Bombay High Court
M/S. Michigan Engineers Pvt. Ltd vs Municipal Corpn. Of Gr. Bombay on 16 April, 2016
Author: Anoop V. Mohta
Bench: Anoop V. Mohta, G.S. Kulkarni
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
APPEAL NO. 644 OF 2006
IN
ARBITRATION PETITION NO. 229 OF 1993
IN
AWARD NO. 77 OF 1993
M/s. Michigan Engineers Pvt. Ltd.,
D-7, Commerce Centre,
78, Javji Dadaji Road, Tardeo,
Bombay-400 084. .....Appellants.
(Original Respondents)
Vs.
Municipal Corporation of Greater
Bombay, a Body Corporate, Constituted
The Bombay Municipal Corporation Act,
1888, having it's office at Mahapalika
Building, Mahapalika Marg, Fort,
Bombay-400 001. ....Respondents.
(Original Petitioners)
Mr. Simil Purohit a/w Mr. Bagla Dandekar i/by Bagla Dandekar & Co.
for the Appellants.
Ms. Nikita Trivedi a/w Mr. R.Y.Sirsikar for the Respondents.
CORAM : ANOOP V. MOHTA AND
G.S. KULKARNI JJ.
RESERVED ON : 18 FEBRUARY 2016.
PRONOUNCED ON : 16 APRIL 2016.
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JUDGMENT (PER ANOOP V. MOHTA, J.):-
The original Claimants-Appellants, by this Appeal, have challenged Judgment dated 21 November 2005 passed by the learned Judge in the Arbitration Petition whereby, the Arbitration Petition No. 229 of 1993 was partly allowed and thereby, modified the award to the following extent-
". The directions contained in the award for making the payment at the rate of Rs.7312/- per unit against item at serial No. 2 is set aside.
. Award stands modified to the above extent.
Respondent shall pay costs of this petition to the Petitioner as incurred by the Petitioner."
2 The learned sole Arbitrator, Mr. Justice V.D. Tulzapurkar, (former Judge of the Supreme Court of India) has passed an award on 12 April 1993. The operative part of the same is as under:-
(a) It is declared that for items at Serial Nos. 2,3, 3(a) 4 and 5 specified in Tabular Statement in para 11 above the Claimants are entitled to get additional payment at the enhanced/higher rates determined and specified by me in para 12 above against each such item after adjusting the payment already made by the Respondents a the Tender Rates.
(b) It is further declared that the Claimants are entitled to get interest at 13% p.a. on the amount that will 2/27 ::: Uploaded on - 16/04/2016 ::: Downloaded on - 17/04/2016 00:00:42 ::: ssm 3 app644.06-judgment.sxw become due for the said items under the declaration at
(a) above from the date when payment for concerned items became due till the date of this Award.
(c) In the circumstances, parties will bear and pay their costs of this Arbitration.
3 Brief facts of the case are as under:-
In the month of April 1989, tenders were invited by the Respondent-Municipal Corporation of Greater Bombay, (for short, "the Corporation") for construction of fine screens, aerated grit chamber at Bhandup and Ghatkopar being Contract Nos. 10/A and 11/A, respectively. On 17 November 1989, the work order of said contract was issued in favour of the Appellants. Under the said contract, the two alternative methods were provided for completing the contract and the option to choose any of them lay with the contractor. Though the Appellants possessed the expertise, equipment and special technique to complete the contract by adopting the alternative R.C.C. Dispensable Conical Shoe method, by installation of stone columns of the size of 400 mm diameter, but were compelled to complete the work by another option by installing 750 mm diameter rammed stones by adopting conventional boiler boring method. Accordingly, on 29 November 1989, work order issued by the Chief Engineer, Sewerage 3/27 ::: Uploaded on - 16/04/2016 ::: Downloaded on - 17/04/2016 00:00:42 ::: ssm 4 app644.06-judgment.sxw Project of Respondent Corporation to Appellants. On 15 December 1989, the work of both the contracts were commenced.
