Bangalore District Court
Council Of Scientific And Industrial vs ) Sri.M.V.Subba Reddy on 24 January, 2023
IN THE COURT OF THE LXXXIII ADDITIONAL CITY
CIVIL AND SESSIONS JUDGE AT BENGALURU CITY
[CCH-84]
:Present:
Ravindra Hegde,
M.A., LL.M.,
LXXXIII Addl. City Civil & Sessions Judge,
Bengaluru
Dated on this the 24th day of January 2023
COM.A.P.No.27/2022
Petitioner Council of Scientific and Industrial
Research New Delhi and National
Aerospace Laboratory (NAL)
Bengaluru-560017.
Represented by its
Administrative Officer.
(By Sri.L.R, Advocate)
// versus //
Respondents 1) Sri.M.V.Subba Reddy,
No.193, 15th 'B' Cross,
II Phase, II Stage,
Mahalakshmipuram,
Bengaluru-560086.
2) Sri. R. Krishnamurthi,
Chief Engineer (Retd), CPWD
and Hon'ble Arbitrator,
No.II-H, West Tower,
Klassic bench Mark Apartments
Near Meenakshi Temple,
Kammanahalli Main Road,
Off: Bannerghatta Main road,
Bengaluru-560076.
(R.1 by Sri.K.V, Advocate,
R.2- Learned Arbitrator)
2
CT 1390_Com.A.P.27-2022_Judgment.doc
Date of Institution of the : 28/03/2022
petition
Nature of petition : Arbitration Petition
Date of commencement of : --
recording of the evidence
Date on which the Judgment : 24/01/2023
was pronounced.
: Year/ Month/s Day/s
Total duration s
00 09 27
JUDGMENT
This petition under Section 34 of the Arbitration & Conciliation Act is filed by the petitioner praying to set aside the award passed by the learned Arbitrator on 28/12/2021 to the extent of award on claims No.1,2,5,7,6,8,10,12 and 11 totaling to Rs.35,29,854/- and also awarding interest @12% per annum.
2. The petitioner was the respondent before the learned Arbitrator and respondent No.1 was the claimant. Respondent No.2 is the learned Arbitrator.
3. Case of the petitioner in brief is as under:
Petitioner had awarded the work of construction of Smart structure laboratory building for advanced composite division at Kodihalli, Bengaluru to the respondent No.1. As per the tender, estimated cost was Rs.1,21,08,061/- and respondent had quoted price of Rs.1,82,98,544/- which is 52.13% above the estimated cost and was accepted. The earnest money and security deposit was required to be given. Total time allowed for completion of the work was 12 months from the date of starting of the work dated 26/7/2006 and stipulated date of completion 3 CT 1390_Com.A.P.27-2022_Judgment.doc was 25/07/2007. Work was not completed and petitioner rescinded the contract on 18/11/2008 with effect from 5/12/2008. Respondent No.1 who was the claimant-contractor has initiated arbitration alleging that delay in work is due to Employer and claimant is entitle for compensation and other amount. After abandonment of the work by the contractor the work was got completed through some other contractor. Before the learned Arbitrator, claimant has submitted claim statement and employer has submitted objection. There were totally 12 claims made by the claimant/contractor. Out of them the learned Arbitrator has rejected claim No.3 and claim No.9 and allowed other claims and totally awarded Rs.37,92,485/- with interest @12% per annum from 26/7/2007 upto realization vide award dated 28/12/2021.
