Delhi District Court
Union Of India vs Rakesh Kumar & Co on 7 July, 2021
In the Court of Shri Sanjiv Jain, District Judge (Commercial
Court)-03, Patiala House Courts New Delhi
OMP Number. 27/2020
Union of India
Northern Railways,
Construction Office,
Kashmere Gate, Delhi
... Petitioner/objector
versus
Rakesh Kumar & Co.
166, Model Town,
Panipat, Haryana.
Also at: H. No. 475, Sector-10,
Panchkulan, Haryana. ... Respondent/claimant
Date of institution : 17.02.2020 Date of reserving judgment : 23.06.2021 Date of decision : 07.07.2021 JUDGME NT
1. This petition under Section 34 of the Arbitration and Conciliation Act, 1996 (as amended upto date) hereinafter called the 'Act' challenges the award dated 19.11.2019 passed by the Arbitrator Sh. Sanat Kumar, whereby, the respondent was awarded a sum of Rs. 26,44,450/- on account of price variation vide claim no. 2 payable within a period of 90 days from the date of award, failing which, petitioner would be liable to pay simple interest @ 12% per annum from the date of the OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.1 of 41 award till the date of payment.
Brief facts:
2. The facts as stated in the petition are that the petitioner had invited tender for the work "Balance work of construction of 10 Nos. major Bridges on Broad Gauge Railway Line across river of span of 9.15 Meter, 12.20 Meter and 30.50 Meter of PSC Girders on well foundation / open foundation with RCC abutments, piers and other allied works like protection work from KM 72.400 to KM 113.750 in between Chakki Bank and Mukerian (including yard) in connection with doubling on Jalandhar Cantt. Pathankot, Jammu Tawi Section" vide notice no. 74-W/1/1/352/WA/PTK dated 14.03.2005. The respondent participated in the tender and its bid was accepted. The work was awarded to the respondent vide letter of award dated 12.07.2005 for a sum of Rs. 9,90,35,161.73. The period of completion of work was 15 months i.e. upto 11.10.2006. As per clause 5.1 of Special Tender Conditions & Instructions to Tenderer, the respondent was to furnish Security Deposit of Rs.
2,50,000/-. The balance amount was to be recovered from the running bills. It is stated that the respondent was time and again requested to arrange sufficient men, materials and machinery etc at site, so that the work could be completed within the original date of completion / extended date but it did not. Various requests and reminders / instructions were also given by the Engineer in the site order book on different dates but OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.2 of 41 despite that, progress of work remained very slow.
3. It is stated that 25 running bills were processed, which were accepted by the respondent along with the measurements without any protest total amounting to Rs. 8,80,67,554.18 apart from the final bill for Rs. 23,04,669/-.
4. It is stated that during the contract, 4 addendums / corrigendums were initiated and approved with the consent of the respondent on 27.03.2006, 24.01.2007, 11.01.2008 & 07.01.2009 respectively. Final measurements were recorded on the basis of actual workdone at site on 29.10.2008 & 03.11.2008 in the measurement book including measurements towards Price Variation Clause (PVC), which were accepted by the respondent without any protest. Final PVC bill dated 06.02.2009 was also accepted by the respondent without any protest giving 'No Claim Certificate' interalia as under:
"I have no other claim outstanding against Northern Railway for work done or for labour and material supplied or any other account and the payment of this bill shall be in final settlement of all my claims in respect of the work."
5. It is alleged that after accepting the entire payment, the respondent, with malafide intention, signed a supplementary agreement to extract money from the public exchequer, though by rule of estoppel, he was estopped from raising any claim. It OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.3 of 41 is stated that upto 06.02.2009, the day, it accepted the final PVC bill, it did not submit any monthly statement in respect of any of the claims as required under clause 43 (1) of GCC 1999.
6. It is stated that the respondent vide letter dated 14.06.2008 invoked the arbitration clause and made 10 claims for Rs. 3,75,00,000/-. Dy. CE/C/G on behalf of GM referred only the four claims for a total sum of Rs. 73,00,000/- and did not refer the other claims being falling in the category of 'excepted matter'. The respondent then approached the High Court vide OMP (T) (Comm.) No. 09/2017 and the High Court vide order dated 28.03.2017 directed DIAC to appoint an Arbitrator from where, vide letter dated 15.04.2007, Sh. Sanat Kumar was appointed as the Sole Arbitrator to adjudicate upon the claims. The respondent filed the statement of claims for Rs. 75,35,138/- along with interest @ 18% per annum. The petitioner contested the claims and filed its reply. The Arbitrator, after conducting the proceedings, vide award dated 19.11.2019 rejected the four claims out of the five claims and allowed claim no. 2 for Rs. 26,44,450/- on account of PVC.
Grounds:
7. The petitioner challenged the award on the following grounds:
A. That the Arbitrator allowed the claim on account of PVC despite the fact that PVC measurements & bill were accepted by the respondent without any protest with no claim certificate.
OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.4 of 41 B. That the Arbitrator did not consider the affidavit of admission / denial of documents by CW1, in which the respondent had admitted the final PVC bill. It is stated that the respondent was not within its legal right to challenge the contents of the same. Despite this, the Arbitrator awarded the amount, which is patently illegal and against the public policy.
C. That the Arbitrator did not consider the provision under clause 43 (2) of GCC 1999 that after giving no claim certificate in respect of final PVC bill, the contractor / respondent is debarred from disputing the correctness of the items covered by no claim certificate.
