work carried out by ALK was in any way defective and not in line and level. The measurement sheet dated 2nd May 1992 countersigned by MHB, ALK, L&T & NIDC did not mention any deficiency. Since the agreements were on back-to-back basis, the agreement between SCOPE and L&T had to be viewed in the same light as that between L&T and MHB, and that between MHB and ALK. Payments under all three contracts were on back- to-back basis after accounting for necessary commissions/deductions. Therefore, ALK was entitled to enhancement of Rs. 15 per kg per sq.mt., which was also claimed by L&T for SCOPE's Twin Tower Project. ALK significantly sought the substitution of the Annexure R1/H being the final bill in place of the earlier Annexure R1/A. It also placed on record Ex. R- 32 which was a document signed on 12th August 1993 whereby, according to ALK all payments were mutually agreed upon between the parties and L&T and it claimed that "only this document can be the true basis of any final bill by either of the parties". An amended tabulation in support of the additional Counter Claim No. 11 was also enclosed.

27. In its rejoinder filed to the above counter-reply on 29th October 1998 MHB's earlier submissions were reiterated. It was denied that the contract CS (OS) No. 2122 of 1999 Page 12 of 31 was on back-to-back basis. It was maintained that the contract between MHB and ALK was an independent one and "has nothing to do with the contract of other parties like L&T and MHB etc."

28. At the hearing before the learned Arbitrator on 26th March 1999 a query was raised by the learned Arbitrator whether ALK had replaced the lighter sections with heavier sections. On 15th April 1999 ALK submitted the following written reply:

"Query No. 2 - Did Al Karma replace the lighter Al-sections with heavier sections?

When did you ask for additional money for the same, from the Claimant for the first time?

As per the nomenclature of original agreement item no. 8.1 and item no. 4(a) of the Special Specifications of the agreement, the steel box backup framing was to be provided as structural member to hold the aluminium frame of adequate sections and the back-up frame was to be paid separately. The Architect changed the concept after the award of the work and omitted the provision of steel box back up frame and approved the aluminium sections as structural members vide Exhibit R-79 vide which the Architect desired that the shop drawings of curtain wall may be submitted accordingly.

The aluminium sections have therefore been used as structural members to withstand the desired wind pressure and therefore heavier aluminium sections have been used in the curtain wall as approved by the Architect in place of lighter sections.

The tacit claim for additional money was made at the time of change of concept by the Architect deviating the agreement item during discussions on the shop drawings and when the response was not forthcoming, it was made in writing on 25-03-94 vide Exhibit R-40."

29. Oral arguments before the learned Arbitrator were concluded on 15th May 1999. On 2nd May 1999 itself the Arbitrator required MHB to send a copy of the 49th RA bill placed by L&T to MHB which according to ALK CS (OS) No. 2122 of 1999 Page 13 of 31 allowed the part rates much more than the rates allowed by MHB to ALK in its final bill. In reply thereto on 4th June 1999 MHB submitted to the learned Arbitrator in writing that the rates shown in the 49th RA bill of L&T or the payment received by MHB "has no relevancy in assuming the actual work executed by the Respondent, Alkarma, after rescission of the contract". However, the bill of balance work executed at the risk and cost of ALK was enclosed.

The impugned Award

30. The sole Arbitrator passed the impugned Award on 31st August 1999. In regard to Claim No. 1 of MHB for a declaration that the rescission by it of the contract was valid, the learned Arbitrator held that the work was not time bound since it had taken more than ten years to be completed. It was further held that the contention of ALK that there was no mention of Alico in the main agreement or in the supplementary agreements was correct. In fact, in the meeting between L&T and MHB (Ex.C-12), it was stated that outside persons would not be required. Although 9th RA bills were prepared and sent by ALK, MHB paid only advance which was in contravention of Clause 5 of the first supplementary agreement dated 13th May 1990 and Clause 10 of the main agreement dated 24th November 1988.