4. The petitioner employer, being aggrieved by this award in respect of all the allowed claims except claim No.4 has filed this petition under Section 34 of Arbitration & Conciliation Act praying to set aside the award on these claims on various grounds. It is contended that the award in respect of claim No.1 and 2 as to the payment of EMD and security deposit is contrary to the agreement clause No.23 and in case of termination of contract as per clause 26(c) security deposit amount shall be liable to be forfeited. It is stated that when there is no breach committed by the petitioner question of payment of EMD and security deposit do not arise and the reasoning given by the learned Arbitrator is absurd and learned arbitrator failed to consider the relevant clauses in the 4 CT 1390_Com.A.P.27-2022_Judgment.doc agreement and has failed to appreciate that the ground floor drawings were supplied on 28/8/2006 which enable the contractor to commence the work, but the contractor came to the work site only on 5/4/2007 and started excavating the earth on 24/4/2007 and cement work was done on 20/6/2007. It is stated that the learned Arbitrator has failed to look into the site order book which reveals the slow progress of the work and has failed to appreciate that the architectural drawings were not required for commencement of foundation work. It is stated that the employer negotiated with the contractor within the framework of the agreement, as to the escalation of cement and steel work and due to abnormal demand made by the claimant, there was negotiation and the claimant sought closure of contract at a belated and advanced stage without any claim and there is no breach committed by the employer. It is also contended that after slow progress of the work with the consent of the contractor, extension of time was granted and the claimant acted upon that EOT and has not raised any objection for extension of time. It is stated that in these circumstances, termination of contract is justified and the claimant is not entitle for EMD and security deposit amount and the finding of the learned Arbitrator is not correct. It is also contended that the finding and award of the Arbitrator as to compensation towards staggered, restricted and increased cost of working and compensation towards idling establishments are devoid of any evidence and the learned Arbitrator blindly accepted the self interested version of the claimant. It is stated that Ex.R.6 to 5 CT 1390_Com.A.P.27-2022_Judgment.doc Ex.R.11 reveals that there was slow progress of work and there was no record to substantiate the claim of staggered restricted and idled working. It is stated that the claimant did not keep any site engineer, clerical staff and labour supervision in the site and calculation of Rs.25,000/- per month for a period of 20 months has no basis and the learned Arbitrator has indulged in guess work. It is stated that in the absence of any material evidence on record the learned Arbitrator ought to have rejected the claim. It is also contended that the learned Arbitrator without any basis awarded a sum of Rs.4,50,000/- towards jungle clearance and preliminary expenses. It is stated that the site was flat and clear and the claimant inspected the site much before the tender and there was no dumping yard or manure pit as contended. However, the learned Arbitrator has awarded amount under this head to the claimant. It is also stated that there is no evidence to demonstrate that 127 loads of waste was carried in Tipper and the learned arbitrator has erroneously shifted the burden on the petitioner by stating that security register has not been produced. It is also stated that the reasoning of the Arbitrator that no evidence could be produced by the claimant as the work was done in a highly secured area is highly absurd and not tenable and the burden which was on the claimant to establish the case is not discharged. It is also stated that the jungle clearance do not come within the scope of arbitration dispute and thereby the learned Arbitrator has enlarged the scope of the dispute and has ignored the site order book. It is also stated that the finding of the learned Arbitrator 6 CT 1390_Com.A.P.27-2022_Judgment.doc as to the loss of materials and other losses and liquidated damages is beyond the scope of agreement and agreement do not provide for such kind of claims. It is stated that the claimant should have produced yellow passes if at all if he has brought the materials inside and the employer cannot be expected to maintain outward and inward registers after lapse of 15 years. It is stated that employer has not committed any breach of contract. It is stated that when the claimant himself was negligent and committed breach question of loss of profit do not arise and the learned Arbitrator mechanically awarded 10% on the imaginary claim. It is also stated that the learned Arbitrator has erred in blindly relying upon Section 73 of the Indian Contract Act and the decisions cited. It is stated that as the employer has not committed any breach this provision is not applicable and the finding is arbitrary, perverse, contrary to the public policy and is liable to be set aside. It is also stated that the awarding of interest @12% per annum on the award amount is not justified as the employer has not committed any breach and question of payment of compensation and interest do not arise. It is also stated that the awarding of interest is not in accordance with Section 31(7) of the Arbitration & Conciliation Act. It is stated that the award of cost of arbitration is liable to be set aside and the claimant alone have to bear the cost and expenses of arbitration. It is stated that the award is in contravention with the fundamental policy of Indian law and is in conflict with most basic notions of morality 7 CT 1390_Com.A.P.27-2022_Judgment.doc or justice. On all these grounds the award in respect of claim No.1,2,5,7,6,8,10,12 and 11 is prayed to be set aside.
