Delhi High Court - Orders
C And C Constructions Limited vs Ircon International Limited on 15 December, 2020
Author: V. Kameswar Rao
Bench: V. Kameswar Rao
$~25
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ OMP(COMM) 566/2020, IA 11279/2020
C AND C CONSTRUCTIONS LIMITED
..... Petitioner
Through: Mr. Navin Kumar, Adv. with
Ms. Rashmeet Kaur & Ms. Arpana
Majumdar, Advs.
versus
IRCON INTERNATIONAL LIMITED
..... Respondent
Through: Mr. Sidhant Goel, Adv. with
Mr. Mohit Goel, Ms. Sangeeta Goel,
Mr. Aditya Goel & Mr. Karmanya
Sharma, Advs.
CORAM:
HON'BLE MR. JUSTICE V. KAMESWAR RAO
ORDER
% 15.12.2020 This matter is being heard through video-conferencing. IA 11279/2020
1. This is an application filed by the petitioner under Section 5 read with Section 14 of the Limitation Act, 1963 seeking condonation of 199 days delay in filing the petition under Section 34 of the Arbitration & Conciliation Act, 1996 ('Act of 1996', for short).
2. It is the case of the petitioner in this application that the challenge in the petition being OMP(COMM) 566/2020 is to the order dated December 21, 2019 whereby the learned Arbitral Tribunal by majority has rejected all OMP (COMM) 566/2020 Page 1 of 10 the claims of the petitioner.
3. It is the submission of Mr. Naveen Kumar, learned counsel for the petitioner that the said order was passed by the Tribunal on an application filed by the respondent herein under Section 16 of the Act of 1996. The petitioner under a bonafide belief that an appeal under Section 37 (2) is maintainable against the impugned Order, filed the same before this Court on March 16, 2020 within the period of limitation as prescribed under Section 34 of the Act of 1996. The said appeal was listed for the first time on September 03, 2020. On September 04, 2020, the same was withdrawn by the petitioner to file a petition under Section 34 of the Act of 1996 and accordingly, the present petition has been filed by the petitioner on October 06, 2020. He states that in view of the fact that the petitioner has been bonafidely pursuing the remedy of appeal under Section 37 of the Act of 1996, the period need to be excluded for computing the limitation. In support of his submissions, Mr. Kumar has drawn my attention to the table in para 7 of the application, which depicts the following:-
DATE(S) NO. OF DAYS CONDONATION 21.12.2019 - 15.03.2020 2 months 23 days Within Limitation 15.03.2020 - 04.09.2020 173 days Under Section 14 of the Limitation Act, 1963. 04.09.2020 - 10.09.2020 7 days Within Limitation 10.09.2020 - 06.10.2020 26 days Under Section 34( 3 ) of the Act
4. In support of his submission that the petitioner is entitled to the benefit of Section 14 of the Limitation Act, 1963, he has relied upon two judgments of the Supreme Court reported as Consolidated Engg.
OMP (COMM) 566/2020 Page 2 of 10Enterprises and Ors. v. Principal Secy. Irrigation Deptt. and Ors., 2008 (7) SCC 169 and Simplex Infrastructure Ltd. v. Union of India (UOI), 2019 (2) SCC 455. He states that if the period between March 15, 2020 and September 04, 2020 is excluded then the petition under Section 34 of the Act of 1996 is within the period of 30 days beyond three months, the limitation period under Section 34 of the Act of 1996. He states that in the facts of this case, the delay of 199 days in filing the present petition need to be condoned.
5. On the other hand, Mr. Sidhant Goel, learned counsel for the respondent except stating that under Section 34 of the Act of 1996, the limitation for filing the petition is three months and delay beyond the period of three months upto 30 days need to be explained by the petitioner, has not opposed the application.
6. Having considered the submissions made by learned counsel for the parties and the judgments relied upon by Mr. Kumar, there is no dispute on the fact that in a petition under Section 34 of the Act of 1996, the petitioner is entitled to the benefit of Section 14 of the Limitation Act, 1963, if the petitioner has bonafidely pursued a wrong remedy.
7. There is no dispute that the petitioner had filed an appeal under Section 37 of the Act of 1996 before this Court on March 15, 2020 and the same was withdrawn on September 04, 2020. The present petition under Section 34 of the Act of 1996 has been filed immediately within a period of 32 days from the date of withdrawing the appeal under Section 37 of the Act of 1996. In effect, the petition has been filed within a period of 115 days, much before the 30 days, beyond the period of three months, had expired. Hence, this Court is of the view that the condonation of delay, as sought for OMP (COMM) 566/2020 Page 3 of 10 by the petitioner in this application need to be allowed. It is ordered accordingly. OMP (COMM) 566/2020 is taken up for hearing. Application is disposed of.