4 Cost of work in Contract No. 10/A was Rs. 3,12,60,215.61 with a contract period of 24 months exclusive of monsoon period while that for Contract No.11/A was Rs. 5,92,94,471.96 with a contract period of 30 months exclusive of monsoon period. The terms and conditions of the contract were included in- General Conditions of Contract for Civil Work (GCC), Bills of Quantities (BOQ), Technical and Special Specifications, Drawings and all other documents mentioned in definition of contract provided under clause 4(b) of GCC. Under the contract, definite and precise sequence of construction programme of work was required to be submitted by the Appellants. As per the sequence of construction and programme of work, the work of improving the bearing capacity of the ground and controlling the settlement was required to be taken up first to achieve results of certain items viz. item Nos. 1 to 5 of BOQ 9, which were required to be executed by the Appellants at the first instance. There are fixed schedule rates provided under various items of BOQ. BOQ and schedule rates are part of the contract, as provided under the 4/27 ::: Uploaded on - 16/04/2016 ::: Downloaded on - 17/04/2016 00:00:42 ::: ssm 5 app644.06-judgment.sxw definition of contract under Clause 4(b) of GCC. The dispute involved in the present Appeal is confined to item No. 2 of BOQ 9. Item No. 2 deals with installation of stone columns. The execution technology of civil items has been specified in Technical Specifications Vol.3, Part I of
2. The technique for installation of stone columns has been specifically provided under Section 02318A. Clause 1.1.2 of Section 02318A provided for two alternative methodologies for installation of rammed stone columns viz. (i) by driving heavy casing tube of 750 mm diameter by using conventional boring piling method or by employing bailor boring method or, (ii) by driving 400 mm diameter closed ended tube by providing dispensable conical shoe at bottom.
As per the definition of contract provided under Clause 4(b) of GCC, all the documents mentioned therein were specifically provided to be complimentary to each other.
5 On 9 December 1989, a co-ordination meeting held between the authorized representatives of Appellants and Respondent Corporation, wherein Appellants' proposed methodology of driving 400 mm diameter closed ended tube by providing dispensable conical shoe at bottom, was not accepted by Respondent Corporation since 5/27 ::: Uploaded on - 16/04/2016 ::: Downloaded on - 17/04/2016 00:00:42 ::: ssm 6 app644.06-judgment.sxw the same was not in conformity with BOQ. The Respondent Corporation was constrained to refuse the proposed methodology since the provisions of BOQ and technical specifications had to be construed harmoniously in conjunction with each other and as per the contract, it was incumbent for the Appellants contractor to install 750 mm diameter stone column. Thus, the execution methodology for installation of 750 mm diameter column i.e. by using conventional boring piling method or by employing bailor boring method as provided under Clause 1.1.2 of Section 02318A of Technical Specifications had to be employed by the Appellants contractor in conformity with the contract.
6 A letter was issued by the Appellants to the Chief Engineer of Consultants M/s. Binnie & Partners (India) Ltd. on 11 January 1990, proposing use of technique of concrete dispensable shoe for installation of stone column. On 19 March 1990, a letter was issued by the Chief Engineer (Sewerage Project) of Respondent Corporation to Appellants explicitly refusing to accept the proposed methodology, which was in deviation with the terms of the contract. By the said letter, the Respondent Corporation made it clear that the stone column 6/27 ::: Uploaded on - 16/04/2016 ::: Downloaded on - 17/04/2016 00:00:42 ::: ssm 7 app644.06-judgment.sxw installed by the Appellants' proposed methodology, could be accepted only on the condition that payment would be made by the Respondent Corporation only under BOQ items existing in contract. If the said condition regarding payment is not acceptable, the Appellants contractor was at liberty to follow technical specification for 750 mm diameter as provided in the contract.
7 On 29 March 1990, since the Appellants contractor was not able to install even one trial stone column as per it's proposed methodology, which was not in conformity with contract, letter addressed by the Executive Engineer (Sewerage Project) of Respondent Corporation to the Appellants advising it to follow relevant technical specification for BOQ item for 750 mm dia. rammed stone column.
