Bangalore District Court
M/S. Deepak Cables (India) Ltd vs Karnataka Power Transmission on 16 December, 2020
IN THE COURT OF THE LXXXIII ADDITIONAL CITY CIVIL
AND SESSIONS JUDGE AT BENGALURU CITY [CCH84]
:Present:
Sri N.Sunil Kumar Singh, B.Com., LL.B.,
LXXXIII Addl. City Civil & Sessions Judge,
Bengaluru
Dated on this the 16th day of December 2020
COM.A.S.No.48/2016
Plaintiff M/s. Deepak Cables (India) Ltd.,
A Company registered under the
Companies Act,
Rep.by its Managing Director
No. 7, N.S. Iyengar Street,
Sheshadripuram,
Bengaluru 560 020.
[By Sri. L.M.S Advocate]
/v e r s u s/
Defendants: 1. Karnataka Power Transmission
Corporation Limited,
A Company registered under the
Companies Act,
Rep.by its Managing Director
Corporate office, Kaveri Bhavan,
Bengaluru 560 009.
[By Sri. S.S, Advocate]
2. Chief Engineer, (Electricity)
Tendering and procurement,
Karnataka Power Transmission
Corporation Limited,
Corporate office, Kaveri Bhavan,
Bengaluru 560 009.
[By Sri. S.S, Advocate]
2
CT 1390_Com.A.S.482016_Judgment .doc
3. Chief Engineer, (Electricity)
Transmission ZoneBengaluru
Karnataka Power Transmission
Corporation Limited,
A.R. Circle, Bengaluru 560 009.
[By Sri. S.S, Advocate]
4. Executive Engineer, (Electricity)
Bengaluru Major Work South Division
Karnataka Power Transmission
Corporation Limited,
A.R. Circle, Bengaluru 560 009.
Date of Institution of the suit : 17/03/2016
Nature of the suit : Arbitration Suit
Date of commencement of :
recording of the evidence
Date on which the Judgment : 16/12/2020
was pronounced.
: Year/s Month/s Day/s
Total duration
04 09 00
JUDGMENT
This suit is filed by plaintiff against defendants U/S.34 of Arbitration & Conciliation Act, 1996.
2. The facts in brief of the plaintiff's case is that plaintiff is reputed Contractor carrying on various infrastructural projects throughout the country for other utilities and also carrying out number of projects for the defendants herein. The defendants company registered under the Companies Act, 3 CT 1390_Com.A.S.482016_Judgment .doc license obtained from Electricity Act issued tender for Design, Engineering, Supply and Installation, Testing and Commissioning of 220 KV cable, 1000 sq.mm copper single core, U.G Cable at the site of KPTCL works and also for running three phase single circuit 220 KV 1000 sq.mm copper single core for route length of 7.9 kms from the proposed 220 KV E.D Compound Sub Station to the proposed 220 KV sub station at HAL, Bengaluru.
3. The plaintiff through their consortium partner L.S.Cable Limited, South Korea having all technical qualification submitted tender through etendering process on 9/7/2007 for executing the project work and on satisfaction of technical qualifications the defendants opened bid and plaintiff is the successful bidder. Such tender was accepted by the defendants and issued letter of award on 31/1/2008. The said award contains supply, erection and civil portion of work. After receiving Performance Bank Guarantee consisting 15% of the total contract values, the defendants have signed the agreement dated 16/2/2008 for carrying on the contract work as per specification of the contract. The contract work is involved of laying underground cable and largely depending on the discharge of reciprocal obligations by the defendants herein. Immediately after entering into agreement with the defendants, plaintiff raised all the resources required for executing of the work. Since the work involves laying of 3 Phase Single Circuit 220 KV Underground cable which is 4 CT 1390_Com.A.S.482016_Judgment .doc required to be laid in Open Trench Method as per the requirement of defendants which involves huge labour, machineries to execute such project work.
4. The plaintiff being successful bidder mobilized all resources required for executing the contract work and defendants have to discharge their obligation in carrying on the entire work within the period of 12 months by the plaintiff herein. The plaintiff was prevented from executing the work on account of several breaches as detailed below:
a) Delay in granting permission by the BBMP for cutting the road and side road for laying the underground cable.
b) Delay on account of change of the route profile.
c) Delay in account of factory acceptance test
d) Delay on account of diversion of cables and accessories.
e) failure to issue the quantity variation and consequent delay in marking payment.
f) More importantly there was a recovery of liquidated damages.