8. Notice of the petition was given to the respondent and the arbitral record was summoned.
Arguments & contentions:
9. I have heard the arguments advanced by Sh. V. K. Rai, Ld. Counsel for the petitioner and Sh. S. W. Haider, Ld. Counsel for the respondent.
10. Ld. Counsel for the petitioner reiterated what has been stated in the petition. He stated that the present case falls under the category of excepted matters as provided under clause 63 & 64 of GCC 1999. He stated that clause 45 (a) of GCC 1999 provides that the measurements can be challenged within seven days, which were not done in this case. He stated that the work was to be completed by 11.10.2006 but the respondent completed the work on 20.04.2008 taking 18 months extra. He was granted seven extensions without levy of penalty under OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.5 of 41 clause 17 (A) (iii) of GCC 1999, which interalia provides that no damages are payable to the contractor. Ld. Counsel contended that once the contract is accepted, its terms & conditions cannot be challenged. He referred the measurements & PVC bill and stated that the measurements and the PVC bill were accepted by the respondent without any protest and as such, he was not entitled to challenge the same in view of clause 45 of GCC 1999 being the matter falling in the category of 'excepted matter'. Ld. Counsel stated that doctrine of waiver is also applicable, since the contractor / respondent did not send any letter raising any protest that it was entitled to PVC.
Admittedly, in the extension letter, it had requested for PVC but the petitioner had declined the same and in view of Section 62 of Indian Contract Act 1872, PVC was not payable to the respondent.
11. Ld. Counsel for the respondent per contra argued that there is no illegality / infirmity in the impugned award. Measurements have no role on PVC, which relates to the cost escalation. The Arbitrator has recorded a detailed finding and thereafter, passed the award, which does not call for interference. Ld. Counsel stated that the extensions were granted under clause 17 (A) of GCC 1999, since, delay was solely attributable to the petitioner and as such, PVC was payable to the respondent.
OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.6 of 41 Findings / Adjudication:
12. I have considered the arguments and gone through the impugned award and the relevant documents.
13. Section 34 of the Arbitration and Conciliation Act reads as under:
"34.Application for setting aside arbitral award-
(1)Recourse to a court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub- section (3). (2)An arbitral award may be set aside by the court only if-
(a) the party making the application furnishes proof that-
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration;
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or
(v)the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or
(b) the court finds that-
(i) the subject-matter of the dispute is not capable of OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.7 of 41 settlement by arbitration under the law for the time being in force, or
(ii) the arbitral award is in conflict with the public policy of India.
Explanation- I For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India only if the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81."
ii) It is in contravention with the fundamental policy of Indian law;
iii)It is in conflict with the most basic notions of morality or justice.
Explanation-II- For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.
[2 (A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the court, if the court finds that the award is vitiated by patent illegality appearing on the face of the award: Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence.
14. Normally, the principles are that the decision of the Arbi-
trator unless there is an error apparent on the face of the award which makes it unsustainable, is not to be set aside even if the court as a court of law would come to a different conclusion on the same facts. The court cannot reappraise the evidence and it is not open to the court to sit in appeal over the conclusion of the arbitrator. Where the arbitrator assigns cogent grounds and sufficient reasons and no error of law or misconduct is cited, OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.8 of 41 the award will not call for interference by the court in exercise of the power vested in it.
15. In Sudarsan Trading Co. v. Government of Kerela & Anr. 1989 AIR 890, it was held that Court cannot substitute its own evaluation of the conclusion of law or fact to come to the conclusion that the arbitrator had acted contrary to the bargain between the parties. Whether a particular amount was liable to be paid or damages liable to be sustained, was a decision within the competency of the arbitrator in the case. By purporting to construe the contract, the court could not take upon itself the burden of saying that this was contrary to the contract and, as such, beyond jurisdiction.
16. In the case of Hiedelberg Cement India Ltd Vs. The In-
dure Pvt Ltd, OMP (Comm) No. 413/2019 decided on 29.01.2020, it was held that law of judicial review and interfer- ence in proceedings under Section 34 of the Act is no more res integra. Reference of the case Associate Builders v/s Delhi De- velopment Authority, (2015) 3 SCC 49 was made, where the Supreme Court has held as under:-
"19. When it came to construing the expression the public policy of India contained in Section 34(2)(b)(ii) of the Arbitration Act, 1996, this Court in ONGC Ltd. v. Saw Pipes Ltd. (2003) 5 SCC 705 : held: (SCC pp. 727-28 & 744-45, paras 31 & 74)
31. Therefore, in our view, the phrase public policy of OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.9 of 41 India used in Section 34 in context is required to be given a wider meaning. It can be stated that the concept of public policy connotes some matter which concerns public good and the public interest. What is for public good or in public interest or what would be injurious or harmful to the public good or public interest has varied O.M.P. (COMM) 413/2019 Page 30 of 37 from time to time. However, the award which is, on the face of it, patently in violation of statutory provisions cannot be said to be in public interest. Such award/judgment/decision is likely to adversely affect the administration of justice. Hence, in our view in addition to narrower meaning given to the term public policy in Renusagar case [Renusagar Power Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC 644] it is required to be held that the award could be set aside if it is patently illegal. The result would be award could 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) in addition, if it is patently illegal.
Illegality must go to the root of the matter and if the illegality is of trivial nature it cannot be held that award is against the public policy. Award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the court. Such award is opposed to public policy and is required to be adjudged void.
74. In the result, it is held that: (A)(1) The court can set aside the arbitral award under Section 34(2) of the Act if the party making the application furnishes proof that:
(I) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the O.M.P. (COMM) 413/2019 Page 31 of 37 submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration.
OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.10 of 41 (2)The court may set aside the award:
(I)(a) if the composition of the Arbitral Tribunal was not in accordance with the agreement of the parties, (b) failing such agreement, the composition of the Arbitral Tribunal was not in accordance with Part I of the Act,
(ii) if the arbitral procedure was not in accordance with: (a) the agreement of the parties, or (b) failing such agreement, the arbitral procedure was not in accordance with Part I of the Act. However, exception for setting aside the award on the ground of composition of Arbitral Tribunal or illegality of arbitral procedure is that the agreement should not be in conflict with the provisions of Part I of the Act from which parties cannot derogate. (c) If the award passed by the Arbitral Tribunal is in contravention of the provisions of the Act or any other substantive law governing the parties or is against the terms of the contract.
(3)The award could be set aside if it is against the public policy of India, that is to say, 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. (4) It could be challenged: (a) as provided under Section 13(5); and
(b) Section 16(6) of the Act.......
44. It was held that in the recent judgments, the Supreme Court has once again reiterated the law related to the examination by a Court of an Award under Section 34 of the Act. In Ssangyong Engineering & Construction Co. Ltd. vs. National Highways Authority of India Ltd. 2019 SCC OnLine SC 677, the Supreme Court has held as under:-
35. What is clear, therefore, is that the expression public policy of India, whether contained in Section 34 or in Section 48, would now mean the fundamental policy of Indian law as explained in paragraphs 18 and 27 of Associate Builders (supra), I.e., the fundamental policy of Indian law would be relegated to the Renusagar understanding of this expression.
This would necessarily mean that the Western Geco (supra) expansion has been done away with. In short, Western Geco (supra), as explained in paragraphs 28 and 29 of Associate Builders (supra), would no longer obtain, as under the guise of interfering with an award on the ground that the arbitrator has not adopted a judicial approach, the Court's intervention OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.11 of 41 would be on the merits of the award, which cannot be permitted post amendment. However, insofar as principles of natural justice are concerned, as contained in Sections 18 and 34(2)(a)(iii) of the 1996 Act, these continue to be grounds of challenge of an award, as is contained in paragraph 30 of Associate Builders (supra).
36. It is important to notice that the ground for interference insofar as it concerns interest of India has since been deleted, and therefore, no longer obtains. Equally, the ground for interference on the basis that the award is in conflict with justice or morality is now to be understood as a conflict with the most basic notions of morality or justice. This again would be in line with O.M.P. (COMM) 413/2019 Page 34 of 37 paragraphs 36 to 39 of Associate Builders (supra), as it is only such arbitral awards that shock the conscience of the court that can be set aside on this ground.
37. Thus, it is clear that public policy of India is now constricted to mean firstly, that a domestic award is contrary to the fundamental policy of Indian law, as understood in paragraphs 18 and 27 of Associate Builders (supra), or secondly, that such award is against basic notions of justice or morality as understood in paragraphs 36 to 39 of Associate Builders (supra). Explanation 2 to Section 34(2)(b)(ii) and Explanation 2 to Section 48(2)(b)(ii) was added by the Amendment Act only so that Western Geco (supra), as understood in Associate Builders (supra), and paragraphs 28 and 29 in particular, is now done away with.
38. Insofar as domestic awards made in India are concerned, an additional ground is now available under sub-section (2A), added by the Amendment Act, 2015, to Section 34. Here, there must be patent illegality appearing on the face of the award, which refers to such illegality as goes to the root of the matter but which does not amount to mere erroneous application of the law. In short, what is not subsumed within the fundamental policy of Indian law, namely, the contravention of a statute not linked to public policy or public interest, cannot be brought in by the backdoor when it comes to setting aside an award on the ground of patent illegality.
39. Secondly, it is also made clear that re-appreciation of evidence, which is what an appellate court is permitted to do, cannot be permitted under the ground of patent illegality appearing on the face of the award.
40. To elucidate, paragraph 42.1 of Associate Builders (supra), OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.12 of 41 namely, a mere contravention of the substantive law of India, by itself, is no longer a ground available to set aside an arbitral award. Paragraph 42.2 of Associate Builders (supra), however, would remain, for if an arbitrator gives no reasons for an award and contravenes Section 31(3) of the 1996 Act, that would O.M.P. (COMM) 413/2019 Page 35 of 37 certainly amount to a patent illegality on the face of the award.
41. The change made in Section 28(3) by the Amendment Act really follows what is stated in paragraphs 42.3 to 45 in Associate Builders (supra), namely, that the construction of the terms of a contract is primarily for an arbitrator to decide, unless the arbitrator construes the contract in a manner that no fair-minded or reasonable person would; in short, that the arbitrator's view is not even a possible view to take. Also, if the arbitrator wanders outside the contract and deals with matters not allotted to him, he commits an error of jurisdiction. This ground of challenge will now fall within the new ground added under Section 34(2A).
42. What is important to note is that a decision which is perverse, as understood in paragraphs 31 and 32 of Associate Builders (supra), while no longer being a ground for challenge under public policy of India, would certainly amount to a patent illegality appearing on the face of the award. Thus, a finding based on no evidence at all or an award which ignores vital evidence in arriving at its decision would be perverse and liable to be set aside on the ground of patent illegality. Additionally, a finding based on documents taken behind the back of the parties by the arbitrator would also qualify as a decision based on no evidence inasmuch as such decision is not based on evidence led by the parties, and therefore, would also have to be characterised as perverse.