5. Respondent-contractor has appeared and filed his objection and stated that the petition is devoid of merits and is not maintainable. It is stated that the learned sole Arbitrator appointed in this case is highly qualified who has passed a reasoned speaking award, by scrutiny of relevant terms and conditions of the contract and documents filed before him and hearing both the parties and by providing sufficient opportunity to the parties to represent the case. It is stated that the learned Arbitrator has confined himself within the domain of the terms and conditions of the contract and has passed award in compliance in accordance with law and interpretation of the terms and conditions has been done by the Arbitrator in accordance with law and there is no scope for reassessing and re-appreciating the merits. It is also stated the contention that the drawings issued is not acceptable, only few drawings were given, the work was under taken on a day to day verbal directions. It is stated that the agency entrusted with the said job relating to supply of architect drawings and structural engineering by name Sampath balaji was terminated by the petitioner, leading to delay, apart from other hindrances for execution and completion of the project within stipulated 12 months. It is stated that the lapses of time and delay in execution was caused due to latches and negligence on the part of the petitioner to fulfill its contractual obligations promptly, correctly and timely. It is stated that there was 8 CT 1390_Com.A.P.27-2022_Judgment.doc abnormal increase in all the inputs going into the work more particularly cement and steel beyond 100% and the petitioner by appreciating the same called for negotiation to restart the work, but has not accepted the same since the price rise of all inputs going into the work was beyond Rs.60 lakhs. It is stated that after failure of negotiation petitioner wrongfully rescinded the contract work with effect from 5/12/2008, instead of foreclosing the contract. It is stated that the respondent did not abandon the work, but it was wrongly terminated by the petitioner. It is stated that the learned Arbitrator has disallowed claim No.3 and 9. It is stated that claim No.1 and 2 awarded is the money available with the petitioner which is recovered or is paid by the respondent No.1 towards security deposit as per contract conditions which was wrongly forfeited by the petitioner. It is stated that the termination of contract is wrongful and is not in order. It is stated that the claim No.4 towards escalation charges is accepted by the petitioner. It is stated that in claim No.5 and 7 Arbitrator has partly allowed the amount by fixing the expenses at Rs.25,000/- and awarded Rs.5 lakhs based on records placed by the parties. It is stated that claim No.8 and 10 are also partly considered based on records placed by both the parties. It is stated that in claim No.10 by not only considering Section 73 of the Indian Contract Act, but also by referring to the rulings and considering the restricted percentage to 10% on the balance value of work against 15% claimed by the respondent No.1. It is stated that in claim No.11, learned Arbitrator has allowed claim for interest 9 CT 1390_Com.A.P.27-2022_Judgment.doc and there is no prohibition in the agreement for payment of interest. It is stated that in claim No.12, though cost imposed is disputed, the petitioner has given the DD for Rs.50,000/- towards cost and therefore the cost cannot be challenged now. It is stated that the learned Arbitrator has neither traversed beyond the contract provisions nor contravened to laws applicable to the works contract agreement and has given speaking award duly taking into account all the terms and conditions of the contract. It is stated that the learned Arbitrator has passed award in accordance with the substantive law for the time being in force in India and has considered the usage of the trade applicable to the transaction. It is stated that the contention taken by the petitioner are imaginary and not sustainable. It is stated that the petitioner is not canvassing any other grounds other than what has been placed before the Arbitrator and the Arbitrator after providing sufficient and equal opportunity to both the parties has passed the reasoned award and the present petition do not stands on the test of law and facts and require to be dismissed and it is stated that the court cannot interfere with the award. On all these grounds, petition is prayed to be dismissed.
6. Now the points that arise for consideration of this court are:
1) Whether the petitioner has made out any grounds under Section 34(2) or 34(2-A) of Arbitration & Conciliation Act to set aside the award passed by the learned Arbitrator on 28/12/2021 in the dispute between the parties?10
CT 1390_Com.A.P.27-2022_Judgment.doc
2) What order?
7. Heard both the counsels. Counsel for petitioner filed written arguments also. Perused records.
8. My answer to the above points are :
POINT No.1 : In the negative.
POINT No.2 : As per final order for the
following:
REASONS
9. Point No.1: Present Arbitration Petition is filed challenging findings of the learned Arbitrator in his award dated 28/12/2021, on claims No.1,2,5, 7,6,8,10,12 and 11 for a sum of Rs.35,29,854/-. Out of 12 claims prayed before the learned Arbitrator claim No.3 and 9 are rejected by the learned Arbitrator. In claim No.4 for payment towards escalation charges, learned Arbitrator has awarded Rs.2,12,631/- and same is not challenged. In claim No.12 which is cost of arbitration plus stamp duty award of Rs.50,000/- is satisfied by Petitioner. Though finding on claim No.12 is also challenged, this claim has been satisfied and need not be considered. Hence, award of learned arbitrator on claim No.1,2,5,7,6,8,10 and 11 are only under challenge in this petition.
10. Admitted facts of the case are that, work of construction of Smart structure laboratory building was entrusted to the respondent by calling tender and 11 CT 1390_Com.A.P.27-2022_Judgment.doc tender submitted by claimant for Rs.1,82,98,544/- was accepted by present petitioner. Work was required to start on 26/7/2006 and completed by 12 months by 25/7/2007. It is also an admitted fact that the work is not completed as planned. It is also an admitted fact that extension of time was given by the petitioner on 3/8/2007 extending the date of completion to 4/4/2008. It is also an admitted fact that even by the extended period, work was not completed. In fact, work was not completed by the respondent at all. The petitioner has rescinded the work by letter dated 18/11/2008 and the rescission came into effect from 5/12/2008. At the time of rescission of the contract, work had come up to foundation. It is also an admitted fact that during this period of contract the price of steel and cement rise abnormally and the respondent had even sought for closure of the contract for this reason. It is also an admitted fact that negotiation was held between the parties and petitioner agreed to compensate to the tune of Rs.35 lakhs for the increase of price of steel and cement and the offer was not accepted by the respondent. After this, contract was rescinded. When the dispute reached arbitration, learned arbitrator, who is retired Chief Engineer of CPWD, he has passed the award. Award of amount on various claims as stated above are challenged in this petition.