5. The very nature of the work may be simple, but the complex created an account of breaches committed by the defendants herein as stated above and there was delay in obtaining permission for road cutting from the BBMP, Police Department. The plaintiff has to dig trenches for laying cable. Thus the defendants herein have to obtain permission from 5 CT 1390_Com.A.S.482016_Judgment .doc BBMP for road cutting and plaintiff have submitted application to BBMP on 5/4/2008 requesting to grant permission for road cutting and defendants have wrote letter to BBMP on 17/4/2008 requesting to grant such permission. But BBMP did not grant permission and suggested to lay cable through Horizontal Dimensional Drilling method. Since the cable is 1000 sq.mm and heavy weight which is not possible to lay through HDD method. Hence defendants have wrote letter to BBMP to grant permission to dig trenches to lay such cable. On 25/4/2009 BBMP grant such permission for road cutting and to create trenches for laying cable. The said delay is beyond control of the plaintiff herein. Since permission was granted for 60 days to lay the cable by digging trench. It is the obligation on the part of defendants to renew such permission for road cutting to carry on the work by the plaintiff. The said delay is directly attributable against defendants herein. In addition to the above said permission of BBMP, permission of Deputy Commissioner of Police (Traffic) is also required. Since contract was carried on by the plaintiff in the traffic area in the heart of the city and application was submitted on 24/4/2009 to the Deputy Commissioner of Police (Traffic) to grant permission and permission was granted by the Police Department on 17/6/2009 and on account of the same there was some delay in carrying on work by the plaintiff. Thus there is delay in granting permission by BBMP and Traffic Police for digging trenches in their respective areas. By that time there was 6 CT 1390_Com.A.S.482016_Judgment .doc considerable delay which can be attributed against defendants and during such period plaintiff has incurred overhead charges and construction materials were stored and also machineries were idle.
6. Since there was considerable delay, plaintiff has requested defendants to waive type test to be conducted and already test was conducted which is less than 5 years old which enable the plaintiff to lay cable and there is no chance of dead line delivery of the contract dates. In this regard plaintiff wrote letter on 4/4/2008 to Chief Engineer, Tendering & Procurement, who have instructed to conduct fresh type of test cable as required in the manufacturing premises of L.S. Cable in South Korea and defendants have communicated to plaintiff, the said fact on 15/5/2008 refusing to waive the type test. Thus plaintiff has arranged type test of 220 KV underground cable at the premise of L.S.Cable, South Korea on 16/6/2008 to 18/6/2008. The said test was conducted on the first lot of underground cable on 2/7/2008 and after conducting all the tests permission was granted to lay the cable and there was denial of unit price stipulated in contract for supply of sand and removal of earth debris disposal. After carrying on the work by the plaintiff there was delay on the part of defendants in processing the bills and payment of running account bills as per the terms of the contract. For these reasons plaintiff being the Contractor failed to achieve milestone within the time stipulated and 7 CT 1390_Com.A.S.482016_Judgment .doc failed to complete the work within the time stipulated as per the agreement. Thus defendants claims that they are entitled to claim liquidated damages and defendants have deducted liquidated damages out of the running bills which is completely illegal, since the delay in carrying on the work by the plaintiff is attributable against defendants. Finally defendants have decided to levy Rs.76,77,000/ liquidated damages on the plaintiff for having carried on work beyond the period prescribed under the contract and there was also delay in approval of final quantity variation on the part of the defendants. Anyhow the plaintiff has completed the work as per the terms of the agreement. Since there was dispute with regard to execution of work as per the terms of contract between plaintiff and defendants herein, even though the work was completed by the plaintiff on 14/5/2012 and plaintiff herein alleges various breaches committed on the part of defendants herein and defendants have failed to pay amounts legitimately due under the contract to the plaintiff, plaintiff has invoked arbitration clause vide letter dated 11/12/2013 and requested defendants to settle dispute as per the claims of the contract. Despite of communication of such letter to the Chief Engineer who has rejected the same and plaintiff and the defendants have nominated one of the Arbitrators on their behalf and the said two Arbitrators who are appointed on behalf of plaintiff and defendants have nominated the third Presiding Arbitrator. Thus the Arbitral 8 CT 1390_Com.A.S.482016_Judgment .doc Tribunal was constituted and intimated the same to the plaintiff and defendants and communicated on 14/4/2014.
7. After constitution of such Arbitral Tribunal, plaintiff being the claimant before the Arbitral Tribunal putforth his claims as detailed below:
DETAILS OF CLAIMS (As Per Claim Statement) Sl. Description of Amount Interest Total No. claims 1 Sand & Debris/ 1,92,94,681 1,13,47,313 3,06,41,994 Earth disposal cost difference for over and above DWA quantity as per contract Unit price.
2 Disposal cost of 0 1,03,74,469 1,03,74,469
excess earth/
debris over and
above DWA
quantity as per
contract unit
price.
3 Interest on 0 43,16,677 43,16,677
running account
bills payment
delay
4 Refund of 76,77,000 0 76,77,000
liquidated
Damages
recovered illegally
and interest
thereon
9
CT 1390_Com.A.S.482016_Judgment .doc 5 Payment for 98,69,344 1,48,33,624 2,47,02,968 quantity variation (over and above DWA quantity) and interest thereon.
