Madras High Court
The Government Of Tamilnadu vs M/S. Gmp International Gmbh
Author: N. Sathish Kumar
Bench: N. Sathish Kumar
1
THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on Delivered on
12~06~2019 28~06~2019
CORAM
THE HONOURABLE MR.JUSTICE N. SATHISH KUMAR
O.P.No.74 of 2019
1. The Government of Tamilnadu,
Rep.by its Secretary
Public Works Department,
Fort St. George,
Chennai 600009.
2. Chief Engineer (Buildings)
Chennai Region, Chepauk,
Chennai 600009.
3. The Superintending Enginner (i/c) PWD,
Building Construction Circle,
Tamil Nadu Legislative Assembly Complex,
Chepauk, Chennai - 600005
4. The Executive Engineer,
Building Construction Division,
Tamil Nadu Legislative Assembly Complex,
Chepauk, Chennai - 600005. .. Petitioners
.Vs.
M/s. GMP International GMBH,
Of Hardenberg Strassee 4-5,
D-10623 Berlin,
Germany,
http://www.judis.nic.in
2
Rep.by its Authorised Singatory
Col.C.Jaisankar (Retd.),
S/o.K.Calianssoundrame,
General Manager, Having office at
Archivista Engineering Project Private Limited,
No.25/20, Ethiraj Lane,
Egmore, Chennai 600008. .. Respondent
Prayer: Petition filed under Section 34 of the Arbitration and
Conciliation Act, 1996 to set aside the impugned Award dated
28.02.2018 passed by the Sole Arbitrator in Arbitration No.1 of 2015.
For Petitioners : Mr. Sricharan Rangarajan
Addl.Govt.Pleader (CS)
For Respondent : Mr. T. Gowthaman
ORDER
This Original Petition is filed under Section 34 of the Arbitration and Conciliation Act, 1996 challenging the Award passed by the sole Arbitrator in favour of the claimant.
2. The case of the claimant is that the claimant's company is an internationally acclaimed company specialized in Architectural Consultancy practice. The First Respondent floated a tender for http://www.judis.nic.in 3 appointment of a consultant for the construction of the New Complex for the Tamil Nadu legislative Assembly at Omandurar Government Estate. The claimant declared as the successful bidder and was appointed as the consultant for providing Architectural consultancy services. For the purpose of executing the responsibilities, the claimant entered into a sub-consultancy agreement with M/s.Archivista Engineering Project Private Limited Company. The claimant has executed his work effectively and submitted his invoice dated 28.04.2011 to the third respondent. After the General elections in 2011 the second respondent took a policy decision to convert the newly constructed secretariat complex into Multi Speciality Hospital and a Medical College. Claimant made a consolidated claim of Rs.48,28,57,947/- as on 13.11.2013, and also filed the O.P.No.388 of 2014.
3. The respondents have denied all the allegations and it is the contention of the respondents that the subject matter is subjudiced before the Commission of Inquiry and only after receipt of the said report, payment dues of claimant can be ascertained. That apart, the http://www.judis.nic.in 4 eligible claim worked out by the respondent to the claimant is only to the tune of Rs.10,31,15,407/-.
4. Based on the respective pleadings, the Arbitral Tribunal framed the following issues:
1. Whether the claimant is entitled to any of the claims made in its Claim Statement?
2.Whether the pendency of an enquiry by the Commission of Enquiry which is in existence is having any bearing on this Arbitral Proceedings?
3. Whether the claimant is entitled to any interest on the claim and if so, what is the rate of interest?
4.Whether the Claimant/Respondent is entitled to any cost and if so, what is the cost?
5.To what such other reliefs the claimant is entitled?
5. After analyzing the entire evidence and facts the Tribunal has found that the Respondent/claimant is entitled to a sum of Rs.23,49,21,943/-. That apart interest at 12% on the above said sum http://www.judis.nic.in 5 from 14.01.2012, the date of termination till the date of filing claim statement and interest at 10% from the date of filing the claim statement till the date of Award. Though the petitioner is challenging the Award on various grounds only on two grounds the State has opposed the Award.