12CT 1390_Com.A.P.27-2022_Judgment.doc
11. Jurisdiction of the court to set aside an arbitral award is limited to the grounds set out in Section 34(2) and 34 (2A) of the Arbitration & Conciliation Act 1996. It is well established principle, as laid down in various decisions, including decision in Associate Builders, that, even if contrary view based on the facts before the Arbitral Tribunal is possible, in the absence of any compelling reasons, court cannot interfere with the view taken by the learned Arbitrator. It is also well established principle that the court sitting U/S.34 of the Act is not supposed to go for re- appreciation of evidence or impose its view as against the view of learned Arbitrator and the power of the court is only to set aside the award, if it is coming under one of the grounds mentioned in the said section. It is also well established principle that the court under section 34 cannot sit in Appeal over the Award. It is also established principle that interpretation of terms of award is left to the arbitrator and unless, interpretation of terms of award by arbitrator is perverse, court cannot interfere. In the presence of these basic principles, grounds urged by the plaintiff and the award of the learned Arbitrator are to be looked into.
12. On looking to the award, on claim No.1 and 2towards EMD and security deposit, learned arbitrator awarded the amount. Before the Arbitrator, contractor had contended that, delay in progress of the work is 13 CT 1390_Com.A.P.27-2022_Judgment.doc due to the lapses on the part of the employer and required architectural and structural drawing was not furnished immediately and work got delayed by 253 days due to delay in issuing of drawings till 5/4/2007 and extension of time was given after expiry of the extension period of completion. It was also contended by the claimant that rescinding of contract is illegal and is wrongful and in violation of law and claimant is entitle for payment towards EMD and security deposit. Employer who is the petitioner in this case had contended that the work got delayed due to slow progress of the work, inspite of several letters sent to speed up the work. It was also contended that claimant could do only 10% work and even though, employer agreed to compensate to the tune of Rs.35 lakhs for the increase of price of steel and cement the offer is not accepted and under clause 25 security deposit recovered from the claimant was forfeited as per the agreement clause. Learned Arbitrator by considering these rival contentions has found that the work got delayed due to delay in architectural and structural drawing and price of steel and cement increased abnormally for which there was an offer to pay Rs.35 lakhs as compensation which was not acceptable to claimant. On these facts and circumstances, rescission of the contract by the petitioner employer is held to be not valid and the EMD 14 CT 1390_Com.A.P.27-2022_Judgment.doc and security deposit amount are ordered to be refunded. Learned arbitrator has held that, when there is no fault of the contractor in non performance of the work and rescission of the contract is not by following procedure required and rescission of contract was bad in law. Arbitrator has also noted that extension was given even without asking and extension given is after expiry of period of completion. as proper notice were not served when the contract was alive.
13. Present petitioner who was the respondent before the learned Arbitrator has challenged this finding of the learned Arbitrator on the ground that termination of the contract is under clause 23(b)(1) and under clause 26(c) security deposit amount is liable to be forfeited. It is also contended that when there is no breach committed by the petitioner question of payment of EMD and security deposit do not arise and the reason given by the Arbitrator is absurd and the petitioner has also contended that the finding that there are lapses on the part of the petitioner in providing drawing etc is not correct and drawing were supplied for the ground floor on 28/8/2006 which enable the contractor to commence the work, but he did not commence the work and he came to the work site on 5/4/2007. It is also contended that the petitioner employer even had negotiation with the respondent towards abnormal increase of steel and cement and had made an offer 15 CT 1390_Com.A.P.27-2022_Judgment.doc which was not accepted. It is also contended that due to slow progress of the work, with consent of contractor extension of time was granted, but the work has not proceeded. It is contended that inspite of these materials placed before the learned Arbitrator, order for refund of EMD and security deposit is made and same is bad in law and is against the contractual terms and is against fundamental policy of Indian law and is perverse and is patently illegal and is also against public policy of India.
14. On looking to the finding on claim No.1 and 2of the learned Arbitrator, learned Arbitrator has gone through the records and has found that the EOT was granted without there being any request of the contractor and at the time of giving EOT, time fixed in the contract had already expired and the delay in proceeding in the work was not due to lapses on the part of the contract, but for the lapses on the part of the employer due to delay in giving drawing and also not following the contract provisions properly and also due to abnormal increase in price of steel and cement. The abnormal increase of price of steel and cement is even admitted by the employer as in the negotiation, employer had even agreed to compensate Rs.35 lakhs which was not acceptable to the claimant. By considering all these aspects the learned Arbitrator has found that the rescission of the contract is bad in law.