6 Payment of bank 37,74,791 21,32,756 59,07,547
commission
charges for
extension of
performance
bank guarantee
for contract
prolongation
interest thereon
i) supply
ii) Erection & 37,92,181 0 37,92,181
Civil
7 Payment of 0 3,71,73,029 3,71,73,029
interest on supply
retention money
blockadedue to
contract
prolongation for
supply portion
8 Cost of escalation 1,26,46,486 0 1,26,46,486
for contract
prolongation
priod for Civil &
Erection. (over &
above DWA
quantity)
9 Cost of 5,00,000 0 5,00,000
proceedings
Total 5,75,54,483 8,01,77,868 13,77,32,351
10
CT 1390_Com.A.S.482016_Judgment .doc There was no such counter claim putforth by defendants before the Arbitral Trinunal. After providing opportunity to both the sides to adduce evidence and mark their documents, the Arbitral Tribunal has passed award on 17/11/2015 and awarded sum of Rs.1,82,96,263/payable by defendants herein to the plaintiff towards claim No.2,3 & 5 and also directed the defendants to pay interest on Rs.1,55,52,964/ @12% per annum till the date of payment. If the said amount not paid in 3 months it shall carry interest at 16% per annum. Further ordered to pay interest on claim No.3 at 12% per annum.
8. Aggrieved by the said award passed by the Arbitral tribunal the plaintiff herein has preferred the present suit on various grounds. Some of the main grounds are the award passed by the Arbitral Tribunal is contrary to the express terms of the contract and Arbitrators have failed to consider the contractual terms and conditions at the time of passing such award and Arbitrators virtually rewriting the terms of the contract by relying on certain cross examinations which is absolutely perverse and opposed to the public policy and contractual terms which was in existence between parties to the suit. It is also contended that award of the Arbitral Tribunal is not in accordance with the terms of agreement and contains decision beyond pleadings of the parties to the suit. Thus the Arbitral Award is erroneous and illegal and 11 CT 1390_Com.A.S.482016_Judgment .doc opposed to the terms of the agreement existed between parties to the suit. While passing award the Arbitrators virtually modified some of the clauses in the agreement which is beyond the jurisdiction of the Arbitrators. Thus the Arbitrators have gone beyond the terms of the agreement while passing such award. It is also contended that learned Arbitrators have failed to consider that in order to constitute a novation there must be fresh agreement signed by both the parties in accordance with law. The award passed by the Arbitral Tribunal is contrary to the documentary evidence and also evidence adduced by both the parties to the suit and findings of the Arbitrators are perverse and contrary to the express terms of the contract. It is also contended that the denial of unit price for supply of sand over and above DWA quantity is completely against to the terms of contract and Arbitrators have failed to note the same while considering award to be passed in favour of the plaintiff herein.
9. The findings of the learned Arbitrators that rate fixed on 15/04/2010 and the amount received without any demur is not a ground to deny contractual claims of the plaintiff. The findings of learned Arbitrators that there is an accord and satisfaction and therefore plaintiff is not entitled to the claims completely is incorrect and without any basis. The findings of the Arbitrators is completely contrary to the facts and probabilities of the case and based on assumption and conjectures which has to be setaside. The findings of the 12 CT 1390_Com.A.S.482016_Judgment .doc Arbitrators with regard to entitlement of bank commission charges for extension of performance bank guarantee is erroneous and illegal and not sustainable. The findings of the Arbitrators that there is specific prohibition for grant of price escalation is completely contrary to the law, facts and terms of the contract which was existed between parties to the suit. The findings of the Arbitrators that the plaintiff is not entitled for extension of time as per GCC is not correct. The findings of the Arbitrators with regard to delay which leads to complete the contract beyond the time granted to the plaintiff is completely misunderstanding and misinterpretation which is not sustainable. The award passed by the Arbitrators restricted the payment of interest to 12% beyond the original period of 12 months is completely contrary to law, facts and probabilities of the case. The award of interest to the plaintiff is not in accordance with law and it is not sustainable. Hence it is prayed to setaside the Arbitral Award with regard to denial portion of claim No. 1, 7, 8, 9, 10 & 11 of the plaintiff before the Arbitrators and prayed to decree the suit as prayed for.
10. The brief averments of statement of objections filed by the defendants is that present suit filed by plaintiff challenging the award dated 17/11/2015 passed by Arbitral Tribunal with respect to the claims of plaintiff in claims No.1, 7 to 11 was contrary to the law, facts and probabilities of the case and present suit is not maintainable. There are no 13 CT 1390_Com.A.S.482016_Judgment .doc sufficient grounds made out to setaside the Arbitral Award under the provisions of Sec. 34 of Arbitration & Conciliation Act. It is well settled principles of law that the Arbitral Award cannot be lightly interfered even though parties aggrieved except under the provisions of section 34 of Arbitration & Conciliation Act. It is well settled that Hon'ble courts in challenges to Arbitral Award will not go into the reasonableness of reasons given by the Arbitral Tribunal. Merely because another view is possible on the same set of facts it cannot be a ground to challenge the Arbitral Award passed by Arbitral Tribunal. This court cannot sit in appeal over findings of the Arbitral Tribunal. The plaintiff has availed innumerable opportunities before Arbitral Tribunal to present their case the contract provides that each party shall appoint its nominee Arbitrators and such two Arbitrators shall appoint the presiding Arbitrator. Thus the plaintiff herein appointed Justice. R.V. Raveendran and defendants appointed justice Shivaraj.V.Patil as Arbitrators on their behalf who are retired judges of Hon'ble Supreme Court of India and the said two Arbitrators have appointed Justice P.V.Reddi as the presiding Arbitrator and after providing sufficient opportunities to both the sides an award is passed by Arbitral Tribunal which does not warrant interference. None of the grounds mentioned in Sec.34 of Arbitration & Conciliation Act have been pleaded in support of the present suit by the plaintiff. Thus the suit of the plaintiff is liable to be dismissed.