45. It was also observed that recently, in Hindustan Construction Company Limited & Anr. Vs. Union of India & Ors., 2019 SCC OnLine SC 1520, the Apex Court has held as under:-
55. Further, this Court has repeatedly held that an application under Section 34 of the Arbitration Act, 1996 is a summary proceeding not in the nature of a regular suit - see Canara OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.13 of 41 Nidhi Ltd. v. M. Shashikala 2019 SCC O.M.P. (COMM) 413/2019 Page 36 of 37 OnLine SC 1244 at paragraph 20. As a result, a court reviewing an arbitral award under Section 34 does not sit in appeal over the award, and if the view taken by the arbitrator is possible, no interference is called for -
see Associated Construction v. Pawanhans Helicopters Limited. (2008) 16 SCC 128 at paragraph 17.
56. Also, as has been held in the recent decision Ssangyong Engineering & Construction Co. Ltd. v. NHAI 2019 SCC OnLine SC 677, after the 2015 Amendment Act, this Court cannot interfere with an arbitral award on merits. "
17. In the backdrop of above, before examining the objections, it is relevant to reproduce some of the clauses of Special Tender Conditions, Special Condition relating to Site Data & Specification and General Conditions of Contract 1999 (GCC 1999).
18. Special Tender Conditions and Instructions to Tenderer/s:
8.1 The entire work is required to be completed in all respects within 15 months from the date of issue of acceptance letter. Time is the essence of contract. The contractor will be required to maintain speedy and required progress to the satisfaction of the Engineer to ensure that the work will be completed in all respects withhin the stipulated period failing which action may be taken by the Railway in terms of clause 17 and / or clause 62 of GCC 1999.
9.8 After the work is completed and taken over by the OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.14 of 41 Railway as per the terms & conditions of the contract or otherwise concluded by the parties with mutual consent and full & final payment is made by the Railway to the contractor for the workdone under the contract, the parties shall execute the supplementary agreement as annexure E. 11.1 The Railway reserves the right to modify the plans and drawings as referred to in the special data and specifications and also the estimate and specifications without assigning any reasons as and when considered necessary by the Railway. The percentage rates for the schedule items and items rates for the non schedule items quoted by the contractor as may be accepted by the Railway will however, hold good irrespective of any changes........
21.5 No claim for idle labour and / or idle machinery etc on any account will be entertained. Similarly no claim shall be entertained for business loss or any such loss.
19. Special Conditions relating to Site Data & Specifications:
49.1 The rate quoted by the tenderer and accepted by Railway shall hold good till the completion of the work and no additional individual claim will be admissible on account of fluctuationn in market rates, increase in taxes / any other levies / tolls etc, except that payment / recovery for overall OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.15 of 41 market situation made as per price variation clause.
49.2 No cognizance will be given for any sort of fluctuation of taxes and other market conditions etc. for any individual item for the purpose of makinng adjustment in payments. The contract shall however, be governed by the General Price Variation Clause (PVC), which shall be determined in terms of 49.4 & 49.5.
49.7 Price variation clause will not apply, if the price variation is upto 4% reimbersement / recovery due to variation in prices and will be made only for the amount in excess of 5% of the amount payable to the contractor as hitherto.
(a) Contracts upto 1 year: No price variation clause should be payable as it is presumed that the contractor will take care of price variation while quoting his rates.
(b) Contracts between 1 & 2 years duration: The total amount of reimbursement / recovery due to variation in prices of the several components shall be limited to 10% of the amount finally payable to the contractor subject to the note below.
(c) Contracts of more than 2 years duration: The total amount of reimbursement / recovery due to variation in prices of the several components shall be limted to 20% of the amount finally payable to the contractor subject to the note below.
Note: i) Material supplied free by the Railway to the contractor will fall outside the purview of the price variation clause.
ii) Duration of the contract shall be prescribed in the tender document at the time of inviting tender and will not include the extended period due to extension of any kind given.
OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.16 of 41
20. General clauses of Contract 1999 (GCC 1999) :
Clause 16 (3): No interest will be payable upon the earnest money and security deposit or amounts payable to the contractors under the contract but the Government securities deposited in terms of Sub-clause (1) of this clause will be payable with interest accrued thereon.
Clause 17A: If in the opinion of the engineer, the progress of the work has been delayed by the act of railways, the contractor shall immediately give notice in writing within 15 days and make endeavor to make the delay and shall be bound to ask for necessary extension of time. The Engineer shall grant such extension of time. No other compensation shall be payable for works so carried out forward to the extended period of time. The same rates terms & conditions of the contract would be applicable.
Clause 17B: The time for the execution of work shall be the essence of contract. If the contractor fails to complete the works within the time as specified in the contract for the reasons other than specified in clause 17 & 17A and the railway may if satisfied that the works can be completed by the contracts within reasonable short time, thereafter, allow the contractor for further extension of time as the engineer may decide. On such extension, railway will be entitled to recover damages and OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.17 of 41 appropriate the security deposit and rescind the contract.
Clause 43 (1): The contractor shall prepare and furnish to the engineer once in every month an account giving full and detailed particulars of all claims for any additional expenses to which the contractor may consider himself entitled to and all extra or additional works ordered by engineer which he has executed during the preceding month and no claim for payment for such works will be considered, which has not been included in such particulars. Clause 43 (2): The contractor shall not be entitled to make any claim whatsoever against railway under or by virtue of or arising out of this contract, nor shall the Railway entertain or consider any such claim, if made by the contractor, after he shall have signed a 'no claim certificate' in favour of the Railway in such form as shall be required by the Railway after the works are finally measured up. The contractor shall be debarred from disputing the correctness of the item covered by 'no claim certificate' or demanding a clearance to arbitration in respect thereof.