16CT 1390_Com.A.P.27-2022_Judgment.doc Main contention of the present petitioner is that the order to refund EMD and security deposit is against clause 23 and 26(c) of the contract. However on looking to clause 23, it only state about giving of security deposit and in clause 23(e), it is stated that in case of termination of the contract, security deposit shall be forfeited. As per clause 23(b)(1) when the contractor has made himself liable for action, employer can rescind the contract and on such rescission, security deposit of the contractor shall be liable to be forfeited and in clause 23(a) several circumstances in which contract can be rescinded has been stated.
15. Learned Arbitrator has given finding that due to lapses on the part of the employer in not giving drawing in time as required and not following the terms of the contract and also the situation of abnormal increase of steel and cement are the cause for non progress of the work and has held that the rescinding of the contract by the employer is not lawful. This finding of the learned Arbitrator is based on facts which cannot be interfered by the court under Section 34 of the Arbitration & Conciliation Act. The learned Arbitrator has also noted that even the contractor petitioner had requested to close the contract and during the subsistence of the contract no penalty was levied and no punitive action was taken for the delay by the contractor though the work was rescinded. The learned Arbitrator 17 CT 1390_Com.A.P.27-2022_Judgment.doc has noted that the claimant has sought for closure of the work, but it was not accepted by the employer and thereafter after negotiation failed on the basis of the earlier show cause notice contract was rescinded and it is not valid. When bases on facts, rescinding of the contract is held to be not valid, consequently, forfeiture of EMD and security deposit also would not be valid. As rightly held by the learned Arbitrator these amounts are of the contractor and was required to be returned after completion of the work. But in this case, contract is illegally rescinded and work is not completed and as such the amount is ordered to be refunded. Hence, contention raised by the petitioner in the present case on this finding on claim No.1 and 2 by the learned Arbitrator cannot be set aside and Section 34(2) or (2-A) of the Arbitration & Conciliation Act. Finding of the learned Arbitrator is neither against fundamental policy of Indian law or is against contractual terms or is against public policy of India or is patently illegal. Therefore, challenge to the finding on claim No.1 and 2 made in the present petition would fail.
16. In claim No.5 and 7, learned Arbitrator has taken both the claims together and awarded Rs.5 lakhs in total by holding that the claimant might have incurred extra expenses during the prolonging period. By considering the prolonging period as 20 months and the expenses incurred as Rs.25,000/- per month, this 18 CT 1390_Com.A.P.27-2022_Judgment.doc amount is arrived. In claim No.5, claim was for compensation towards staggered and restricted working including increased cost of working and the claim was for Rs.5,75,000/-. In claim No.7, claim was for compensation towards idling establishment due to non utilization and under utilization of the establishment deployed exclusively for execution of the work amounting to Rs.11,75,000/-. Learned Arbitrator has noted the contention of claimant that, though the work was to be completed by 25/7/2007, it was prolonged to 5/12/2008 i.e. the date of rescinding of the contract and by that time only 10% of work was completed and it is contended that the work got delayed due to non supply of drawing in time and also and sudden increase of the market rate of material and labour during 2006 to 2008. It was contended that due to prolongation of the work the claimant has incurred extra expenses as he was required to watch and ward clerical and technical staff for the extended period to complete the project. Contention of the employer was that, work was abandoned by the claimant after completing of the foundation work and the claimant had failed to complete the work within the prescribed and extended time. The learned Arbitrator by considering these contentions of the parties has noted that the work was to be completed within 12 months, but at the time of rescission the work was completed only upto 19 CT 1390_Com.A.P.27-2022_Judgment.doc foundation. The learned Arbitrator has noted that the foundation work would have taken only 3 months, if there was no hindrance from the employer. The learned Arbitrator considered the fact that the delay is due to the employer and also due to abnormal increase in price of steel and cement and during this extended period claimant was to keep minimum establishment like site engineer, clerical staff and labour supervisor etc to operate the agreement. The learned Arbitrator has held that the idling of labour was for a period of 25 months, but as the claim was made only for 20 months, has considered the expenses incurred per month during this period as Rs.25,000/- per month and has awarded Rs.5 lakhs.
17. This finding on claim No.5 and 7 has been seriously challenged by the petitioner by stating that the claimant did not enter the site till 5/4/2007 as could be seen from the order book and work was stopped due to shortage of labour. It is contended that documents produced as per Ex.R.6 to Ex.R.11 reveals that there was slow progress of work and there is no evidence to show that the work was staggered and there is idled working. It is stated that there was no hindrance from the petitioner and Ex.C.3, C.4 and C.20 reveals that only permission is sought and they cannot constitute evidence of idling of labour. It is also stated that the calculation of Rs.25,000/- per month for a period of 20 20 CT 1390_Com.A.P.27-2022_Judgment.doc months has no basis and the Arbitrator has indulged in guess work.