8 On 24 May 1990, since no productive work was achieved by the proposed methodology, a letter was issued by the Executive Engineer (Sewerage Project) of the Respondent Corporation to Appellants, calling upon the use of technique as per clause 1.1.2 of Section 02318A for 750 mm diameter stone column. Since Appellants' 7/27 ::: Uploaded on - 16/04/2016 ::: Downloaded on - 17/04/2016 00:00:42 ::: ssm 8 app644.06-judgment.sxw proposed methodology was unsatisfactory, on 28 May 1990, a letter was issued by the Executive engineer (Sewerage Project) of Respondent Corporation to Appellants that the proposed methodology was not acceptable to consultant and thus, in the interest of the project, requesting for employing bailer boring method as per the contract.
9 On 5 June 1990, since the Appellants failed to establish proposed methodology to the satisfaction of technical specifications, a letter was issued by the Chief Engineer (Sewerage Project) of the Respondent Corporation to the Appellants requesting it to adopt bailer boring method as per the contract. On 6 June 1990, a letter was issued by the Chief Engineer (Sewerage Project) of the Respondent Corporation to Appellants that the Appellants had never quoted a rate for proposed methodology, which was in deviation with the contract.
On 27 November 1990, a letter was issued by the Appellants to the Executive Engineer, Respondent Corporation requesting for payment of Rs.10,970/0 per stone column. On 16 November 1991, a letter was issued by the Appellants Contractor to the Municipal Commissioner, Respondent Corporation for it's decision under Clause 8/27 ::: Uploaded on - 16/04/2016 ::: Downloaded on - 17/04/2016 00:00:42 ::: ssm 9 app644.06-judgment.sxw 96 of the GCC in view of dispute regarding payment. On 22 April 1992, decision was taken by the Municipal Commissioner of Respondent Corporation that claim submitted by the Appellants is not admissible. As the Appellants were wrongfully denied to use the one of the alternative method of which they had option, therefore, the Appellants were required to put the additional cost for which the Respondent required to pay the same as the Respondent refused to pay. Therefore, the Respondent agreed to refer the said disputes and differences for the Arbitration as per clause 96 and 97 of the GCC.
10 On 12 April 1993, the learned Arbitrator passed declaratory Award whereby, the Appellants were declared as entitled to get additional payment at the enhanced higher rate at 2/3 rd of the rates claimed by them and further was declared entitled to get interest of 18% per annum on the said enhanced amount from the date when it became due till the date of award.
11 On 23 September 1993, the Respondents challenged the said Award by filing the Arbitration Petition. On 21 November 2005, the impugned Judgment/order was passed, and therefore, the present 9/27 ::: Uploaded on - 16/04/2016 ::: Downloaded on - 17/04/2016 00:00:42 ::: ssm 10 app644.06-judgment.sxw Appeal is filed on 18 January 2006.
12 The learned counsel appearing for the Appellants/Claimants submitted that, the alternative which the Claimants wanted to opt for, was not given any trial and was denied to them by the Respondent Corporation for no valid reason and instead, the Respondent Corporation foisted on them the expensive alternative of installing rammed stone columns of 70 mm dia for which they must compensate the Claimants. It is not possible to reject the claim outright for absence of such material inasmuch as the Respondents have received the benefit of getting the requisite number of rammed stone columns of the size of 750 mm dia installed by wrongfully denying the other alternative which was open to the Claimants namely to install the same number of rammed stone columns of the size of 400 mm dia thereby, subjecting the Claimants to higher expenditure and it was never the intention of the parties that the Claimants should do so gratuitously.