Clause 45 (a): It shall be open to the contractor to take specific objection to any recorded measurements or classification on any ground within seven days of the date of such measurements. Any remeasurement taken by the Engineer or the Engineer's representative in the presence of the contractor or in his absence after due notice has been given to him in OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.18 of 41 consequence of objection made by the contractor shall be final and binding on the contractor and no claim whatsoever shall thereafter be entertained regarding the accuracy and classification of the measurements.
Clause 46 (1): The contractor shall be entitled to be paid from time to time by way of "on account" payment only for such works as in the opinion of the Engineer he has executed in terms of contract. All payment due on the Engineer's or Engineer's representatives certificate of measurements shall be subject to any deduction which may be made under these presents and shall further be subject to unless otherwise required by clause 16 of these conditions a retention of ten percent by way of security deposits, until the amount of security deposit by way of retained earnest money and such extension shall amount to 10% of total value of the contract provided always that the Engineer may by any certificate make any correction or modification in any previous certificate which shall have been issued by him and that the Engineer may withhold any certificate if the works or any part thereof are not being carried out to his satisfaction.
Clause 46 (3): "On account" payment made to the contractor shall be without prejudice to the final making up of the accounts (except where measurements are specifically noted in the measurement book as "final measurements" and as such OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.19 of 41 have been signed by the contractor) and shall in no respect be considered or used as evidence of any facts stated in or to be inferred from such account not of any particular quantity of work having been executed not of the manner of its execution being satisfactory.
Clause 63: All disputes and differences of any kind whether during the progress of work or after its completion, whether before or after the determination of contract shall be referred by the contractor to the Railway and the Railway shall within 120 days after receipt of contractor's representation make and notify decisions on all matters in writing provided the matter for which, the provision has been made in clause 8 (a), 18.22 (5), 39, 43 (2), 45 (a), 55, 55-A (5), 57, 57A, 61 (1), 61 (2) and 62 (1) (b) of General Conditions of Contract. In any clause of the Special Conditions of the contract shall be deemed as 'excepted matters' and decisions of the Railway authority, thereon shall be final and binding on the contractor provided further that 'excepted matter's shall stand specifically excluded from the purview of the arbitration clause and not be referred to arbitration.
Clause 64 (1) (i): In the event of any dispute or difference between the parties, if the Railway fails to make a decision within 120 days, then in such a case but except in any of the 'excepted matters' referred to in clause 63 of the conditions, the OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.20 of 41 contractor, after 120 days but within 180 of his presenting his final claim on disputed matters shall demand in writing that the dispute or difference be referred to arbitration.
Clause 64 (1) (ii) (a): The arbitration proceedings shall be presumed to have commenced from the day, a written and valid demand for arbitration is received by the Railway.
Clause 64 (1) (iv): If the contractor does not prefer his specific and final claim in writing within a period of 90 days of receiving the intimation from the Railways that the final bill is ready for payment, he will be deemed to have waived his claim and the Railway shall be discharged and released of all liabilities under the contract in respect of these claims.
Clause 64.5: Where the arbitral award is for the payment of money, no interest shall be payable on whole or any part of the money for any period till the date on which, the award is made.
Clause 64.6: The cost of arbitration shall be born by the respective parties. The cost shall interalia include fee of the arbitrator (s) as per the rates fixed by the Railway Administration from time to time.
21. A perusal of record reveals that the petitioner had invited tenders for the balance work of construction of ten major OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.21 of 41 bridges on broad gauge railway line across the river on Jalandhar Cantt, Pathankot, Jammu Section. The respondent was awarded the work vide letter of award dated 12.07.2005. The work was to be completed within 15 months expiring on 11.10.2006. The total cost of the work was Rs. 9,90,35,161.73. Due to change in the scope of work, GAD and drawings, the work got delayed and the period was extended by another 18 months under clause 17 (A) (iii) of GCC 1999. Although, the respondent had requested for extensions without penalty and with PVC but the petitioner granted the extensions without penalty and without PVC. The final bill was prepared, which the respondent signed under protest. The bill was paid after about ten months of completion of work. Since, the payment on account of additional expenses were not included in the final bill, the respondent invoked the arbitration raising various claims including the claim for PVC. The Arbitrator on the basis of the pleadings of the parties, framed the following issues:
1. Whether the claimant / respondent is entitled to the claims as set out in the statement of claim?
2. Whether the claimant / respondent is entitled to interest and if so at what rate and from which period?
3. Whether the claimant / respondent is not entitled to the claims in view of signing of Supplementary Agreement on 06.02.2009?
4. Relief.
22. The parties led their evidences and advanced the arguments referring the case laws.
OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.22 of 41
23. Ld. Arbitrator considered the contention of the petitioner that the claims falling in the category of 'excepted matters' are not arbitrable, even if, they have been referred to Arbitrator for adjudication. He referred clause 63 of GCC 1999 and the case of General Manager, Northern Railway Vs. Sarvesh Chopra, 2002 (4) SCC 45 and M/s Harsha Consturction Vs. Union of India, AIR 2015 SC 270 and held that in view of the propositions laid down in the cases supra, what is to be seen is whether a particular claim falls in the category of 'excepted matter' or not. In case it falls in that category, the same cannot be decided by the Tribunal. He also considered the contention of the petitioner that in terms of clause 43 (1) of GCC 1999, the contractor is required to submit once in every month full and detailed particulars of all the claims to which he would be entitled including for extra or additional works ordered by the Engineer, which he had executed in the preceeding months and that in term of clause 46 (1) of GCC, payments were to be made to the contractor only 'on account' basis and without prejudice to the final making up of the accounts under clause 46 (3) except the final measurements as signed by the contractor. He also considered the contention that as per clause 64 (1) (iv) of GCC 1999, the contractor could prefer any specific or final claim in writing within a period of 90 days of receiving the intimation from the railways that the final bill is ready for payment and in case he fails to do so, railway is discharged and released of all the liabilities under the contract in respect of OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.23 of 41 those claims.