6. The Learned Additional Government Pleader (CS) Mr. Sricharan Rangarajan appearing for the Petitioner/State mainly focused his argument that the claim is barred by limitation. The Learned Additional Government Pleader mainly contended that though the plea of limitation has not been raised in arbitral proceedings, it is his contention that the cause of action arose from the date of final bill then the claim ought to have been prepared within three years. In this case admittedly, the cause of action arose three years much prior to the date of reference. Therefore, the claim is barred by limitation. The another contention of the learned Additional Government Pleader is that as far as the claim for the extended period there is no evidence available on record to award the damages towards the claim on extended period of development. Hence it is his contention that the http://www.judis.nic.in 6 Award of the Arbitrator in that aspect has to be set aside. In support of his contention he relied upon the following judgments:
1. Major (Retd) Inder Singh Rekhi vs. Delhi Development Authority [(1988) 2 SCC 338]
2. Panchu Gopal Bose vs. Board of Trustee for Port of Calcutta [(1993) 4 SCC 338]
3. Steel Authority of India Ltd., vs. J.C.Budharaja, Government and Mining Contractor [(1999) 8 SCC 122]
4. Indian Drugs & Pharmaceuticals Ltd. Vs. Indo Swiss Synthetics Gem Mfg Co. Ltd., and Others [(1996) 1 SCC 54]
5. Kamlesh Bab and others vs. Lajpat Rai Sharma and other [(2008)12 SCC 577]
6. Lion Engineering Consultants vs. State of Madhya Pradesh and others [(2018) 16 SCC 758]
7. Madras Metropolitan Water Supply & Sewerage Board and another vs. Ramakrishna Reddy and another [1995 (II) CTC 373]
8. Sealand Shipping & Export Pvt. Ltd., vs. Kin-ship http://www.judis.nic.in 7 Services (India) Pvt. Ltd., vs. Kinship Services (India) Pvt.Ltd. [2011 SCC Online Bom 638]
9. Bharat coking Coat Ltd., vs. L.K.Ahuja [(2004) 5 SCC 109]
10. State of Rajasthan and Another vs. Ferro Concrete Construction Pvivate Limited [(2009) 12 SCC 1]
11. All India Radio vs. M/s.Unibros & Another [ 2010 SCC Online Del 870]
7. On the other hand the learned counsel for the Respondent contended that the Petitioner has raised the limitation aspect for the first time. It is his contention, though the plea of limitation can be raised at any stage, the fact remains that the claim is within the period of three years from the original cause of action. The final invoice has been issued on 28.4.2011 thereafter termination notice was issued to the claimant only on 29.12.2011 and subsequently the claimant has also filed an application before the court of law for appointment of Arbitrator in 2014. Therefore the question of bar of limitation does not arise. Hence it is the contention of the learned counsel that such plea http://www.judis.nic.in 8 has no merit at all.
8. It is further contended that as far as the claim awarded by the Arbitrator for extended period for A and B Block to the tune of Rs.10,40,16,136/-, the learned Arbitrator has considered the entire matter and analysed the entire evidence and passed a reasoned Award. It is not the case of the Government that the respondent did not continue to extend the service even after contractor stopped the work. Hence it is his contention that the Tribunal has analysed the entire evidence and found that the amount is reasonable, the same cannot be interfered under Section 34 of the Act.