13 The learned Arbitrator, in the facts and circumstances, referring to the evidence so recorded by giving sufficient reasons and 10/27 ::: Uploaded on - 16/04/2016 ::: Downloaded on - 17/04/2016 00:00:42 ::: ssm 11 app644.06-judgment.sxw the material placed on record including rival contentions of the Respondents, observed and held as under:-
"12 ......It is true that the Claimants should have placed material on record regarding the actual expenditure incurred by them. But it is not possible to reject their claim outright for absence of such material inasmuch as the Respondents have received the benefit of getting the requisite number of rammed stone columns of the size of 750 mm dia installed by wrongfully denying the other alternative which was open to the Claimants namely to install the same number of rammed stone columns of the size of 400 m dia thereby subjecting the Claimants to higher expenditure and it was never the intention of the parties that the Claimants should do so gratuitously. Not to grant any higher rate whatsoever would amount to the Respondents getting unjust enrichment, apart from the Respondents going scot-free in spite of their wrongful denial of the alternative to the Claimants to which they were entitled. I am, therefore, of the opinion that on quantum meruit basis the Claimants would be entitled to claim additional payment at reasonably enhanced rate. In all the circumstances of the case, it would be reasonable to grant to the Claimants enhanced higher at 2/3rd of the rates claimed by them. Accordingly, I fix the enhanced rate per unit at Rs. 7,312.00 against item at Serial No. 2, at Rs.686.00 against item at Serial No. 3, at Rs. 230.00 against item at Serial No. 3(a), at Rs. 7,312.00 against item at Serial No.4 and at Rs. 486.00 against item at Serial No.5 since payment for these items at Tender Rates has already been made by the Respondents to the Claimants, the Respondents are directed to pay the difference between the Tender Rates and the rates specified by me above.
13. On the question of interest claimed by the Claimants, the Respondents have averred that the same cannot be 11/27 ::: Uploaded on - 16/04/2016 ::: Downloaded on - 17/04/2016 00:00:42 ::: ssm 12 app644.06-judgment.sxw allowed in view of the prohibition contained in Clause 85 of the General Terms and Conditions of the Contract. In my view, Clause 85 prohibits payment of interest in routine case of delay arising in payment normal running bills. Here the entitlement to additional expenditure is refuted altogether and the additional payment has become due ad the result of my adjudication. Therefore in view of the notice given by the Claimants that they shall claim interest at 18%, the Claimants are entitled get interest at the rate form the date when payment for the concerned items became due till the date of this Award."
14 The learned counsel appearing for the Appellants has pointed out various communication on record including, communication dated 12 June 1990 whereby, the Appellants referring to the decision of the Executive Engineer, as per clause 7 while dealing with the aspect of deviation from the contract conditions, submitted that, "However, if you feel that your decision is final then we request you to put this matter for arbitration, as per the conditions in the contract at the earliest". The proposal so stated, was accordingly proceeded further for discussion. Admittedly, there was no stop notice and/or indication to the Appellants not to complete the work as per the available one method out of two. On the contrary, admittedly Appellants proceeded and completed the work by choosing one of the method by making rammed stone columns, which was part of the 12/27 ::: Uploaded on - 16/04/2016 ::: Downloaded on - 17/04/2016 00:00:42 ::: ssm 13 app644.06-judgment.sxw contract itself. The work was completed under the supervision and direction and subject to the technical specification as per the agreement. In case of dispute and/or doubt about the decision of the Executive Engineer, it was permissible to refer the matter for Arbitration. Such issue, as per the agreement, referable to the Arbitration inspite of the decision of Executive Engineer and/or concerned Officer, even as per the Arbitration Contract, the rate for such work done by the Appellants are always subject to the final decision of the Arbitral Tribunal. Having once adopted this mechanism, which is permissible in law, the learned Arbitrator therefore, in our view, rightly awarded the amount as recorded above, on the quantum meruit basis, towards the additional payment at enhanced reasonable rate. The reason therefore, so given and so recorded above, in our view, is within the framework of law and the record. There is no breach of any terms and conditions and therefore, the award ought not to have been modified, as done in the present case. There was no perversity and/or award was not contrary to the record and/or the terms and conditions. The view expressed by the learned Arbitrator was within the framework of law, as by consent the Arbitrator was appointed to settle the issue, as there was no 13/27 ::: Uploaded on - 16/04/2016 ::: Downloaded on - 17/04/2016 00:00:42 ::: ssm 14 app644.06-judgment.sxw agreement with regard to the decision taken by the concerned Officer.