31. Referring to Ex.R-79 being the letter dated 3rd March 1989, the Arbitrator observed that while the contract provided for steel backing to the aluminium frame work, the Architects approved of the change to the heavier aluminium sections and thereby the quantity of aluminium used had increased above 3.00 kg per mt. length of aluminium section. The Arbitrator undertook an inspection of the site on 6th March 1999 when the work was in progress. The learned Arbitrator found that the letter dated 24th September 1994 (Ex. C-25) rescinding the contract was not received by ALK and came to its notice only when it received notice of the appointment of the CS (OS) No. 2122 of 1999 Page 14 of 31 Arbitrator.

32. The learned Arbitrator held that the delay in completion of the work took place mainly because the drawings submitted by ALK to the Architects were not approved for a long time and the decisions were not communicated to ALK in time; the Architects delayed the approval of the samples of fittings and fixtures. There was a delay in issuing of working drawings by the Architects and delay was caused due to the non-approval by the Architects of the proposal of strengthening. Accordingly, it was held that the rescission of the contract by MHB was not valid, legal or contractual.

33. As regards Claim No. 2 towards charges paid to Alico due to failure of ALK to adhere to its commitments, the learned Arbitrator held that there was no mention either in the main agreement or the supplementary agreements that Alico should be engaged for the design of the curtain wall. The design of the curtain wall was the responsibility of the Architects. Ex.C-56 to C-60 related to some other work as some of the receipts pertained to period earlier than the date of the main agreement dated 24th November 1988. In the agreement between the parties the Architects were the certifying authority whereas in the agreement between MHB and Crystal, Alico was the certifying authority. It was held that the agreement between MHB and Crystal was different from the agreement between MHB and ALK. Consequently, it was held that ALK could not be burdened with the expenditure incurred on Alico. Claim No. 2 was, therefore, rejected.

34. Claim No. 3 for forfeiture of security deposit was rejected since the reason for the delay in completion of the work was attributable to MHB and as the contract had been wrongly terminated. Claim No. 4 regarding encashment of the performance guarantee for Rs. 20 lakhs was also rejected. As regards Claim No. 5, the learned Arbitrator observed that measurements CS (OS) No. 2122 of 1999 Page 15 of 31 of the work done were finalized by the LC on 11th April 1995 and signature of both parties had been obtained on the measurement sheets. MHB had prepared a final bill for an enhanced amount of Rs. 1,35,20,330. It was noticed that in the 49th RA bill paid by SCOPE to L&T and in turn the rates paid by L&T to MHB adopted much higher part rates than those adopted by MHB to ALK in the final bill prepared by MHB. The negative bill was, therefore, rejected.

35. It was held that the expenditure incurred in strengthening the aluminium framework to withstand a weight load of 340 kg/sq.mt. was to be borne by SCOPE. It was further observed as under:-

"The Respondent has executed the work in a vertical straight line using a theodolite, but later on the Respondent was asked to use the laser beam equipment and he purchased the laser beam equipment and used the same. In fact, the verticality and the horizontal lines were ensured with this theodolite and laser beam equipment and signed by the representatives of MHB, Al-Karma, NIDC and Architects (Exh R-53). But as the work dragged on for a long time, without fixing the glass panes, some shims might have fallen or got disturbed. Hence to keep the vertical Aluminium members absolutely vertical, some shims which have been disturbed or fallen out due to looseness of the nuts of the bolts, have to be replaced. From the folder no. 17, it is seen that the Claimant had purchased Aluminium shims for Rs.5,38,599. But from page No. 60 of Folder No.8 it is seen that the Claimant had fixed the Aluminium shims worth only Rs.4,08,500. The enhanced labour employed for refixing the exact thickness of shims so that the vertical members remain truly vertical can be taken as 100% of the cost of shims. Thus, the amount recoverable from Al-karma will be Rs.4,08,500/- + 100% of Rs.4,08,500/- = Rs.8,17,000/- and I award the same amount to the Claimants."

36. As regards the risk and cost incurred by engaging Crystal to do the balance work, it was observed that no tenders were called while awarding the work to Crystal and that the agreement with Crystal was for labour rates only, whereas the agreement with ALK was for complete items of work including material and labour. If indeed a large amount was due from ALK, CS (OS) No. 2122 of 1999 Page 16 of 31 it is surprising that MHB had paid ALK Rs. 8,50,000 on 24th February 1995 towards cost of the unused aluminium sections taken over by MHB. Therefore, the sum paid to Crystal for the balance work could not be recovered from ALK. As regards Claim No. 5, it was held that only Rs. 8,17,000 was recoverable by MHB from ALK. Claim No. 6 for overhead establishment and staff was not supported by any documentary evidence and was accordingly rejected. Interest at 18% per annum was awarded on the amount held due to MHB from ALK under Claim No. 5 with effect from 1st February 1995 till the date of payment or decree, whichever was earlier. Claim No. 8 for costs of arbitration was rejected.