He did not find force in the contentions of the petitioner and held that such a restriction if accepted would be violative of Section 28 of the Contract Act 1872 and would be void. On harmonious reading of clauses 43 (1) and 64 (1) (iv) of GCC, it is clear that even if the claims have not been raised in the monthly statement of claims, they can still be raised within a period of 90 days from the intimation of final bill. In the present case, all the claims were raised even before the final bill was intimated to the respondent. Thus, the claims are legally maintainable and are not barred under clause 43 (1) of GCC.
24. The Arbitrator also considered contention of the petitioner that in terms of clause 45 (a) of GCC, it is open to the contractor to take specific objection to any recorded measurements within seven days of the date of such measurements. Any measurement taken by the Engineer in the presence of the contractor or in his abssence after due notice shall be final and binding on the contractor and no claim whatsoever shall thereafter be entertained regarding the accuracy and classification of the measurements. He held that the purpose behind the said clause is that the work done by the contractor should be measured in the presence of the contractor. For this purpose, notice is required to be given to him. In case, he does not attend to such measurements despite notice, the same would be recorded in his absence, which would be OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.24 of 41 binding on him. If he objects to the measurements on any ground within seven days of such measurements, the same would be investigated and measured. He held that the said clause is in consonance with the principles of natural justice. There is nothing unreasonable in the said clause as finality has to be attained regarding the measurements in an ongoing project and the issue of measurements cannot be left to be decided at a later stage i.e. such objection under clause 45 (a) of GCC would be categorised under the 'excepted matter' as provided in clause 63 of GCC.
25. While deciding the issue "whether the claimant / respondent is not entitled to the claim in view of signing of supplementary agreement on 06.02.2009", the Arbitrator held that a bare perusal of supplementary agreement dated 06.02.2009 Ex. RW1/63 shows that it was signed by the respondent with the endorsement "supplementary agreement sign under protest subject to our claim already submitted". By that time, the respondent had already invoked the arbitration. The General Manager, Railways had constituted a Arbitral Tribunal to decide the claims. He held that in this view of the matter, signing of supplementary agreement subsequent to the Tribunal having been constituted is of no consequence. He held that the respondent has signed the supplementary agreement under protest, which clearly indicates that it was subject to the claims already submitted by it. He did not find merit in the OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.25 of 41 contention of the petitioner that after signing of supplementary agreement, the arbitration clause does not survive.
26. While deciding issue no. 1, the Arbitrator discussed all the claims i.e. claim no. 1, 1 (a), 1 (b), 1(c), 1(d), 1(e), 1(f), 1(g), 1(h), 1(i), 1(j) and 1 (k) in detail and rejected the same. Neither the petitioner nor the respondent challenged the findings of the Arbitrator on these claims.
27. The challenge in the petition is qua allowing 'PVC' to the respondent.
28. It is not in dispute that as per the contract, the work was to be completed within a period of 15 months i.e. by 11.10.2006 but due to change in the scope of work from time to time, the work got delayed and was completed in 33 months (15+18 months) under clause 17 (A) (ii) of GCC 1999. As per the clause, the respondent had to apply for the extensions, which it applied with PVC vide letters dated 19.10.2006, 24.04.2007, 05.06.2007, 04.09.2007, 23.10.2007, 27.12.2007, 01.03.2008 and 07.04.2008, however, the petitioner granted the extensions without penalty and without PVC.
A perusal of record would show that the respondent was paid escalation as due, freezing indices upto the stipulated completion date i.e. 11.10.2006. The escalation based on the RBI index for the work executed between 12.10.2006 to OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.26 of 41 20.04.2008 was not paid. The respondent had contended before the Arbitrator that when the extensions were granted under clause 17 (A) (iii) of GCC, the escalation as per PVC clause provided in the contract was payable. The petitioner per contra had contended that the extensions were granted on the specific request of the respondent and it was not entitled to any compensation for the extended period of time; that it could not complete the work within the stipulated time of completion due to slow progress of work and as such, the extensions were granted under clause 17 (A) (ii) & (iii) GCC 1999 without PVC and without penalty; that PVC was paid on frozen indices upto the stipulated date of completion in terms of the letter dated 29.10.2007. It was also contended that the respondent had aceepted the bill of price variation (PVC) without any objection and therefore, its claim is liable to be rejected. Reference was made of the clause 11.1 of the Special Tender Conditions and Instructions to Tenderer to contend that the claim is beyond the scope of the agreement.