Both the parties agreed for the Arbitration and therefore, the decision given by the learned Arbitrator, in our view, ought not to have been interfered with and or modified. The learned counsel appearing for the Respondents have placed on record the following judgments:-
a) Rajasthan State Mines & Minerals Ltd. Vs. Eastern Engineering Enterprises & Anr.1 "Award disregarding the terms of the contract is a jurisdictional error. Arbitrator cannot award an amount which is ruled out or prohibited by the terms of the contract. If there is a specific bar in the contract to the raising of a particular claim then the award passed in respect thereof is in excess of jurisdiction. Even if the claim is raised and referred to arbitration, such claim amount cannot be awarded as the agreement is binding between the parties and the arbitrator has to adjudicate as per the agreement. A deliberate departure or conscious disregard of the contract manifests the disregard of his authority or misconduct on his part."
b) Steel Authority of India Limited Vs. Gupta Brothers Steel Tubes Limited2 "Where an arbitrator travels beyond the contract, the award would be without jurisdiction and would amount to legal misconduct and would become amenable for being set aside by the Court."
1 (1999) 9 SCC 283 2 (2009) 10 SCC 63 14/27 ::: Uploaded on - 16/04/2016 ::: Downloaded on - 17/04/2016 00:00:42 ::: ssm 15 app644.06-judgment.sxw
c) K.P. Poulose Vs. State of Kerala & Anr.3 "Award passed by ignoring material documents which throw abundant light on the controversy constitutes legal misconduct under Section 30(a) of Arbitration Act, 1940.
d) Waverly Jute Mills Co. Ltd. Vs. Raymon & Co. (India) (P) Ltd.4 "If an award deals with a matter not covered by the agreement, it could be modified under Section 15(a) of the 1940 Act."
e) Indian Oil Corporation Ltd. Vs. Amritsar Gas Service & Ors.5 "Award modified so that the relief granted would be within the jurisdiction of the arbitrator."
f) The Upper Ganges Valley Electricity Supply Company Ltd.
Vs. The U.P. Electricity Board6 "The invalid part of the award being severable from that which is valid, there is no justification for setting aside the entire award."
g) J.C. Budhraja Vs. Chairman, Orissa Mining Corporation Ltd. & Anr.7 "Part of the award suffering from the vice of legal misconduct being severable from the rest of the award, entire award is not liable to be set aside. Amounts awarded by the arbitrator falling within 3 (1975) 2 SCC 236 4 AIR 1963 SC 90 5 (1991) 1 SCC 533 6 (1973) 1 SCC 254 7 (2008) 2 SCC 444 15/27 ::: Uploaded on - 16/04/2016 ::: Downloaded on - 17/04/2016 00:00:42 ::: ssm 16 app644.06-judgment.sxw jurisdiction can be severed from other portions of the award.
h) D.C.M. Ltd. Vs. Municipal Corporation of Delhi & Anr.8 "If the arbitrator has exceeded his jurisdiction, the award to that extent can be set aside."
i) Bombay Housing Board Vs. Karbhase Nail & Co.
Sholapur9 "In the absence of any agreement for the claimed rates, stipulated rates would apply and be binding upon the parties."
j) M/s. Alopi Parshad Vs. Union of India10 "Where the party has chosen to tie himself down by the express terms of the contract, there is no scope for the arbitrator to award by applying principle of quantum meruit. The legal principle which forms the basis of the award in awarding the claim amount, can be examined by the Court. Extra rates by applying quantum meruit cannot be awarded where there are fixed contractual rates."
k) M/s. Patel Engineering Co. Ltd. Vs. Indian Oil Corporation Ltd.11 "The arbitrator cannot award on the basis of quantum meruit where there are express terms of the contract."