14CT 1390_Com.A.S.482016_Judgment .doc
11. The defendant No. 1 is Government Company fully owned by Government of Karnataka. Prior to 01/06/2002 the defendant No. 1 engaged in transmission and distribution of electricity in Karnataka State and now defendant No.1 is engaged in business of transmission of electricity in the State and other defendants are officers of defendant No. 1 company. The work entrusted to the plaintiff by calling tender by the defendants is admitted. But it is claimed that despite of undertaking to complete the work within 12 months from the date of contract. The work was not completed by the plaintiff within stipulated time and as per specification of the contract. Hence it has give raise to the dispute between plaintiff and defendants which was referred to the Arbitrators and adjudicated in accordance with law. After considering all the aspects with regard to the dispute involved between plaintiff and defendants herein the Arbitral Tribunal passed an award on 17/11/2015 and pleased to allow the claims of plaintiff partly and directed the defendants herein to pay sum of Rs.1,82,96,263/ towards claim Nos. 2, 3 & 5 and interest on Rs.1,55,52,964/ at 12% per annum from 01/01/2012 till payment and also directed to pay the same within 3 months and beyond that 16% interest was granted and out of 11 claims raised by the plaintiff. But Arbitral Tribunal has allowed 3 claims and partly allowed two claims and impugned award is well reasoned which cannot be interfered and Arbitral Tribunal has fully and comprehensively dealt with the 15 CT 1390_Com.A.S.482016_Judgment .doc entire evidence adduced by both the parties before it in arriving at the conclusion that the plaintiff is entitled for the relief as awarded by the Arbitral Tribunal and there is no such grounds mentioned by the plaintiff to interfere with the award passed under section 34 of Arbitration & Conciliation Act. Hence suit of the plaintiff is deserves to be dismissed and prayed to dismiss suit of the plaintiff with cost.
12. Heard arguments of both the sides and perused the LCR.
13. The points that arise for consideration are:
1. Whether the plaintiff made out sufficient grounds to set aside the Arbitral Award passed by the Arbitrators dated 17/11/2015 U/S.34 of Arbitration & Conciliation Act 1996 ?
2. What order?
14. My finding to the above points are as follows:
POINT No.1 : Negative.
POINT No.2 : As per final order for the following:
REASONS
15. POINT No.1 : The case of plaintiff is that plaintiff is reputed Contractor carrying on various infrastructural projects throughout the country for other utilities and also carrying out number of projects for the defendants herein. The defendants company registered under the Companies Act, license obtained from Electricity Act issued tender for Design, 16 CT 1390_Com.A.S.482016_Judgment .doc Engineering, Supply and Installation, Testing and Commissioning of 220 KV cable, 1000 sq.mm copper single core, U.G Cable at the site of KPTCL works and also for running three phase single circuit 220 KV 1000 sq.mm copper single core for route length of 7.9 kms from the proposed 220 KV E.D Compound Sub Station to the proposed 220 KV sub station at HAL, Bengaluru.
16. The plaintiff through their consortium partner L.S.Cable Limited, South Korea having all technical qualification submitted tender through etendering process on 9/7/2007 for executing the project work and on satisfaction of technical qualifications the defendants opened bid and plaintiff is the successful bidder. Such tender was accepted by the defendants and issued letter of award on 31/1/2008. The said award contains supply, erection and civil portion of work. After receiving Performance Bank Guarantee consisting 15% of the total contract value, the defendants have signed the agreement dated 16/2/2008 for carrying on the contract work as per specification of the contract. The contract work is involved of laying underground cable and largely dependent on the discharge of reciprocal obligations by the defendants herein. Immediately after entering into agreement with the defendants, plaintiff raised all the resources required for executing of the work. Since the work involves laying of 3 Phase Single Circuit 220 KV Underground cable which is required to be laid in Open Trench Method as per the 17 CT 1390_Com.A.S.482016_Judgment .doc requirement of defendants which involves huge labour, machineries to execute such project work.
17. The plaintiff being successful bidder mobilized all resources required for executing the contract work and defendants have to discharge their obligation in carrying on the entire work within the period of 12 months by the plaintiff herein. The plaintiff was prevented from executing the work on account of several breaches as detailed below:
a) Delay in granting permission by the BBMP for cutting the road and side road for laying the underground cable.
b) Delay on account of change of the route profile.
c) Delay in account of factory acceptance test
d) Delay on account of diversion of cables and accessories.
e) failure to issue the quantity variation and consequent delay in marking payment.
f) More importantly there was a recovery of liquidated damages.