OMP(COMM) 566/2020
8. As stated above, the challenge in this petition is to an order dated December 21, 2019 passed by the learned Arbitral Tribunal on an application filed by the respondent under Section 16 of the Act of 1996.
9. It is the case of the respondent in the said application that in view of Clause 49.5 of the General Conditions of Contract ('GCC', for short), which is reproduced as under, the claims of the petitioner, which are primarily in the nature of damages because of delay attributable to the respondent, are not maintainable.
"49.5 Delays due to Employer / Engineer In the event of any failure or delay by the Employer / Engineer in fulfilling his obligations under the contract, then such failure or delay, shall in no way affect or vitiate the contract or alter the character thereof; or entitle the Contractor to damages or compensation but in any such case, the Engineer shall grant such extension or extensions of time to complete the work, as in his opinion is / are reasonable ."
10. The petitioner herein had opposed the said application primarily on the ground that (i) the application under Section 16 of the Act of 1996 has been filed belatedly and; (ii) Clause 49.5 of GCC is hit by Section 28 of the Indian Contract Act, 1872 ('Contract Act', for short) and as such, not enforceable. The Tribunal rejected both the submissions on behalf of the petitioner by holding that (i) Clause 49.5 of the GCC is not hit by Section 28 OMP (COMM) 566/2020 Page 4 of 10 of the Contract Act and; (ii) such an application is entertainable when each and every claim raised by the petitioner is hit by Clause 49.5 of the GCC and no award whatsoever can be passed by the Tribunal even after holding trial, which is not at all warranted or justifiable to continue with the trial and thereafter reject the claims filed by the petitioner on the short ground, the same are not maintainable in view of Clause 49.5 of GCC and by saying so, the Tribunal had condoned the delay in filing application under Section 16 of the Act of 1996. The Tribunal referred to various judgments relied upon by the learned counsel for the respondent.
11. Suffice would it be to state, the Tribunal has allowed the application filed by the respondent and rejected all the claims made by the petitioner herein.
12. Mr. Naveen Kumar, learned counsel for the petitioner has primarily submitted that the Tribunal has clearly erred in accepting the application of the respondent under Section 16 of the Act of 1996. The Tribunal should have allowed the petitioner to produce evidence that the delay in discharging the obligations under the contract was clearly on the respondent and as such, the petitioner was entitled to the claims, which were in the nature of damages.
13. That apart, he has drawn my attention to various documents to contend that the respondent had by its own conduct, not adhered to Clause 49.5 of the GCC. In support of his submission, he has drawn my attention to page 670 of the documents, wherein the respondent in its communication to the petitioner has stated for grant of extension of time, the petitioner's claims for additional financial burden has to be dealt together. In other words, the respondent has agreed with the claim of the petitioner for OMP (COMM) 566/2020 Page 5 of 10 additional financial burden. Mr. Kumar has relied upon the judgment as reported in MANU/SC/1620/2009, Asian Techs Ltd. v. Union of India, in support of his submission that de-hors a stipulation which bars a claim, still the Arbitrator can consider the aspect of delay and award the claim, if justified.
14. On the other hand, Mr. Sidhant Goel, learned counsel for the respondent states that the issue, which has been decided by the Tribunal is no more res-integra. He, has drawn my attention to the impugned order to show the judgments he has relied upon to contend that Clause 49.5 of the GCC is a valid stipulation and in the presence of such a stipulation, the petitioner could not have raised a claims for damages on the ground of delay attributable to the respondent.
(i) National Buildings Construction Corporation Ltd. v. Antia Electricals Pvt . Ltd., 2010 SCC Online Deli 2329;
( ii) Union of India through Dy. Chief Engineer (Const.), Central Railway v. M / s Shyam Constructions, 2012 SCC Online Bom 1581; ( iii ) Konkan Railway Corporation Limited v. M / s Oriental Construction Company Limited, 2013 SCC Online Bom 238;
( iv ) Bombay Railways Engineering Co. v. General Manager, Central Railway, Bombay High Court in Appeal No.451 of 2012 in Arbitration Petition No. 813 of 2011 decided on July 10, 2013;
( v) Union of India , through Dy. Chief Engineer (Con ) / Works v. M / s Vinay Agarwal, 2015 SCC Online Bom 2030;
(vi ) Oil and Natural Gas Corporation v. Wig Brothers Builders and Engineers Private Limited, ( 2010 ) 13 SCC;
(vii) Ramnath International Construction (P) Ltd. v. Union of India, OMP (COMM) 566/2020 Page 6 of 10 (2007) 2 SCC 453;
(viii) Public Works Department v. M/s Navayuga Engineering Co. Ltd. & Anr., 2014 SCC Online Del 1343;
ix) Union of India & Ors . v. M / s Venus Engineering Concern Pvt. Ltd., 2017 SCC Online Cal 337.