l) Roopji & Sons Vs. Dyer Meaken & Co. Ltd.12 8 (1997) 7 SCC 123 9 (1975) 1 SCC 828 10 AIR 1960 SC 588 11 AIR 1975 Pat. 212 12 AIR 1930 All 545 16/27 ::: Uploaded on - 16/04/2016 ::: Downloaded on - 17/04/2016 00:00:42 ::: ssm 17 app644.06-judgment.sxw
"Applicability of quantum meruit is excluded where party is bound by express terms of contract."
m) Associate Builders Vs. Delhi Development Authority13 "It is well settled law that an award which is not based on any evidence is necessarily perverse and liable to be set aside."
15 The above law position requires no discussion as settled.
We have to see the facts of this case. The Judgments so referred above are on different facts and are distinguishable. In view of the facts so recorded above and specifically reasoning given by the learned Arbitrator, this case needs to be dealt with accordingly.
16 The Apex Court, in Food Corporation of India and Ors. Vs. Vikas Majdoor Kamdar Sahakari Mandli Limited, 14 referring to Section 70 of the Contract Act, 1872, while dealing with the principle of quantum meruit for the extra work and the reasonable payment whether required to be granted or not, recorded that the payment under this Section can also be claimed when the benefit has already been availed by the other side and in para Nos. 19 and 20 recorded 13 (2015) 3 SCC 49 14 (2007) 13 SCC 544 17/27 ::: Uploaded on - 16/04/2016 ::: Downloaded on - 17/04/2016 00:00:42 ::: ssm 18 app644.06-judgment.sxw the said principle as under:-
"19 A person who does work or who supplies goods under a contract, if no price is fixed, is entitled to be paid a reasonable sum for his labour and the goods supplied. If the work is outside the contract, the terms of the contract can have no application; and the contractor is entitled to be paid a reasonable price for such work as was done by him.
20 If a party to a contract has done additional construction for another not intending to do it gratuitously and such other has obtained benefit, the former is entitled to compensation for the additional work not covered by the contract. If an oral agreement is pleaded, which is not proved, he will be entitled to compensation under Section 70. Payment under this section can also be claimed for work done beyond the terms of the contract, when the benefit of the work has been availed of by the defendant."
17 This is the case where the Respondents admittedly, availed the benefits and permitted the Claimants to work and complete the construction and the decision of Executive Engineer was made subject to Arbitration. The Arbitrator, therefore, was empowered to do so and deal with the issue of payment for the work admittedly done by the Appellants. The Arbitrator has taken a view based upon the agreement between the parties and awarded the reasonable compensation. We see no reason to interfere with the same by the 18/27 ::: Uploaded on - 16/04/2016 ::: Downloaded on - 17/04/2016 00:00:42 ::: ssm 19 app644.06-judgment.sxw learned Judge. [T.P. Geroge Vs. State of Kerala15]. This is not the case of award which is contrary to settled law and/or record. Considering the principle of Section 30 of Arbitration Act 1940 Arbitrator was not obliged to give reasons, unless it stipulates in the agreement itself. In the present case, the reasons are provided. There was no error apparent on the face of record of the award to vitiate the decision of the Arbitrator on the points. [Trustees of the port of Madras Vs. Engineering Constructions Corporation Ltd.16].
18 The claim of high rate by the contractor for abnormal increase in quantity of work, the power of Arbitrator to award the higher rate is within the framework of law. [State of U.P. Vs. Ram Nath International Construction Pvt. Ltd.17].
19 There is no case of misconduct made out after reading the award so passed by the Arbitrator, on the contrary, the award is reasoned one, based upon the contract terms between the parties and the correspondence placed on record. The amount so awarded is not 15 AIR 2001 SC 816 16 1995 (5) SCC 531 17 AIR 1996 SC 782 19/27 ::: Uploaded on - 16/04/2016 ::: Downloaded on - 17/04/2016 00:00:42 ::: ssm 20 app644.06-judgment.sxw based upon any sort of loss and/or claim of liquidated damages. After going through the record, as well as, the correspondence between the parties, we are also convinced that the claim so awarded by the learned Arbitrator was towards the work admittedly done and the Respondents admittedly got the benefit out of it. The Respondents, therefore, cannot deny the claim once agreed to refer the decision to the Arbitrator on this issue. The Arbitrator, therefore, has jurisdictional authority to pass and/or award reasonable compensation beyond the rates so agreed, as sought to be contended by the learned counsel appearing for the Respondents.