18. On looking to the award and the contention of the parties, as discussed on claim No.1 there was delay in furnishing drawing and voluntarily the employer has given extension of time after expiry of completion period of contract and work could not be proceeded. The learned Arbitrator has noted that the period of completion was 12 months in which only 3 months period would have been sufficient for foundation, but the work proceeded till it was rescinded on 5/12/2008 and the work was to be completed as per the original schedule by 25/7/2007 and more than one year 5 months has elapsed before rescinding the contract and if the time required for foundation was 3 months, then during contract period, the machinery and establishment like site Engineer, clerical staff etc became idle for 9 months and even thereafter till contract is rescinded same situation continued. By considering these aspects, learned Arbitrator came to the conclusion that for a period of 25 months there was idling of labour, but restricted the same to 20 months as requested by the claimant. It is contended by the petitioner that this fixing amount of Rs.25,000/- is without any basis and is only guess work. However, Arbitrator who is an expert in the field and is a retired Chief Engineer, in the absence of any material produced 21 CT 1390_Com.A.P.27-2022_Judgment.doc by the parties is permitted to utilize his rich experience and arrive at a figure even by guess work and this cannot be disputed. As against the claim for Rs.17,50,000/-, learned Arbitrator has awarded only Rs.5 lakhs. The learned Arbitrator has noted that the respondent employer though was having records as he have to maintain register at the time of entry and exit, has not produced the relevant documents and in the absence of the same, and by considering the minimum requirement of keeping the establishment has awarded the amount which is not unreasonable. Hence, finding of the learned Arbitrator on claim No.5 and 7 cannot be said to be not even a possible view or is patently illegal or is perverse. Therefore, challenge to the award on claim No.5 and 7 would also fail.
19. Claim towards clearance of jungle and preliminary expenses like disposal of garbage, construction of shed and other allied work in claim No.6 the learned Arbitrator, as against claim for Rs.9,14,927/- has awarded Rs.4,50,000/-. While awarding this amount the learned Arbitrator has taken into consideration, the contention of the respondent and also the claimant. The learned Arbitrator has noted that the contention of the claimant that the claimant has removed the foul smelling garbage filled in the site of construction which was not provided in the agreement and the same was brought to the notice of 22 CT 1390_Com.A.P.27-2022_Judgment.doc the employer by Ex.C.16 and the employer has not refuteed the receipt of this letter. The learned Arbitrator has also noted that claimant constructed cement godown, site office etc and levelled the site and cleared the bushes and trees for taking up the construction work. The learned Arbitrator has also considered Ex.C.3, Ex.C.4, Ex.C.5 and Ex.C.6 and that the additional work was recorded in the first site order book. The contention of the respondent that site clearance and any other allied work is part of the contract itself and therefore no separate payment is to be made and no separate claim is performed is also considered. The learned Arbitrator has found that, though quantity was not indicated in the correspondence of the claimant, foul smelling garbage waste removed is established from records. The learned Arbitrator has noted that the claimant could not produce documents like photographs as it is highly secured area. Since the respondent employer has not produced the Register maintained by the security for entering and exit of the vehicle and also the materials., in the absence of such available materials which should have clinched the issue, learned arbitrator has awarded reasonable amount of Rs.1,50,000/- towards disposal of garbage, Rs.25,000/- towards jungle clearance and Rs.2 lakhs towards construction of shed and Rs.75,000/-
23CT 1390_Com.A.P.27-2022_Judgment.doc towards levelling and other allied works, in total awarding Rs.4,50,000/- in claim No.6.
20. Petitioner disputed award in this claim by contending that the claimant was aware of the site condition and he had inspected the site before tender and there was no dumping yard or manure pit as contended and it was the duty of the contractor to inspect the site before opting for tender. Petitioner contends that without considering clause 15 of the contract, finding is given. However, on looking to clause 15 of Ex.C.2, do not deal with the aspect of contractor requiring to do any work which was not provided in the contract, as required for this contract work and then claiming the amount. The petitioner has also contended that there was no evidence to demonstrate that 127 loads of waste was carried in tipper as claimed by the claimant. Learned Arbitrator in respect of jungle clearance has awarded only Rs.25,000/- in claim No.6 and the contention of the claimant that 127 loads of waste was carried is not accepted by the learned Arbitrator though not in specific words. The claim No.6 is not only for jungle clearance, it is for construction of the shed, disposal of garbage, jungle clearance, levelling and other allied work. Contention of the respondent employer that the contractor was expected to know the condition of the site before also, will not come in the way of award, as, if 24 CT 1390_Com.A.P.27-2022_Judgment.doc this work was not done by the claimant, respondent employer who is maintaining records of every entry and exit of the vehicle and persons, should have produced such documents to dispute the claim of the claimant. By considering these aspects, learned Arbitrator allowed the claim by awarding reasonable amount. Though the construction of shed is part of the work of the claimant for which no separate claim could be made, learned Arbitrator has considered that, contract which was for one year was rescinded on completion of foundation and contractor cannot recover his expenses in cleared bill upto foundation. On considering these aspects, awarding of these amounts by the learned Arbitrator appears to be a clear possible view and the same cannot be interfered. This award on claim No.6 cannot be said to be against the terms of the contract or against law or is beyond the jurisdiction of the learned Arbitrator or is patently illegal.