37. As regards ALK's Counter Claim No. 1, the learned Arbitrator allowed the rate of Rs. 785 per sq.mt., (average), after going through the rates prepared by the parties. The final bill was reworked by the learned Arbitrator by determining the extended usable glass panes of 10,270.40 sq.m which had to be paid at Rs. 785 per sq.m. This together with glass panes already used worked out to Rs. 82,95,068.28. The learned Arbitrator in regard to the escalation adopted the calculations submitted by ALK for a sum of Rs. 71,89,520.40. Consequently, the learned Arbitrator awarded ALK a sum of Rs. 1,04,17,434.

38. As regards Counter Claim No. 2, as a logical corollary to the earlier finding that the contract was wrongly rescinded, the learned Arbitrator awarded ALK a sum of Rs. 12,90,926 towards refund of security deposit. As regards Counter Claim No. 3, the learned Arbitrator held that it was irregular on the part of MHB to encash the performance bank guarantee and, therefore, it should pay ALK a sum of Rs. 20,00,000. As regards Counter Claim No. 4 for Rs. 1,41,29,508, the Arbitrator held that ALK was not entitled to get any damages in view of the express Clause (xi) under the second supplementary agreement dated 22nd June 1993. Counter Claim No. CS (OS) No. 2122 of 1999 Page 17 of 31 5 was for Rs. 3,40,966 towards reimbursement of Alico's charges. It was held that since ALK had taken the services of Alico, the charges for the services should be borne by ALK. Consequently, this counter-claim was rejected.

39. As regards Counter Claim No. 6, a sum of Rs. 12,17,284 was awarded for overhead and establishment of staff as against the revised claim of Rs. 16,61,787. Loss and profit was computed at 15% of the work at Rs. 6,17,123 which was awarded to ALK under Counter Claim No. 7. Counter Claim No. 8 towards loss of interest due to profit not earned was disallowed since pendente lite and future interest had already been allowed. Thus under Counter Claim No. 9, 18% simple interest on the awarded amounts of Counter Claim Nos. 1, 2, 3, 6 and 7 was awarded with effect from 1st February 1995 till the date of payment or decree whichever is earlier. As regards cost of arbitration proceedings, ALK was held to be entitled to the reimbursement of arbitration expenses of Rs. 4,00,000. Counter Claim No. 11 was for using heavier aluminium sections. Since these had been dealt with in Counter Claim No. 1, it was rejected.

40. Ultimately, the learned Arbitrator held that MHB had to pay ALK a sum of Rs. 1,51,25,767 together with simple interest at 18% per annum, on Rs. 1,47,25,767 with effect from 1st February 1995 till the date of payment or decree whichever is earlier, and on an amount of Rs. 4,00,000 with effect from the date of publication of the Award till the date of payment or decree whichever is earlier.

41. Affidavit by way of evidence has been filed in the present matter by Mr. Ashish Bhatia, the Attorney Holder of MHB and Mr. Jaikishan Das, Partner of ALK.