9. No dispute with regard to the existence of the agreement and engaging the Respondent as consultancy. Similarly, the Tribunal has factually analysed the entire evidence on both side and found that the claimant is entitled to the Award for the actual work done by the Respondent/claimant. The work in respect of Claim No.'a' to 'e' is not disputed. What was disputed by the Department is only with quantum of amount. The Tribunal has considered the entire evidence and http://www.judis.nic.in 9 analysed the same and found that the claimant is entitled such amount. Besides the Tribunal also awarded a sum of Rs.10,40,16,136/- towards the claim on the extended period of development. Though the contractor was asked to stop work on 26.6.2011 the respondent had to keep his engineers, staff and establishment in full readiness and to commence the work. Finally, the Respondents/Government terminated the consultancy agreement with effect from 14.1.2012. The Tribunal in fact taken note of the evidence particularly the engineers evidence to the effect that Consultancy services provided by the claimant and he should be paid for such services. To award the above amount the Tribunal also taken into consideration of the exhibits and passed a reasonable order. When the Tribunal has analysed the documents and factually found that there was some consultancy services even after the work was stopped. The respondent had to stay in the project site and had to give his service. Admittedly his contract was terminated only on 14.1.2012. So till such time he has sent the bills towards his consultancy service.
10. When the Tribunal has considered the entire evidence and http://www.judis.nic.in 10 factually found that the respondent is entitled to such amount, this Court cannot sit as Appellate Authority to re-appreciate the entire evidence. No doubt, the contractor who is making claim for loss of profit has to prove that if he received the amount due under the contract. He could have utilised the same for some other business from which he could have earned profit. But the fact remains in this case that he has not sought for any claim for loss of profit what he was sought is only towards the service rendered by him during the extended period. When the work is not disputed, the period of time is also not disputed merely his contract was terminated subsequently and work was cancelled due to the change of Government, the Arbitrator's finding in that head is reasonable, cannot be said that there is no evidence at all. Therefore the Apex Court Judgment relied upon by the petitioner in Bharat Coking Coat Ltd., case (supra) is not applicable to the facts of the present case. The facts are quiet different in the above case.
11. With regard to the limitation aspect from the citations submitted by the petitioner herein the law emerge that cause of action http://www.judis.nic.in 11 arose when the assertion of the claim was first made and reference to arbitration should be within three years from the date of cause of action and similarly plea of limitation can be raised at any point of time. Absolutely there is no dispute with regard to the preposition emerged in the above judgment cited by the petitioner but fact remains that admittedly the final invoice was issued on 28.4.2011 and claimant agreement was terminated on 29.12.2011 and within period of three years an application filed for appointment of Arbitrator in O.P.No.388/2014. Therefore, it cannot be construed to mean that the cause of action accrued more than three years. It is also well settled that the period from the date of petition till the Arbitrator appointed shall be excluded. Such being a position, it cannot be said that entire claim is barred by limitation. Similarly, the parties are bound by the decision of the Arbitrator and the contract was not in dispute and the work and consultancy agency is also not in dispute. When the Arbitrator is found that the claimant is entitled to claim on the basis of evidence on record merely because the view of the Arbitrators is capable of some other interpretation or view by the Court such award cannot be interfered under Section 34 of the Act. http://www.judis.nic.in 12
12. Scope of interference under Section 34 of the Arbitration and Conciliation Act 1996 is discussed in Oil and Natural Gas Corporation Ltd., v. Saw Pipes Ltd., [2003 (5) SCC 705], wherein the Honoruable Apex Court has held that an Award can be set aside if it is contrary to:
a) fundamental policy of Indian law; or
b) the interest of India; or
c) justice or morality; or
d) if it is patently illegal Award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the court.
13. The power of the Court to set aside the Award would be exercised only in cases where the Court finds that the Arbitral Award is on the face of it erroneous or patently illegal or in contravention of the provisions of the Act. In the case on hand, considering the entire findings of the Arbitrator this court do not find any materials to show that this case requires interference under Section 34 of the Act. In Swan Gold Mining Ltd., v. Hindustan Copper Ltd reported in 2015(5) SCC 739 the Honourable Apex Court has held as follows:
http://www.judis.nic.in 13 "12. Section 34 of the Arbitration and Conciliation Act, 1996 corresponds to Section 30 of the Arbitration Act, 1940 making a provision for setting aside the arbitral award. In terms of sub-section (2) of Section 34 of the Act, an arbitral award may be set aside only if one of the conditions specified therein is satisfied. The Arbitrator’s decision is generally considered binding between the parties and therefore, the power of the Court to set aside the award would be exercised only in cases where the Court finds that the arbitral award is on the fact of it erroneous or patently illegal or in contravention of the provisions of the Act.