18. The very nature of the work may be simple, but the complex created an account of breaches committed by the defendants herein as stated above and there was delay in obtaining permission for road cutting from the BBMP, permission from Police Department. The plaintiff has to dig trenches for laying cable. Thus the defendants herein have to obtain permission from BBMP for road cutting and plaintiff 18 CT 1390_Com.A.S.482016_Judgment .doc have submitted application to BBMP on 5/4/2008 requesting to grant permission for road cutting and defendants have wrote letter to BBMP on 17/4/2008 requesting to grant such permission. But BBMP did not grant permission and suggested to lay cable through Horizontal Dimensional Drilling method. Since the cable is 1000 sq.mm and heavy weight which is not possible to lay through HDD method. Hence defendants have wrote letter to BBMP to grant permission to dig trenches to lay such cable. On 25/4/2009 BBMP grant such permission for road cutting and to create trenches for laying cable. The said delay is beyond control of the plaintiff herein. Since permission was granted for 60 days to lay the cable by digging trench. It is the obligation on the part of defendants to renew such permission for road cutting to carry on the work by the plaintiff. The said delay is directly attributable against defendants herein. In addition to the above said permission of BBMP, permission of Deputy Commissioner of Police (Traffic) is also required. Since contract was carried on by the plaintiff in the traffic area in the heart of the city and application was submitted on 24/4/2009 to the Deputy Commissioner of Police (Traffic) to grant permission and permission was granted by the Police Department on 17/6/2009 and on account of the same there was some delay in carrying on work by the plaintiff. Thus there is delay in granting permission by BBMP and Traffic Police for digging trenches in their respective areas. By that time there was considerable delay which can be attributed 19 CT 1390_Com.A.S.482016_Judgment .doc against defendants and during such period plaintiff has incurred overhead charges and construction materials were stored and also machineries were idle.
19. Since there was considerable delay, plaintiff has requested defendants to waive type test to be conducted and already test was conducted which is less than 5 years old which enable the plaintiff to lay cable and there is no chance of dead line delivery of the contract dates. In this regard plaintiff wrote letter on 4/4/2008 to Chief Engineer, Tendering & Procurement, who has instructed to conduct fresh type test cable as required in the manufacturing premises of L.S. Cable in South Korea and defendants have communicated to plaintiff, the said fact on 15/5/2008 refusing to waive the type test. Thus plaintiff has arranged type test of 220 KV underground cable at the premise of L.S.Cable, South Korea on 16/6/2008 to 18/6/2008. The said test was conducted on the first lot of underground cable on 2/7/2008 and after conducting all the tests permission was granted to lay the cable and there was denial of unit price stipulated in contract for supply of sand and removal of earth debris disposal. After carrying on the work by the plaintiff there was delay on the part of defendants in processing the bills and payment of running account bills as per the terms of the contract. For these reasons plaintiff being the Contractor failed to achieve milestone with the time stipulated and failed to complete the work within the time stipulated as per the 20 CT 1390_Com.A.S.482016_Judgment .doc agreement. Thus defendants claims that they are entitled to liquidated damages and defendants have deducted liquidated damages out of the running bills which is completely illegal, since the delay in carrying on the work by the plaintiff is attributable against defendants. Finally defendants have decided to levy Rs.76,77,000/ liquidated damages on the plaintiff for having carried on work beyond the period prescribed under the contract and there was also delay in approval of final quantity variation on the part of the defendants. Anyhow the plaintiff has completed the work as per the terms of the agreement. Since there was dispute with regard to execution of work as per the terms of contract between plaintiff and defendants herein, even though the work was completed by the plaintiff on 14/5/2012 and plaintiff herein alleges various breaches committed on the part of defendants herein and defendants have failed to pay amounts legitimately due under the contract to the plaintiff, plaintiff has invoked arbitration clause vide letter dated 11/12/2013 and requested defendants to settle dispute as per the claims of the contract. Despite of communication of such letter to the Chief Engineer who has rejected the same and plaintiff and the defendants have nominated one of the Arbitrators on their behalf and the said two Arbitrators who are appointed on behalf of plaintiff and defendants have nominated the third and Presiding Arbitrator. Thus the Arbitral Tribunal was constituted and intimated the same to 21 CT 1390_Com.A.S.482016_Judgment .doc the plaintiff and defendants and communicated on 14/4/2014.
20. After constitution of such Arbitral Tribunal, plaintiff being the claimant before the Arbitral Tribunal putforth his claims as detailed below:
DETAILS OF CLAIMS (As Per Claim Statement) Sl. Description of Amount Interest Total No. claims 1 Sand & Debris/ 1,92,94,681 1,13,47,313 3,06,41,994 Earth disposal cost difference for over and above DWA quantity as per contract Unit price.
2 Disposal cost of 0 1,03,74,469 1,03,74,469
excess earth/
debris over and
above DWA
quantity as per
contract unit
price.