29. The Arbitrator referred the PVC clause incorporated in clause 49 of the Special Conditions relating to Site Data & Specification held that as per the clause, the rate quoted by the contractor and accepted by the railway shall hold good till the completion of work and no additional claim will be admissible on account of fluctuation in market rates, increase in taxes etc except that payment / recovery for overall market situation as OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.27 of 41 given in price variation clause. He considered the clause 49.7, as per which, for contracts between 1 and 2 years duration, total amount of reimbursement / recovery due to variation in prices of the several components shall be limited to 10% of the amount finally payable to the contractor. He also considered the Note appended to the clause, which provides that the duration of contract will not include the extended period due to extension of any kind. He observed that as the present contract was originally of 15 months duration, the same would fall in the category of contracts between 1 to 2 years duration and not in the category of contracts of more than 2 years duration, even if it was completed in 33 months. He referred clauses 17-A & 17- B of GCC 1999 and held that the clauses 17-A (ii) & (iii) deal with the extension of time due to a situation where there was non compliance of obligations by the petitioner viz. modification of the work, any act or neglect of railway employees or by other contractor employed by the Railway, contractor not receiving in due time necessary instruction, delay in providing necessary drawings etc. In such a situation, the contractor is bound to ask for necessary extension of time, which shall be considered by the Engineer, who may grant such extension as is reasonable having regard to the nature of period of delay and quantum of work affected. The sub-clause (ii) however, states that ".... No other compensation shall be payable for works so carried forward to the extended period of time, the same rates, terms & conditions of contract being OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.28 of 41 applicable as if such extended period of time was originally in the original contract itself".
30. The Arbitrator held that clause 17-A applies only in case of delay or failure on the part of the Railways and clause 17-B applies in a situation, where there was delay due to any act of the contractor. Since, Railway has accepted that the extensions were granted on its account, so these extensions were granted under clause 17-A (ii) and / or (iii). Had there been delay or failure on the part of the claimant / contractor, extensions would have been granted under clause 17-B. He agreed with the submissions of the respondent that the claim of PVC does not fall under the claim for damages or compensation. He held that normally, in case of failure on the part of the employer, the contractor is entitled to claim overhead expenses, loss of profit etc. Those are the claims which would fall under the category of 'damages or compensation'. PVC is specifically payable under the contract as per clause 49 of Special Conditions relating to Site Data and Specifications. Thus, the contention of the petitioner that the said claim of PVC is barred by clauses 17
(ii) & (iii) is wholly misconceived and is hereby rejected. He held that clause 11.1 of the Special Tender Conditions & Instructions to Tenderer is misplaced as no compensation has been claimed for delay in finalization of drawings. He held that the claim for PVC cannot be an 'expected matter' as the same is specifically allowed by clause 49 of the Special Conditions OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.29 of 41 relating to Site Data and Specifications.
31. The Arbitrator referred all the extensions granted by the petitioner and held that it was the petitioner, which revised the drawings several times and supplied them as late as on 31.12.2007. The respondent cannot be blamed for the slow progress of the work. The delay in the work was caused due to change in designs of the spans of the bridge and revision of other works related to bridge, which is attributable to the petitioner. Admittedly, the extensions were granted without levying any penalty or liquidated damages but had the respondent been at fault, the petitioner would have certainly imposed the penalty / liquidated damages for the extensions. He referred the case of Union of India Vs. M/s Chenab Construction Joint Venture, 2010 (6) R. A. J. 334 (Del), where it was held:
"7. .......Another finding of fact is that the extension which has been granted to the respondent for completion of the contract was an extension without levy of liquidated damages. Once there is no levy of liquidated damages, it is quite clear that the extension is not on account of any fault of the contractor. I, therefore, do not find any fault whatsoever with the aforesaid awarding of the claim to the respondent by the Arbitral Tribunal".
32. The Arbitrator also considered the contention of the petitioner that the respondent had signed the PVC bill Ex. RW1/62 without any protest and thus, it could not raise any claim after signing the bill. He held that it is no doubt true that OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.30 of 41 the said bill was signed by the respondent without any protest but it was contended by the respondent that the PVC bill was the part of the final bill. Since the final bill was signed under protest, PVC bill would also be considered having been signed under protest. He held that simply because the respondent had signed the PVC bill without any protest, the same would not imply that it cannot raise any claim in respect of the same subsequently. He referred the case of Bharat Coking Coal Ltd Vs. Annapurna Construction, (2003) 8 SCC 154, where it was held that while accepting the final bill, if the respondent had not unequivocally stated that it would not raise any further claim, it cannot be estopped or precluded from raising any claim. He also referred the case of Pandit Construction Co. Vs. DDA & Anr, 143 (2007) DLT 270. In that case, final bill was signed by the contractor without any condition and subsequently he raised the claims. The High Court referred the case of Bharat Coking Coal Ltd (supra) and held that the contractor could not be prohibited from raising the claim even if he had signed the final bill.
33. The Arbitrator held that in the present case also, the respondent had raised the claim within a period of 90 days as per clause 64 (1) (iv) of GCC 1999 after receiving the intimation from the Railway that the final bill is ready for payment. (The intimation was made on 06.02.2009). By that time, the respondent had invoked the arbitration and raised the OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.31 of 41 claim vide letter dated 14.06.2008. The respondent in its letters Ex. CW1/35, CW1/19, CW1/21 and CW1/22, time & again had informed the petitioner that PVC claim is payable to it for the extended period. He held that in the light of these facts, even if, the PVC bill has been signed without any protest, the above endoresement would not make the claim as not maintainable. He also distinguished the case of Delhi Jal Board Vs. Kaveri Infrastructure Pvt Ltd & Anr, 206 (2014) DLT 136. In that case, Arbitrator had allowed the claims of escalation despite there being a prohibition of the said claim in the contract. The Court set aside the claim on the ground that it was prohibited in the contract. In the present case, there was no such prohibition of grant of PVC. He also distinguished the case of Braithwaite Burn & Jessop Construction Co. Ltd Vs. Rail Vikas Nigam Ltd, 259 (2019) DLT 781. In that case, the project got delayed for 45 months for which extensions were granted by the respondent. It imposed delay damages on the petitioner only for the first seven months and did not hold responsible for the remaining 38 months. The Tribunal found both the parties responsible for the delay. The Court held that the Tribunal has righly concluded that in view of the delayed action on the part of the claimant resulting in delay of the project, the petitioner is disentitled from claiming the benefit accruing on account of price variation.