It is a well settled proposition that the Court shall not ordinarily substitute its interpretation for that of the Arbitrator. Similarly, when the parties have arrived at a concluded contract and acted on the basis of those terms and conditions of the contract then substituting new terms in the contract by the Arbitrator or by the Court would be erroneous or illegal."
"13. It is equally well settled that the Arbitrator appointed by the parties is the final judge of the facts. The finding of facts recorded by him cannot be interfered with on the ground that the terms of the contract were not correctly interpreted by him."
"21. Mr. Sharan, learned senior counsel appearing for the appellant, also challenged the arbitral award on the http://www.judis.nic.in 14 ground that the same is in conflict with the public policy of India. We do not find any substance in the said submission. This Court, in the case of Oil and Natural Gas Corporation Ltd. (supra), observed that the term ‘public policy of India’ is required to be interpreted in the context of jurisdiction of the Court where the validity of award is challenged before it becomes final and executable. The Court held that an award can be set aside if it is contrary to fundamental policy of Indian law or the interest of India, or if there is patent illegality. In our view, the said decision will not in any way come into rescue of the appellant. As noticed above, the parties have entered into concluded contract, agreeing terms and conditions of the said contract, which was finally acted upon. In such a case, the parties to the said contract cannot back out and challenge the award on the ground that the same is against the public policy. Even assuming the ground available to the appellant, the award cannot be set aside as because it is not contrary to fundamental policy of Indian law or against the interest of India or on the ground of patent illegality.
22. The words “public policy” or “opposed to public policy”, find reference in Section 23 of the Contract Act and also Section 34 (2)(b)(ii) of the Arbitration and Conciliation Act, 1996. As stated above, the interpretation of the contract is matter of the Arbitrator, who is a Judge, chosen by the parties to determine and decide the dispute. The Court is precluded from re-appreciating the evidence and to http://www.judis.nic.in 15 arrive at different conclusion by holding that the arbitral award is against the public policy."
14. The Honourable Apex Court in McDermott International Inc., v. Burn Standard Co.,Ltd., [2006 (11) SCC 181] explained the term patent illegality and held that patent illegality must go to the root of the matter. Public Policy violation should be so unfair and unreasonable as to shock the conscience of the Court. The supervisory role of the Court under Section 34 is to be kept at a minimum level and interference is envisaged only in case of fraud or bias, violation of natural justice, etc., If the Arbitrator has gone contrary to or beyond the express of law of the contract or granted relief in the matter not in dispute that would come within the purview of Section 34 of the Arbitration and Conciliation Act 1996.
15. A Division Bench of this Court in Puravankara Projects Limited v. Mrs.Ranjani Venkatraman Ganesh and Another [2018 (6) MLJ 588] also followed the above judgment of the Apex court and held that only in the circumstances envisaged under the decision of the Apex Court the Award can be interfered. http://www.judis.nic.in 16
16. In view of the above this Court is of the view that the Award cannot be interfered and the petition is liable to be dismissed.
17. In the result, the petition is dismissed. No costs.
28.06.2019 Index : Yes / No Internet: Yes ggs To M/s. GMP International GMBH, Of Hardenberg Strassee 4-5, D-10623 Berlin,Germany, Rep.by its Authorised Singatory Col.C.Jaisankar (Retd.), S/o.K.Calianssoundrame, General Manager, Having office at Archivista Engineering Project Private Limited, No.25/20, Ethiraj Lane, Egmore, Chennai 600008.
http://www.judis.nic.in 17 N. SATHISH KUMAR, J.
ggs order in:
O.P.No.74 of 2019
28.06.2019 http://www.judis.nic.in