21. In claim No.8, compensation for other losses suffered like loss of materials etc including liquidated damages is claimed by the claimant. The claim is for Rs.28,45,500/-. The learned Arbitrator has awarded Rs.7,50,000/-. Learned Arbitrator has noted that the claimant had mobilized various materials like sand, jelly, bricks, size stones, cement and steel, but due to rescission of the work the claimant could not lift those materials and has suffered loss. It is contended by 25 CT 1390_Com.A.P.27-2022_Judgment.doc claimant before learned Arbitrator that once materials are taken inside, same cannot be taken out without prior permission of the concerned Engineer in writing. Respondent had contended that this claim is baseless and contended that Ex.C.16 is created letter and was not received by the respondent and the claimant was asked to lift the material belonging to him after rescission of the contract. The learned Arbitrator by considering all the records, has noted that on rescission of the contract notice was served on the claimant to take back his material on or before 5/12/2008, but the claimant has not lifted the same and under such circumstances, employer should have taken the stock of the claimant available at the site in the presence of the witness and intimated the same to the claimant. Learned arbitrator has noted that both the parties have not acted in diligent and prudent manner. The learned Arbitrator has also noted that in the letter dated 15/1/2009 and 16/3/2009 the employer has stated that necessary action would be taken as per the general conditions of contract, but no such action is taken. By looking to these records, learned Arbitrator has found that the materials belonging to the claimant was left at the site and the same is not returned and those materials were not taken out from the site of work after rescission and the material could be removed from the secured area only with approval of the respondent and 26 CT 1390_Com.A.P.27-2022_Judgment.doc no proof was given by the respondent for the claimant's materials available and taken out form the site of work. The learned Arbitrator has also noted that the material like bricks, cement, sand etc were lying on the dates of rescission, but proof of collecting materials were neither given by the claimant nor by the respondent. In these circumstances, the learned Arbitrator by considering the records of the claimant and the respondent placed before him, has considered this claim and awarded Rs.7,50,000/-.
22. This award on claim No.8 is disputed by the petitioner on the ground that agreement Ex.C.2 do not provide for this kind of claim and the items mentioned were not kept by the petitioner and Ex.C.16 letter is not received by the employer and without proof of the said letter the learned Arbitrator has awarded the amount. It is also stated that the petitioner employer could not produce the documents as it is 13 years old Register. Petitioner contends that, claimant was required to prove that the materials lifted by him were available with the petitioner at the site and in the absence of such proof awarding of amount is patently illegal and only on the basis of surmises and conjunctures. On looking to the award, learned Arbitrator though considered claim of the claimant has awarded only Rs.7,50,000/- as against the claim of Rs.28,45,500/-. Though Ex.C.16 is stated to have not been received by the present petitioner, in 27 CT 1390_Com.A.P.27-2022_Judgment.doc letters of employer itself, time and again the present respondent was asked to remove the materials from the site after rescission and 2-3 such letters were being issued by the present petitioner to the contractor. It is not the case of present petitioner that after these letters, contractor respondent came to the site and has removed the materials. When contract is rescinded and the contractor is asked to remove his materials, but he failed to remove the same, then it is the duty of the employer to keep in accounts of such materials and intimate the contractor. In the present case, as it is secured area contractor simply cannot come and lift the materials. It is not even the case of the present petitioner that the contractor had after rescission came to the site and removed his materials. Since it is secured area, even if such materials are removed by the contractor, Employer would be knowing it, as it maintains Register for every entry and exit. On considering all these, awarding of Rs.7,50,000/- towards loss suffered by the contractor for loss of materials like cement, brick, sand etc which were brought for the project to the site and which are not lifted back by the contractor is a reasonable award. Since, work was stopped in the middle after foundation work on rescission of contract, materials that were brought to the site which were not utilized and were not returned to the claimant, are to be returned and 28 CT 1390_Com.A.P.27-2022_Judgment.doc towards this claim, awarding of Rs.7,50,000/- is quite reasonable and this finding of the learned Arbitrator cannot be said to be patently illegal and is against public policy as contended.