CS (OS) No. 2122 of 1999 Page 18 of 31

Validity of rescission of the contract

42. On Claim No. 1 in which MHB sought the declaration that the rescission of the contract was valid, it was submitted by Ms. Priya Kumar, learned counsel for MHB, that on admitted documents, the rescission was valid, and therefore the finding to the contrary by the learned Arbitrator was illegal and perverse. She referred to the letters dated 14th October 1993 and 25th January 1994 of L&T which adversely commented on the inaction by ALK in rectification and other works. The fact that ALK itself admitted that it had to rectify defects in the curtain wall in the reply filed before the Arbitrator, it is plain that such defects did exist. As regards deficiency of verticality, reference has been made to the letters of the Architects. Moreover, the Arbitrator had himself awarded Rs. 4,08,500 towards missing shims which were crucial for suitability and verticality of the curtain wall even as per the statement of ALK before the Arbitrator. The fact that rectification work was also carried out by Crystal pointed to ALK's failure to carry out the work in terms of the contract. In support of the plea that ALK had in fact abandoned the work, a reference was again made to various documents including the letter of L&T dated 7th May 1994 to MHB directing it to inform ALK to proceed with the rectification immediately and the show cause notice dated 29th July 1994. It is submitted that ALK remained defiant and refused to start the rectification work. Reference is made to the reply dated 5th August 1994 of ALK to the show cause notice. Reference is also made to the show cause notice dated 18th June 1994 (Ex.C-26) and 29th July 1994 (Ex.C-27) which preceded the letter dated 24th September 1994 terminating the contract (Ex.C-25). It is submitted that the above overwhelming documentary evidence was sufficient for the learned Arbitrator to uphold that the termination of the contract by MHB was legal and valid.

43. Mr. Ashish Bhagat, learned counsel appearing for ALK, on the other CS (OS) No. 2122 of 1999 Page 19 of 31 hand pointed out that there is a clear finding by the learned Arbitrator that the delay was attributable essentially to the Architects. In fact, in the arbitration between SCOPE and L&T, the latter had been duly compensated for the delay in completion of the project. This was essentially on account of the failure of the Architects to grant timely approvals to the drawings and designs. Further, the categorical finding was that time was not the essence of the contract as was evident from the fact that the main agreement in 1988 was followed by two supplementary agreements. Even on the date of the termination of the contract on 24th September 1994 as the approvals/ decisions were awaited, including the decision on the strengthening of the structure to withstand the wind velocity which changed the entire nomenclature of the contract. Mr. Bhagat referred to several documents to show that there were breaches of the contract and the obligations by MHB. Running bills were not paid in time and only advance payments were released which were in contravention of Clause 10 of the main agreement and Clause 5 of the supplementary agreement dated 13th May 1990.

44. At the outset, it requires to be observed that the scope of interference by the Court with the Award is limited as has been explained by the Supreme Court in Arosan Enterprises Ltd. v. Union of India (1999) 9 SCC 449 and M/s. Hind Construction Contractors v. State of Maharashtra AIR 1979 SC 720 and also this Court is not exercising an appellate function and is therefore not expected to re-appreciate the evidence. To recollect what was stated in Arosan Enterprises (SCC, p.475-476):

"Be it noted that by reason of a long catena of cases, it is now a well settled principle of law that reappraisal of evidence by the court is not permissible and as a matter of fact exercise of power by the Court to reappraise the evidence is unknown to proceedings under Section 30 of the Arbitration Act. In the event of there being no reasons in the award, question of interference of the court would not arise at all. In the event, however, there are reasons, the interference would still be not available within the jurisdiction of the Court unless of course, there exist a total perversity in the award or the judgment is based on CS (OS) No. 2122 of 1999 Page 20 of 31 a wrong proposition of law: In the event however two views are possible on a question of law as well, the court would not be justified in interfering with the award.

The common phraseology "error apparent on the face of the record"

does not itself, however, mean and imply closer scrutiny of the merits of documents and materials on record: The court as a matter of fact, cannot substitute its evaluation and come to the conclusion that the arbitrator had acted contrary to the bargain between the parties. If the view of the arbitrator is a possible view the award or the reasoning contained therein cannot be examined. In this context, reference may be made to one of the recent decisions of this Court in the case of State of Rajasthan v. Puri Construction Co. Ltd.((1994) 6 SCC 485 wherein this court relying upon the decision of Sudarsan Trading Co. case (Sudarsan Trading Co. v. Government of Kerala ((1989) 2 SCC

38) observed in paragraph 31 of the Report as below:

"A court of competent jurisdiction has both right and duty to decide the lis presented before it for adjudication according to the best understanding of law and facts involved in the lis by the judge presiding over the court. Such decision even if erroneous either in factual determination or application of law correctly, is a valid one and binding inter parts. It does not, therefore, stand to reason that the arbitrator's award will be per se invalid and inoperative for the simple reason that the arbitrator has failed to appreciate the facts and has committed error in appreciating correct legal principle in basing the award. An erroneous decision of a court of law is open to judicial review by way of appeal or revision in accordance with the provisions of law. Similarly, an award rendered by an arbitrator is open to challenge within the parameters of several provisions of the Arbitration Act. Since the arbitrator is a judge by choice of the parties and more often than not a person with little or no legal background, the adjudication of disputes by an arbitration by way of an award can be challenged only within the limited scope of several provisions of the Arbitration Act and the legislature in its wisdom has limited the scope and ambit of challenge to an award in the Arbitration Act......It is necessary, however, to put a note of caution that in the anxiety to render justice to the party to arbitration, the court should not reappraise the evidences intrinsically with a close scrutiny for finding out that the conclusion drawn from some facts, by the arbitrator is, according to the understanding of the court, erroneous. Such exercise of power which can be exercised by an appellate court with power to reverse the finding of fact, is CS (OS) No. 2122 of 1999 Page 21 of 31 alien to the scope and ambit of challenge of an award under the Arbitration Act." "

45. The Award of the learned Arbitrator as regards Claim No. 1 is a detailed one which refers to several documents on record. In particular the learned Arbitrator did consider the letter addressed by L&T to MHB dated 14th October 1993. It is pointed out that MHB had in fact issued a letter dated 26th November 1993 instructing Alico not to communicate with L&T. In May 1992, the work done by ALK was checked with the glazed lining and laser beam equipment. Minutes were recorded and signed by the representatives of MHB, ALK and NIDC and no deficiency in the verticality or horizontal lengths was found during the checking. Ex.R-53 is the measurement sheet dated 2nd May 1992 containing the signatures of the three parties. On 10th February 1994, L&T wrote to the Architects stating that the work pertaining to the curtain wall could not be progressed until the "glass issue and strengthening of aluminum frame are decided". It appears that even on 27th December 1993 STP Consultants had written to the Architects as regards the frame work of the curtain wall and advised them that they should be designed to withstand the wind pressure of 170 per kg. per sq.m. In a further letter written on 21st April 1994 by L&T to the Architects it was mentioned that early approval/decision was required on seven issues including "tolerance limit of curtain wall" and "thickness of toughened glass to be used and the larger panels".

46. The explanation offered by ALK that it could not take steps to rectify the verticality till the above approvals were obtained appears to be plausible. Reference is made to various documents to show that the decisions on these various items were still awaited and pending either with the Architects or MHB or L&T. On the question of failure to comply with the time schedule and regarding the abandonment of work, even on 5th August 1994 in reply to the show cause notice ALK had mentioned that the CS (OS) No. 2122 of 1999 Page 22 of 31 decision on rectification of defects was still pending with the Architects. In the meeting held between the Architects and L&T on 29th April 1994, the issues regarding modification of aluminium section were still being discussed. Inter alia, the decision had yet to be taken whether 6mm or 8mm thick plain glass should be used.

47. The argument that since the Arbitrator has awarded MHB the main claim under Claim No. 5 in the sum of Rs. 8.17 lakhs, there was obvious defect in the work performed by ALK, does not appear to be the reason for termination of the contract. Once the defect, if any, was removed by giving ALK time for that purpose then it could no longer be a justification for the contract being terminated. The learned Arbitrator has found as a matter of fact that ALK excluded 21,470.11 sq.m. of Item No. 8.1 as against 22,800 sq.m. The joint inspection of the work referred to hereinbefore did not mention any defect. What the learned Arbitrator did in Claim No. 5 was to compensate MHB for the absence of shims which resulted in loosening of the nuts and bolts affecting the verticality of the aluminium members.

48. The finding in respect of Claim No. 1 also is to be seen in light of the LC's report. As already observed, this Court is not sitting in appeal over the findings of the learned Arbitrator with a view to re-appreciate the evidence. The Award in respect of Claim No. 1 of MHB is a detailed and reasoned one appreciating the evidence on record. This Court is unable to hold that there is any error apparent on the face of the record.