3 Interest on 0 43,16,677 43,16,677
running account
bills payment
delay
4 Refund of 76,77,000 0 76,77,000
liquidated
Damages
recovered illegally
and interest
thereon
22
CT 1390_Com.A.S.482016_Judgment .doc 5 Payment for 98,69,344 1,48,33,624 2,47,02,968 quantity variation (over and above DWA quantity) and interest thereon.
6 Payment of bank 37,74,791 21,32,756 59,07,547
commission
charges for
extension of
performance
bank guarantee
for contract
prolongation
interest thereon
i) supply
ii) Erection & 37,92,181 0 37,92,181
Civil
7 Payment of 0 3,71,73,029 3,71,73,029
interest on supply
retention money
blockadedue to
contract
prolongation for
supply portion
8 Cost of escalation 1,26,46,486 0 1,26,46,486
for contract
prolongation
priod for Civil &
Erection. (over &
above DWA
quantity)
9 Cost of 5,00,000 0 5,00,000
proceedings
Total 5,75,54,483 8,01,77,868 13,77,32,351
23
CT 1390_Com.A.S.482016_Judgment .doc There was no such counter claim putforth by defendants before the Arbitral Trinunal. After providing opportunity to both the sides to adduce evidence and mark their documents, the Arbitral Tribunal has passed award on 17/11/2015 and awarded sum of Rs.1,82,96,263/payable by defendants herein to the plaintiff towards claim No.2,3 & 5 and also directed the defendants to pay interest on Rs.1,55,52,964/ @12% per annum till the date of payment. If the said amount not paid in 3 months it shall carry interest at 16% per annum. Further ordered to pay interest on claim No.3 at 12% per annum. Aggrieved by the said Arbitral Award, present suit is filed by plaintiff claiming that Arbitral Award is opposed to public policy as provided U/S.34 of Arbitration & Conciliation Act.
21. On going through the award passed by the Arbitral Tribunal and on hearing both the sides and on going through the evidence and documents produced before the Arbitral Tribunal, it is not in dispute that plaintiff is reputed Contractor carrying on various infrastructural projects throughout the country and also carrying on number of projects for defendants herein. It is also not in dispute that defendant is registered company incorporated under the Companies Act and defendants have called for tender for laying 220 KV cable to the length of 7.9 KM from the proposed site of defendants at East Division Compound to the 24 CT 1390_Com.A.S.482016_Judgment .doc proposed 220 KV substation at HAL, Bengaluru. As per the tender called admittedly plaintiff have applied for tenders which was accepted on 31/1/2008 being the successful bidder and the said tender contains supply of UG Cable, erection and civil work and in pursuance of the said acceptance of tender admittedly plaintiff have furnished Performance Bank Guarantee consisting 15% of the total value of the contract to the defendants and signed agreement dated 16/2/2008 to carryout the said work as per the specification. It is also not in dispute that the contract work involved laying underground cable and the said work depends on the reciprocal obligations of defendant and admittedly after signing such agreement plaintiff have raised the resources required for executing of the work and procure huge labour and machineries for executing of the contract work. But plaintiff contended that after mobilization of all resources they have to carry on and complete the work within 12 months as per the terms of the contract. But plaintiff was prevented from executing the said work on account of several breaches on the part of the defendants herein which are detailed below:
a) Delay in granting permission by the BBMP for cutting the road and side road for laying the underground cable.
b) Delay on account of change of the route profile.
c) Delay in account of factory acceptance test 25 CT 1390_Com.A.S.482016_Judgment .doc
d) Delay on account of diversion of cables and accessories.
e) failure to issue the quantity variation and consequent delay in marking payment.
f) More importantly there was a recovery of liquidated damages.
22. Despite delay in obtaining permission from various departments like BBMP, Horticulture, Traffic Police and NIMHANS the work was concluded and completed by the plaintiff is not in dispute between parties to the suit. The plaintiff contended that the delay in obtaining permission from BBMP and Traffic Police has to be attributable against defendants herein and they have sustained heavy losses due to carrying on the prolonged work and there was idle of men and machinery due to the delayed permission obtained from BBMP and Traffic Police. Thus they could not able to complete the work within the stipulated time and they have incurred heavy losses in carrying on such work. It is also contended by the plaintiff that they have used more sand for filling and cleared earth debris from the spot while excavation of the soil for laying cable and they have incurred more cost than which was provided under the contract work and for using more sand and disposal of earth debris they have incurred heavy cost over and above DWA quantity as per contract unit and they have to renew bank guarantee periodically due to extension of time during delayed period for 26 CT 1390_Com.A.S.482016_Judgment .doc which they have paid bank charges and also they have incurred heavy interest on the same. It is also contended that the running bills which they have submitted to the defendants periodically were not paid within time. Hence the defendants have to pay interest on the delayed payment. It is also contended by the plaintiff that they have incurred additional cost towards joints installed while additional 220 kv normal straight cable was passed on and there was more amount spent for erection and civil work and they are also entitle for liquidated damages which was deducted by the defendants in the running bills along with interest. It is also contended by the plaintiff that they have paid towards terminating structure, surge arrestor as per the DWA rates and due to escalation of cost in carrying on the work they are entitle for additional cost which was not paid by the defendants. It is also claimed that they are entitle for litigation expenses since the defendants have dragged on them to the litigation without having any justification. All these aspects have been putforth before the Arbitral Tribunal by the plaintiff and details of claims made by the plaintiff before the Arbitral Tribunal are as follows:
DETAILS OF CLAIMS (As Per Claim Statement) Sl. Description of Amount Interest Total No. claims 1 Sand & Debris/ 1,92,94,681 1,13,47,313 3,06,41,994 Earth disposal cost difference for over and above DWA quantity as 27 CT 1390_Com.A.S.482016_Judgment .doc per contract Unit price.