23. In claim No.10 for compensation for loss of profit, as against claim for Rs.27,44,782/- by calculating loss of profit at 15%, learned Arbitrator has awarded 10% loss of profit and awarded Rs.16,25,668/-. Admittedly, work was rescinded with effect from 5/12/2008 and by that time, only foundation work, value of Rs.20,41,862/- was over, as against total value of work of Rs.1,82,98,544/-. Still, there was balance value of work of Rs.1,62,56,682/-. This balance work was not done due to rescission of the contract. Since the contractor had taken up the work with a view to make profit, contractor has suffered loss of profit due to abrupt rescission of the contract at the foundation level. Hence, learned Arbitrator by referring to decisions cited, has held that contractor is entitle for loss of profit. By considering that in different decisions referred, different percentage of loss of profit is awarded, learned Arbitrator, by taking conservative stand, has awarded 10% on the balance value of the work left amounting to Rs.1,62,56,682/- and awarded Rs.16,25,668/-.
24. This award of Rs.16,25,668/- is disputed by the petitioner on the ground that contractor is not 29 CT 1390_Com.A.P.27-2022_Judgment.doc entitle for compensation as there are lapses on the part of the contractor. Due to delay in furnishing drawing and due to many other reasons, contractor could not proceed and when the work was upto the foundation level, employer has rescinded the contract without following the procedure required under law and the contractor is made to suffer. The contention of the petitioner that section 73 of the Indian Contract Act is not applicable as there is no breach of contract, cannot be accepted. As discussed on claim No.1 and 2, it is clearly established that there was no lapse on the part of the contractor, but due to the lapse on the part of the employer the work could not proceed and rescission of the contract is unlawful and the employer has breached the terms of the contract. As such, under Section 73 of the Indian Contract Act the claimant contractor is entitle for compensation. By considering 10% of the remaining work value as loss of profit, learned Arbitrator has awarded Rs.16,25,668/-. This finding of the learned Arbitrator is just and proper and there are no ground to hold that this finding is against public policy or is against fundamental principles of Indian law or is patently illegal or is not even a possible view. Therefore, award of the learned Arbitrator on claim No.10 cannot be set aside under Section 34 of the Act.
25. In claim No.11 as against the interest claim of 24%,learned Arbitrator has awarded 12% interest from 30 CT 1390_Com.A.P.27-2022_Judgment.doc 5/12/2008 which is the date of coming into effect of the rescission. This finding is challenged by the petitioner stating that there is no lapse, default and negligence on the part of the Employer and as such, awarding of interest is unjustified and illegitimate. It is contended by present petitioner that learned Arbitrator has not given cogent reason for awarding interest and Ex.C.2 contract do not provide for interest. However, as per Section 31(7)(a) of Arbitration & Conciliation Act, unless otherwise agreed by the parties, Arbitrator may include interest at such rate as it deems reasonable on the whole or any part of the money, for the whole or any part of the period from the date of cause of action till the date of award. Therefore, if there is no agreement between the parties barring awarding of interest, Arbitrator is having discretion to award interest at such rate as he finds reasonable for the period from date of cause of action till the date of award. In the present case, there is no such bar in the contract to award interest. As such, learned Arbitrator is well within his jurisdiction to award interest. Interest of 12% awarded by the learned Arbitrator is very reasonable. Since the rescission of the contract came into effect on 5/12/2008, learned Arbitrator has awarded interest from that date till the date of award and this award of 12% interest is very reasonable and cannot be interfered. Learned Arbitrator has also noted that if the 31 CT 1390_Com.A.P.27-2022_Judgment.doc amount is not paid within 3 months, from the date of award, post interest award shall be applicable as per Arbitration & Conciliation Act, beyond the grace period of 3 months. Hence the finding on claim No.11 is within the scope of power of the learned Arbitrator and the finding is reasonable and cannot be interfered under Section 34 of the Act.
26. Regarding claim No.12 though this awarding of cost is challenged, by paying the cost, Petitioner is already said to have satisfied this claim. Hence, this claim need not be considered. Even otherwise, awarding of cost is well within the discretion of learned arbitrator and same cannot be questioned, unless it is unreasonable. Cost awarded is reasonable in this case and same cannot be interfered.
27. On looking to all these aspects, petitioner who has challenged the award of the learned Arbitrator on different claims, has failed to establish the grounds for challenge. The petitioner has failed to establish that the award of the learned Arbitrator on those claims is erroneous or is against fundamental principles of Indian law or is perverse or is patently illegal or is not even a possible view. Hence, award on these challenged claims cannot be set aside as prayed. Accordingly point No.1 is answered in the negative.
28. POINT No.2 : For the discussion made on above point, following order is passed:
32CT 1390_Com.A.P.27-2022_Judgment.doc ORDER Arbitration Petition filed under Section 34 of the Arbitration & Conciliation Act against award of the learned Arbitrator on claims No.1,2,5,7, 6,8,10,12 and 11, passed on 28/12/2021 is dismissed.
[Dictated to the Judgment Writer; transcript thereof corrected, signed and then pronounced by me, in the Open Court on this the 24th day of January 2023] [Ravindra Hegde] LXXXIII Additional City Civil Judge.
BENGALURU.
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