20 Having noted the Arbitration clause, in addition to above clauses, the Executive Engineer's decision held to be final, as the issue was referred by the parties to the Arbitral Tribunal. The Arbitrator has power and authority to decide the monetary claim and rate to be paid, as it was not decided and/or could not be decided by the Engineer, therefore, in the present case, based upon the clauses and the conditions, the award so passed by the learned Arbitrator is well within the framework of law and the record. The submission that as the decision of Executive Engineer was final and therefore the 20/27 ::: Uploaded on - 16/04/2016 ::: Downloaded on - 17/04/2016 00:00:42 ::: ssm 21 app644.06-judgment.sxw contractor was not entitled for any other amount than fixed for other claims, is unacceptable, as it is contrary to the contract between the parties itself. There is no clause pointed out that the decision of the Executive Engineer shall not be questioned in any Arbitration proceedings and cannot be subject matter of Arbitration dispute.
Therefore, the case is made out by the Appellants to interfere with the order passed by the learned Single Judge, which is contrary to the terms and conditions itself and against the settled principle of law in this regard.
21 In the present case, therefore, we are inclined to observe that the award so passed by the learned Arbitrator was not beyond the terms of contract. It is not without jurisdiction and/or shows any illegal misconduct. The award passed, based upon the material placed on record, apart from the grant of reasonable compensation considering the nature of admitted work done under the supervision and control of the Respondents-Corporation. As the payment was subject to Arbitral Tribunal decision, this itself means it is permissible for the Arbitrator to award reasonable compensation, if the matter does not fall and cover by the special agreement. We are inclined to 21/27 ::: Uploaded on - 16/04/2016 ::: Downloaded on - 17/04/2016 00:00:42 ::: ssm 22 app644.06-judgment.sxw observe that even in absence of agreement in claimants rates and stipulated rates, if party agreed to refer the same issue for arbitral tribunal to adjudicate the decision of Arbitral Tribunal, binds all including the Respondents. The extension of principle of quantum meruit, in the facts and circumstances, rightly made and therefore, the award ought not to have modified as done by the learned Judge.
There was no express provision with this regard though two methods were provided under the contract of payment. As directed and permitted, the Appellants completed the work and agreed by both the parties to refer the decision to the Arbitrator, itself means and shows that there was no fixed contractual rights agreed and fixed by the Appellants and/or by the parties, as there was no express terms of contract in this regard and specifically about the rates. The decision so taken by the learned Arbitrator, ought not to have been faulted with, as the amount was not towards the liquidated damages and/or compensation, but for the actual work done under the supervision of the Respondents. The findings, therefore, so given by the learned Arbitrator in no way can be stated to be perverse and/or required to be interfered with by the learned Judge. [Associate Builders (supra)].
It is relevant to note that the Respondents never stopped and/or asked 22/27 ::: Uploaded on - 16/04/2016 ::: Downloaded on - 17/04/2016 00:00:42 ::: ssm 23 app644.06-judgment.sxw the Appellants not to work unless the rates are settled by agreement.
On the contrary, as recorded, permitted to work and/or proceeded with the work by one method out of two so available with further agreement to refer the Executive Engineers decision to the Arbitration.