2 Disposal cost of 0 1,03,74,469 1,03,74,469
excess earth/
debris over and
above DWA
quantity as per
contract unit
price.
3 Interest on 0 43,16,677 43,16,677
running account
bills payment
delay
4 Refund of 76,77,000 0 76,77,000
liquidated
Damages
recovered illegally
and interest
thereon
5 Payment for 98,69,344 1,48,33,624 2,47,02,968
quantity variation
(over and above
DWA quantity)
and interest
thereon.
6 Payment of bank 37,74,791 21,32,756 59,07,547
commission
charges for
extension of
performance
bank guarantee
for contract
prolongation
interest thereon
i) supply
ii) Erection & 37,92,181 0 37,92,181
Civil
28
CT 1390_Com.A.S.482016_Judgment .doc 7 Payment of 0 3,71,73,029 3,71,73,029 interest on supply retention money blockadedue to contract prolongation for supply portion 8 Cost of escalation 1,26,46,486 0 1,26,46,486 for contract prolongation priod for Civil & Erection. (over & above DWA quantity) 9 Cost of 5,00,000 0 5,00,000 proceedings Total 5,75,54,483 8,01,77,868 13,77,32,351
23. Thus before Arbitral Tribunal the plaintiff herein claims total sum of Rs.13,77,32,351/ which is liable to be paid by defendants to the plaintiff. Despite of putforth such claims, defendants herein have not putforth any counter claim before the Arbitral Tribunal and on perusal of records after providing opportunities to both the sides to adduce evidence and mark documents on their behalf the Arbitral Tribunal has passed an award on 17/11/2015 and awarded total sum of Rs.1,82,96,263/ payable by defendants to the plaintiff along with interest @ 12% per annum on the said amount from the date of award till realization. It is also pertinent to note that the Arbitral Tribunal has directed 29 CT 1390_Com.A.S.482016_Judgment .doc defendants to pay interest @ 12% per annum on Rs.1,55,52,964/ in sum of Rs.45,67,540/ along with litigation cost. On going through the findings given by the Arbitral Tribunal with regard to the claims made by plaintiff the findings are just and proper when compared to the documents and evidence placed by both the parties to the suit. But in the grounds of the present suit plaintiff has contended that the Arbitral Tribunal passed an award which is opposed to the public policy as provided U/S.34 of Arbitration & Conciliation Act. The evidence placed before the Arbitral Tribunal by both the plaintiff and defendant was considered and proper finding was given which cannot be opposed to the public policy are erroneous as contended by the plaintiff. Admittedly the work involved in the said contract is of not simple in nature and plaintiff has to obtain permission of BBMP and Traffic Police while carrying on the work and entire delay in obtaining such permission cannot be attributable against defendants alone which fact has been considered by the Arbitrators while giving finding and while passing award and no such erroneous order is passed as contended by the plaintiff.
24. On going through the award passed by the Arbitral Tribunal, it is pertinent to note that after considering evidence of both the sides the Arbitrators have rejected some of the claims of plaintiff and since no counter claim is made by defendants the Arbitral Tribunal has considered it is just 30 CT 1390_Com.A.S.482016_Judgment .doc and proper to award sum of Rs.1,82,96,263/ payable by defendants to the plaintiff along with interest @ 12% per annum. Even though it is contended that plaintiff have used more sand for laying cable and they have spent more money for lifting earth debris from the spot and cost incurred is more than which is prescribed under the contract. Thus they are entitle for escalation of price of the contract for prolonging period in carrying on civil and erection work and laying cable. All these aspects have been considered by the Arbitral Tribunal while passing award which cannot be considered as exceeding the limits of the Arbitrators while passing such award. Even though it is argued by learned counsel for plaintiff that denial of some of the claims of plaintiff is contrary to the provisions of the agreement executed between plaintiff and defendants herein and it is also argued that exceeding the limits of Arbitrators they have not considered some of the claims and the Arbitrators have gone beyond the scope of agreement which is executed by both the parties to the suit. Hence there is no such patent irregularities in considering the claim of plaintiff by the Arbitrators. The plaintiff has not putforth sufficient grounds to set aside Arbitral Award passed by the Arbitral Tribunal as provided U/S.34 of Arbitration & Conciliation Act. This court cannot examine the legality of award passed by the sole Arbitrator by going through the evidence and documents produced before the Arbitrators by the plaintiff and defendants herein and this court cannot reappreciate the evidence and documents 31 CT 1390_Com.A.S.482016_Judgment .doc produced before the sole Arbitrator by both the parties to the suit. If the finding given by the Arbitral Tribunal is opposed to the public policy or exceeding the limits of Arbitrators while passing such award or the award passed by the Arbitrators is not considering the clauses mentioned in the agreement as provided U/S.34 of Arbitration & Conciliation Act then only this court can set aside the same.