15. He states, even otherwise, the petitioner is estopped from raising such claims when the petitioner has accepted the decision of the respondent to grant escalation because of the extension of time granted to it.
16. Having heard the learned counsel for the parties, this Court is of the view that a stipulation in the contract like Clause 49.5 of the GCC would bar the claims of the petitioner before the learned Arbitral Tribunal. This I say so in view of the judgments relied upon by Mr. Goel, as referred to above. The law on the subject being very clear, the Tribunal was justified in allowing the application filed by the respondent seeking rejection of the claims by relying upon Clause 49.5 of the GCC.
17. That apart, there is no dispute that the petitioner had accepted the communication of the respondent at page 773 of the documents dated October 14, 2013, wherein the respondent had clearly stated that the claim of the petitioner is not admissible and the extension of time granted to the petitioner is not on the basis of the claims as per Clause 49 of the GCC. In other words, they have rejected the claims of the petitioner in terms of Clause 49 of the GCC. In this regard, I may point out, the Supreme Court in the case of ONGC vs. Wig Brothers Builders and Engineers Pvt. Ltd., (2010) 13 SCC 377 has, in para 6 and 7 held as under:-
"6. In view of the above, in the event of the work being delayed for whatsoever reason, that is even delay which is attributable to ONGC, OMP (COMM) 566/2020 Page 7 of 10 the contractor will only be entitled to extension of time for completion of work but will not be entitled to any compensation or damages. The arbitrator exceeded his jurisdiction in ignoring the said express bar contained in the contract and in awarding the compensation of Rs. 9.5 lakhs. This aspect is covered by several decisions of this Court. We may refer to some of them.
In Associated Engineering Co. v. Government of A.P. MANU/SC/0054/1992 : 1991 (4) SCC 93, this Court observed:
24. The arbitrator cannot act arbitrarily, irrationally, capriciously or independently of the contract. His sole function is to arbitrate in terms of the contract. He has no power apart from what the parties have given him under the contract. If he has travelled outside the bounds of the contract, he has acted without jurisdiction....
In Rajasthan State Mines and Minerals Ltd. v. Eastern Engineering Enterprises MANU/SC/0601/1999 : 1999 (9) SCC 283, this Court held:
The rates agreed were firm, fixed and binding irrespective of any fall or rise in the cost of the work covered by the contract or for any other reason or any ground whatsoever. It is specifically agreed that the contractor will not be entitled or justified in raising any claim or dispute because of increase in cost of expenses on any ground whatsoever. By ignoring the said terms, the arbitrator has travelled beyond his jurisdiction as his existence depends upon the agreement and his function is to act within the limits of the said agreement. This deliberate OMP (COMM) 566/2020 Page 8 of 10 departure from the contract amounts not only to manifest disregard of the authority or misconduct on his part but it may be tantamount to mala fide action.
It is settled law that the arbitrator is the creature of the contract between the parties and hence if he ignores the specific terms of the contract, it would be a question of jurisdictional error which could be corrected by the court and for that limited purpose, agreement is required to be considered.
....
He cannot award an amount which is ruled out or prohibited by the terms of the agreement.
In Ramnath International Construction (P) Ltd. v. Union of India MANU/SC/8802/2006 : 2007 (2) SCC 453, a similar issue was considered.
This Court held that Clause 11(C) of the General Conditions of Contract (similar to Clause 5A under consideration in this case) was a clear bar to any claim for compensation for delays, in respect of which extensions had been sought and obtained.
This Court further held that such a clause amounts to a specific consent by the contractor to accept extension of time alone in satisfaction of claims for delay and not to claim any compensation; and that in view of such a bar contained in the contract in regard to award of damages on account of delay, if an arbitrator awards compensation, he would be exceeding his jurisdiction.
7. In view of the above, the award of the arbitrator in violation of the OMP (COMM) 566/2020 Page 9 of 10 bar contained in the contract has to be held as one beyond his jurisdiction requiring interference. Consequently, this appeal is allowed in part, as follows:
(a) The judgment of the High Court and that of the civil court making the award the rule of the court is partly set aside in so far as it relates to the award of Rs. 9.5 lakhs under claim No. (1) and the award of interest thereon.
(b) The judgment of the civil court as affirmed by the High Court in regard to other items of the award is not disturbed."
(Emphasis Supplied)
18. From the aforesaid exposition of law, it is clear that the Clause 49.5 being a valid clause and the petitioner having accepted such a stipulation, could not have contended otherwise, contrary to the said stipulation. If the contention of the petitioner is accepted, then it would mean, this Court is going contrary to the stipulation agreed to by the parties in the contract.
19. In view of my above discussion, I do not see any merit in the petition. The same is dismissed.
V. KAMESWAR RAO, J DECEMBER 15, 2020/ak OMP (COMM) 566/2020 Page 10 of 10