Engagement of Alico

49. The second major issue raised by MHB to the impugned Award concerns the contradictory findings in respect of Alico. It is submitted that under Claim No. 2 the learned Arbitrator recorded a finding that there was no agreement for the engagement of Alico and, therefore MHB was not CS (OS) No. 2122 of 1999 Page 23 of 31 entitled to risk and purchase cost of engaging Alico in respect of Counter Claim No. 5 of ALK. The learned Arbitrator recorded a finding that the charges for the services taken from Alico should be borne by ALK and therefore Counter Claim No. 5 was rejected.

50. According to Ms. Priya Kumar, learned counsel appearing for MHB, the finding in respect of Counter Claim No. 5 amounts to an acceptance by the learned Arbitrator that ALK had in fact agreed to engage the services of Alico as an implied condition of the contract between the parties and that on account of breach of the said condition MHB was liable to be compensated as claimed by it in Claim No. 2.

51. This Court on an examination of the agreement dated 24th November 1988 and the two supplementary agreements dated 13th May 1990 and 22nd June 1993 is inclined to concur with the view expressed by the learned Arbitrator that nowhere in these documents is it mentioned that Alico would be engaged by MHB for the design for the curtain wall. The reliance placed by learned counsel for MHB on a contract entered into between Alico and ALK prior to the agreement dated 24th November 1988 between MHB and ALK does not indicate any assurance by ALK that it would engage Alico for preparation of design. On the other hand, the correspondence between the parties shows that ALK was resisting the request of MHB for engaging Alico. By a letter dated 29th May 1994 written by ALK to MHB this aspect was fully discussed with ALK firmly informing MHB that "we shall not pay or bear any charges for the engagement of M/s Alico for this project". In the circumstances, this Court finds no error having been committed by the learned Arbitrator in holding that there was, in fact, no agreement between the parties for engaging the services of Alico. In fact, the dismissal of Counter Claim No. 5 made by ALK is consistent with its position since the engagement of services of Alico was not part of the contract. Neither could CS (OS) No. 2122 of 1999 Page 24 of 31 MHB claim to be compensated for engaging its services nor ALK as each of them dealt with Alico outside the contract and on their own. This part of the Award, therefore, does not call for interference.

Use of heavier section of Aluminium

52. The third major issue concerned the use of heavier section of aluminium by ALK. In this regard a severe criticism was made of the impugned Award by Ms. Priya Kumar, learned counsel for MHB and in particular the observations of the learned Arbitrator that under Ex. R-79, the Architects approved the change of steel packing to the aluminium structurally strong section. Reference was made to Clause 28(v) of the special specifications which prohibited the payment for any change in weight of the material used. It is pointed out that in response to a specific query by the learned Arbitrator whether ALK had removed the lighter section and replaced it with heavier sections, ALK replied that it had executed the work as per the Architects's approval which on the face of the documents showed that the weight of the aluminium was within the contract's stipulation.

53. It is submitted that the communication relied upon by ALK was for the proposed strengthening of curtain wall which was being finalized at that time and for which extra item rates were called for. ALK had not performed any strengthening of curtain wall during the period May to November 1994 and therefore was not entitled to any extra payment. It is submitted that learned Arbitrator had awarded the money to ALK for the work not done by it. Referring to the specifications in the contract, it is pointed out that aluminium had to be used for the curtain wall glazing which was not restricted to between 2-3 kg per meter. Clause 28 (v) specifically prohibited variations in quoted rates to the sections of the lighter/heavier weight. Referring to the letter dated 3rd March 1989 from the Architects to ALK (Ex.R-79), it is pointed out that the approval specified the weight of the CS (OS) No. 2122 of 1999 Page 25 of 31 aluminium for vertical framework as 2.407 kg per mt. and horizontal member as 1.77 kg per mt. as proposed by ALK. This was within the contractual stipulation of L-2 per kg mt. Consequently ALK could not make any claim for heavier section.

54. Lastly, it is submitted that till the 9th RA bill though payments were being made regularly on 1988 rates, a major revision of rates took place in the second supplementary agreement dated 22nd June 1993, ALK did not make any claim for extra item/heavier section. Even according to ALK the major work was done even prior to the second supplementary agreement dated 22nd June 1993. Clause (xi) of the said agreement stated that "no further escalation or compensation of whatsoever manner shall be payable to ALK other than the above". The amount awarded i.e., Rs. 8,78,946.20 was the figure claimed by ALK prior to the amendment of its counter-claim.