25. On perusal of Arbitral Award there is no such patent irregularity or opposed to justice or morality and award passed is unfair or unreasonable as contended by the plaintiff. While arguing learned counsel for plaintiff relied upon decisions reported in (2003) 5 SCC 705 which is the case of Oil & Natural Gas Corporation Limited v/s Saw Pipes Limited, (2006) 4 SCC 445 which is the case of Hindustan Zinc Limited v/s Friends Coal Carbonisation, (2007) 13 SCC 236 which is the case of Security Printing and Minting Corporation of India Limited and another v/s Gandhi Industrial Corporation, (2008) 16 SCC 128 which is the case of Associated Construction v/s Pawanhans Helicopters Limited, (2014) 9 SCC 263 which is the case of Oil and Natural Gas Corporation Limited v/s Western Geco International Limited, (2015) 3 SCC 49 which is the case of Associate Builders v/s Delhi Development Authority, (2015) 5 SCC 739 which is the case of Swan Gold Mining Limited v/s Hindustan Copper Limited. I have 32 CT 1390_Com.A.S.482016_Judgment .doc gone through the principles laid down in the said decisions which are not applicable to the present facts and circumstances of this case. Likewise learned counsel for defendants while arguing relied upon decisions reported in (2007) 4 SCC 697 which is the case of Food Corporation of India v/s Chandu Constructions and Another, (2011) 14 SCC 147 which is the case of Oil and Natural Gas Corporation Limited v/s Offshore Enterprises Inc., 2017 SCC Online Del 8773 which is the case of M/s Pawan Hans Helicopters Limited v/s M/s Maritime Energy Heli Air Services Private Limited. I have gone through the principles laid down in the said decisions and as per the principles laid down in the said decisions admittedly this court cannot reappreciate the evidence and documents placed before the sole Arbitrator and cannot set aside the Arbitral Award and this court cannot examine the legality of award passed by the sole Arbitrator, if it is not opposed to the public policy or exceeding the limits of sole Arbitrator. If the award passed by the Arbitrator is erroneous and not considering the evidence and documents placed by both the parties to the suit in the right prospective and exceeding the limits of Arbitrators while considering the clauses mentioned in the agreement then only this court can set aside such Arbitral Award. But on perusal of the Arbitral Award and the grounds taken by the plaintiff in the present suit, there is no patent irregularity or opposed to the justice or morality and 33 CT 1390_Com.A.S.482016_Judgment .doc this court not found that award passed is unfair or unreasonable as contended by the plaintiff. Considering all the claims made by plaintiff before the Arbitrators, just and reasonable amount to be awarded in sum of Rs.1,82,96,263/ is considered to be payable by defendants to the plaintiff along with interest @ 12% per annum. Even though it is contended that plaintiff has to extend Performance Bank Guarantee and paid commission amount and interest which was considered by the Arbitrators by awarding interest on Rs.1,55,52,964/ at 12% per annum and also cost incurred by the plaintiff which cannot be held as unfair or unreasonable as contended by the plaintiff.
26. In view of the above said discussion, I am of the opinion that plaintiff has not at all made out any cogent grounds to prove that impugned Arbitral Award is opposed to public policy or the Arbitrators have exceeded the limits in passing such award. Further the plaintiff has not at all made out cogent grounds to set aside the Arbitral Award and no grounds made out to show that learned Arbitrators are perverse, unfair or unreasonable in passing such award. The plaintiff has utterly failed to prove and establish that the award passed by the sole Arbitrator falls within any of the provisions prescribed U/S.34 of Arbitration & Conciliation Act 1996. On the other hand in the arguments of defendants side they have specifically submitted that the Arbitrators have considered all the material aspects and applied provisions of 34 CT 1390_Com.A.S.482016_Judgment .doc law to the facts and circumstances of this case and passed an award which is not opposed to public policy as contended by the plaintiff. The materials placed before this court by both the parties clearly discloses that the award passed by the Arbitral Tribunal is just and reasonable taking into consideration the evidence and documents placed by both the sides before the Arbitrators. Thus the present suit is deserves to be dismissed. Accordingly I hold point No.1 as negative.
27. POINT No.2 : In view of my discussion on point No.1 above, I proceed to pass following:
ORDER The suit filed by the plaintiff U/S.34 of Arbitration & Conciliation Act 1996 is hereby dismissed.
In view of the circumstances of this case, the parties are directed to bear their own costs.
Draw decree accordingly.
[Dictated to the Judgment Writer; transcript thereof corrected, initialed and then pronounced by me, in the Open Court on this the 16th day of December 2020] [N. Sunil Kumar Singh] LXXXIII Additional City Civil Judge.
BENGALURU.