Therefore, the issue of rate was not decided finally and/or agreed by and between the parties and left for the Arbitrator to adjudicate the same. The learned Arbitrator, as recorded, accordingly adjudicated and awarded the reasonable compensation. We have gone though the amount so awarded and the reasons so recorded in the same. Even for that, we see there is no perversity based upon the commercial contract and the amount so claimed, supported by the material on record. The rate of interest so awarded, in the facts and circumstances, of 18% p.a. also needs no interference. However, considering the fact that though asked for 18% p.a. and by recording further, this is not the case of routine payment based upon the normal running bills though demanded 18% p.a., restricted to 13% p.a. on the amount due for the said item, from the date when the payment for concerned items become due till the date of this award. However, considering the general trend and in view of the Judgments of the Supreme Court, so referred above, we are inclined to restrict the 23/27 ::: Uploaded on - 16/04/2016 ::: Downloaded on - 17/04/2016 00:00:42 ::: ssm 24 app644.06-judgment.sxw interest @ 9% p.a. instead of 13%, so awarded.
22 The learned Judge, in our view, erred in holding that the Appellants ought to have made the claim for damages, as there was a breach of contract. The Arbitrator, as recorded, has granted 2/3 of the claim of the Appellants by granting approved rate. The learned Judge, ought not to have interfered with as there was no perversity.
The Arbitrator was within its jurisdiction to fix the rate in the items, which was not provided in the contract. The award was for fixing the responsibility of contract and was not for the breach of contract.
Therefore, there was no question of leading any evidence and/or proof of damages. The view taken by the learned Judge was possible and plausible, therefore, considering the provisions of the Arbitration Act, 1940, it ought not to have been interfered with.
23 The amount so claimed by the Appellants was for items, for which no rates were provided under the contact. The Respondents compelled the Appellants to install 750 mm Diameter Stone with conventional boring method and as the Petitioner admitted by adopting second method, therefore, awarded 2/3 rate claimed by the 24/27 ::: Uploaded on - 16/04/2016 ::: Downloaded on - 17/04/2016 00:00:42 ::: ssm 25 app644.06-judgment.sxw Appellants. The learned Arbitrator, as discussed, on rate analysis passed the award. The learned Judge failed to appreciate that the claim made by the Appellants was determined the rate for items for which the tender document of the Respondents provides, no rates.
There was no question of denying the work by the Appellants without any payment and/or gratuitously. The legal entitlement for the work tendered, is well recognized principle, specifically when the rates were not agreed and/or made subject to the Arbitration and compelled the contractor-Appellants to complete the work within a period. Such claim of pro-rata rate for the work done, ought not to have interfered with by the learned Judge. The Arbitration, itself was for the fixing the reasonable rate based on the existing tender contract. The adjudication, therefore, so done by the Arbitrator was well within the purview and power of the Arbitrator, including the agreement between the parties.
24 Having once observed above, we are not inclined to accept the case of the Appellants with regard to the power of the learned Judge to modify the award, as done by the learned Judge in the present case. It is settled that the award can be modified by the 25/27 ::: Uploaded on - 16/04/2016 ::: Downloaded on - 17/04/2016 00:00:42 ::: ssm 26 app644.06-judgment.sxw Court under Section 34. The law is clear on this issue as declared by the Supreme Court, as well as, by this Court. Considering the nature of construction contract, we are inclined to reduce the rate of interest from 9% p.a. instead of 13% p.a., as done by the Supreme Court also in many such matters. This is also for the reasons that such pendency of Court litigations should not be the reason to burden the interest upon the Corporation only.
25Therefore, the following order:-
ORDER
a) The impugned order of the learned Single Judge dated 21 November 2005, modifying the Arbitral award is set aside.
b) The award passed by the learned Arbitrator is maintained in every respect, except the rate of interest, which is to be restricted to 9% p.a. instead of 13% p.a.. Rest of the award is maintained.
c) Appeal is allowed accordingly.
d) There shall be no order as to costs.
26 The learned counsel appearing for the Respondent seeks
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stay of execution of this Order. Considering the reason so recorded
and in the interest of justice, we are inclined to grant six weeks time.
The present order, therefore, will not be executed for six weeks from today. Order accordingly.
(G.S. KULKARNI, J.) (ANOOP V. MOHTA, J.)
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