55. In reply, it is pointed out by Mr. Ashish Bhagat, learned counsel for ALK, that Clause 28(v) of the special specifications is only a guide and not restricted to the value stated therein. ALK had informed the learned Arbitrator in detail about the use of heavier aluminium section due to omission of the steel brackets back up framing. By the time the issue of strengthening the curtain wall was taken up ALK had already used the heavier aluminium section. The report of the LC on the question is referred to in this regard.

56. It is pointed out that the nomenclature of Item No. 8.1 clearly mentions the provision of steel frame backing and separate payment for the steel framing. This steel framing was modified by the Architects. Mr. Bhagat also brought to the Court two samples of panels of curtain wall. One, with steel back up frame box and other with existing panel without back up frame where the aluminium framework is to act as a structural member, using CS (OS) No. 2122 of 1999 Page 26 of 31 heavier section in place of lighter/heavier aluminium framework. It was clarified that the rate of Item No. 8.1 is per sq.mt. and therefore the comparison of the weight is to be made on sq.mt. basis. It was submitted that the weight per sq.mt. of the curtain wall with the aluminium frame actually provided at site comes to 7.88 kg per sq.m. whereas the weight per sq.m. of the curtain wall of aluminium frame as per the agreement under Item No. 8.1 comes to 3.43 kg per sq.m. According to Mr. Bhagat, this itself showed that the heavier aluminium section frame was used.

57. Clause (xi) of the second supplementary agreement dated 22nd June 1993 does not preclude the claim for using a heavier section of aluminium. There was indeed an agreement for payment of extra charges on account of members variation issue under Clause 44 of Sub Head B of the agreement dated 24th November 1988. The learned Arbitrator found as a fact that the Architects required the change in the design and instead of the steel box back up frame, heavier aluminium sections were approved to act as a structural member to take up the load of wind pressure. This Court has also been shown the two samples. One of the panels of curtain wall is part of the steel box part frame and the other is not. It is clear that there was a definite change brought about in the designing by the Architects by requiring the panel of curtain wall to be made entirely of aluminum. While it is disputed by learned counsel for MHB that the heavier section of aluminium was not to be placed by ALK, a perusal of the LC's report shows otherwise. The said report requires to be quoted at length and reads as under:

"Both parties stated that payments have so far being made on the dimensions given in the drawings and the said are provisional subject to the final measurements.

Both parties stated that most of the work done is partial and very little work is done in complete shape. Both parties stated that agreement item 8.1 has been substituted as the drawings have been revised by the Architect but in the bill paid old unchanged nomenclature continues.

CS (OS) No. 2122 of 1999 Page 27 of 31

I had cross-checked the dimensions shown on the drawing and the dimensions of the sub.strate existing at site. It was seen by me that there were differences between the two dimensions which would not be satisfactorily explained by the parties. For the item 8.1 necessary revised drawing for the type of work existing at site is available and it was perused by me and the work done was in accordance with revised drawings. Therefore there was no other way but to measure by steel tape the work done at site."

58. The above report was prepared on 19th April 1995 and has not been objected to by either party. It is plain that according to both parties who were present when the LC visited the site the agreement Item No. 8.1 had been "substituted as the drawings have been revised by the Architect". There is a categorical finding that for Item No. 8.1 the revised drawings for the type of work existing at the site were indeed available and were perused by the LC who concluded that "the work done was in accordance with revised drawings". The above report of the LC depicts the factual situation as it existed in 1995. With no objections being raised to the LC's report, the learned Arbitrator cannot be faulted for placing reliance thereunder to uphold the counter-claim of ALK.

59. In the view of this Court, the learned Arbitrator could not be stated to have committed any error in basing his conclusion on the report of the LC. It does appear that ALK replaced the steel backing with heavier sections of aluminium on the advice of the Architects. Once it was accepted by MHB before the LC that the work done was in accordance with the revised drawings, it was no longer open to MHB to contend that the change in the design was without its approval. The documents on record which have been examined thoroughly by the learned Arbitrator appear to have indicated otherwise. The interpretation placed by the learned Arbitrator on the document (R-79) was a plausible view and per se cannot said to be erroneous.

CS (OS) No. 2122 of 1999 Page 28 of 31

Challenge as to correctness of calculations

60. It was then contended that there is a serious error in the calculations of the amount payable under the claim of escalation. The value of escalation, according to MHB, was to be based on the actual value of work. It is pointed out that the conclusion drawn by ALK of the escalation could be changed and was amended twice before the learned Arbitrator. It is submitted that the learned Arbitrator simply adopted the calculations suggested by ALK even though it was observed that he had calculated the escalation. Mr. Ashish Bhagat also referred to the calculations to point out that they were supported by documents on record. It is pointed out that while the final figure of escalation claimed by ALK could be Rs. 1,54,28,482.55, the learned Arbitrator had in fact awarded Rs. 71,89,520.40.

61. It is seen that the learned Arbitrator actually reworked the final bill and reduced the claims of ALK in view of the total variation of the work, the amount for the heavier section in the sum of Rs. 80,43,750 had to be added. As per the formula escalation value of the total work worked out to Rs. 71,89,520.40. It was open to the learned Arbitrator to have adopted the calculation as given by ALK. That by itself does not make it illegal as long as it can be explained with reference to the escalation formula. This Court is not impressed with the submission that an erroneous calculation was adopted by the learned Arbitrator and on that basis therefore, the Award stands vitiated. The view taken by the learned Arbitrator had a valid explanation and the Court is not prepared to sit in appeal over the said conclusion.

62. The Arbitrator correctly analyzed the handwritten calculations to work out a single average rate for the glazing. The average rate worked out from the claim of ALK worked out to Rs. 792.14. The learned Arbitrator adopted a lesser rate of Rs. 785 per sq.m. (average). Even the figure of Rs. 203 CS (OS) No. 2122 of 1999 Page 29 of 31 suggested by ALK for deduction had been struck off. This only meant that this was accounted for in arriving at the figure of Rs. 785 per sq. m. The submission on behalf of MHB that the sum of Rs. 203 had to be further deducted from Rs. 785 does not stand to reason.

Other objections

63. There is no factual basis laid for the allegation that the learned Arbitrator acted in a biased manner. Only because the learned Arbitrator adopted the calculation for escalation as suggested by ALK, does not make him biased. In fact, the learned Arbitrator has entertained the claim under Claim No. 5 made by MHB. The learned Arbitrator has not allowed all the amounts as claimed by ALK. He has rejected some of the counter-claims and only partly allowed some of them. The challenge to the impugned Award on the ground of bias is also, therefore, rejected.

64. The other submissions by MHB made in its written arguments to assail the impugned Award have been examined in detail. This Court finds no ground having been made out by MHB within the scope of Sections 30 and 33 of the Act to interfere with the impugned Award of the learned Arbitrator as regards the claims and counter-claims of the parties, barring the counter- claim of ALK for interest which is dealt with hereafter.

Award of interest

65. As regards the award of interest, there is merit in the contention that interest could not have been awarded on the amount of costs of Rs. 4 lakhs but on the other principal sums under the counter-claims of ALK that have been allowed. Also, considering that the dispute has been pending for a large number of years, and in light of the decision in Krishna Bhagya Jala Nigam Ltd. v. G. Harischandra Reddy (2007) 2 SCC 720, the award of 18% simple interest for the entire period up to the date of payment appears CS (OS) No. 2122 of 1999 Page 30 of 31 to be on the higher side. Consequently, the impugned Award in this respect is modified by directing that ALK will be entitled to simple interest at 9% per annum on the awarded amounts of Counter Claim Nos. 1, 2, 3, 6 and 7 with effect from 1st February 1995 till the date of payment. No interest will be payable on the costs of Rs. 4 lakh under Claim No.10.

66. With the above modification as regards interest, IA No. 8382 of 2000 is disposed of and the impugned Award dated 31st August 1999 as modified above is made rule of the Court. Decree sheet be drawn up accordingly. The suit is disposed of.

S. MURALIDHAR, J.

AUGUST 29, 2012 akg CS (OS) No. 2122 of 1999 Page 31 of 31

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