In the present case, the respondent was not responsible for the delay. It was solely attributable to the petitioner. The OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.32 of 41 decision to freeze the price index taken in October 2007 was never agreed by the respondent. It continued writing to the petitioner that it was entitled to PVC.
34. In the instant case as observed by the Arbitrator, the petitioner did not dispute the calculations made by the respondent in annexure B. It only raised the objections of the same having been not signed / forged. It never contended that the said calculations are not as per the RBI indices. No suggestion was put to CW1 that calculations were wrong. The Arbitrator held that since the respondent had signed the annexure B, question of it being a forged document does not arise. It is only a calculation of PVC amount payable. He therefore, allowed the claim of Rs. 26,44,450/- for price variation as per the details mentioned in annexure B.
35. On a careful study of award and the record, I find that the Arbitrator considered all the relevant facts & circumstances and the case laws referred by the parties. He has given a logical interpretation to the terms of the contract and arrived at the findings, which do not smack from arbitrariness.
36. Perusal of the letters Ex. CW1/16, CW1/17 would show that the respondent while seeking the extensions had clearly stated that the cost of cement, steel, stone chips, labour have increased 100% from that of the accepted rates in the tender. It OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.33 of 41 had requested the petitioner to extend the time with PVC and without penalty. Vide letter Ex. CW1/35 dated 20.08.2007, it had requested that due payment of price variation be made to it, so that it could meet out the extra expenditure already incurred on account of price rise during the course of execution. It had stated that the price variation clause be extended till the date of completion of work. It had stated that PVC bill for the stipulated period is not acceptable as it has already paid the price rise during the extended period. In the letters Ex. CW1/18, Ex. CW1/19, Ex. CW1/20, Ex. CW1/21 & Ex. CW1/22 dated 04.09.2007, 23.10.2007, 27.12.2007, 01.03.2008 & 07.04.2008, it had stated that the payment for PVC for the extended period is payable to it. Although, the petitioner granted the extensions without penalty and without PVC under clause 17 (a) (iii) of GCC 1999 but facts & circumstances and the record show that the delay was solely attributable to the petitioner. In the instant case, the petitioner had issued a certificate Ex. CW1/29, wherein, it had assessed the performance of the respondent 'satisfactory'. When the delay was solely attributable to the petitioner, the respondent would be entitled for the cost component on account of escalation of materials and labour during the extended period. It is not the case that the prices of the materials and labour had not increased during the extended period. When the respondent was allowed / paid PVC during the stipulated period of completion, on the same analogy, it is entitled to PVC during the extended period of completion. The OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.34 of 41 contractual clauses, which disentitle the aggrieved party to the benefit of Section 55 and 73 of the Indian Contract Act would be void being violative of Section 23 of the Contract Act, which was so held in the case of Simplex Concrete Piles (India) Ltd Vs. Union of India (2010) ILR 2 Delhi 699 and G. Ramachandra Reddy Vs. Union Of India, 2009 (6) SCC 414, that the respondent is entitled to PVC benefits and damages / expenses incurred for keeping men and machinery etc at site during the extended period.
37. In the instant case, the Arbitrator has rightly held that had there been any delay or failure on the part of the respondent, the petitioner would have granted the extensions under clause 17-B of GCC and claimed damages from the respondent. He has also rightly held that PVC does not fall under the claim for damages or compensation. Normally, in case of failure on the part of the employer, the contractor is entitled to claim overhead expenses etc, which claims fall under the category of damages or compensation. He has rightly held that clause 11.1 of the Special Tender Condition is misplaced. In the case of Union of India Vs. Chenab Construction Joint Venture supra, the extension was granted to the respondent for completion of contract without levy of liquidated damages. It was held that since the extension was not on account of any fault of the contractor, there was no illegality in awarding the claim to the respondent by the Tribunal. In the instant case also, the OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.35 of 41 extensions were granted by the petitioner without levy of penalty. The delay was not on account of any fault of the respondent, so in view of the case supra, the Arbitrator was right in holding that the respondent was entitled to PVC even during the extended period as per details mentioned in annexure B. This was a logical conclusion given by the Arbitrator and does not require interference nor it can be said that the Arbitrator went beyond the terms & conditions of the contract and exceeded his jurisdiction.
38. Admittedly, the respondent had accepted the PVC bill dated 06.02.2009 without any protest giving 'No Claim Certificate' but it had accepted the final bill with protest, which was paid after about 10 months. It is to note that the respondent had invoked the arbitration. Had NOC been volunteered, there would have been no rhyme or reason to seek the arbitration. It was held in the case of Ambika Construction Vs. Union of India (2006) 4 ARB LR 288 (SC) that clause 42 (2) of GCC does not absolutely bar the contractor from raising genuine claim, even after the submission of NOC.
39. As regards signing of the supplementary agreement Ex.
CW1/31 dated 06.02.2009, it is in the form of fill in the blanks, where the details were written in the blank portion. Admittedly, the said agreement finds mention that the final bill has been acknowledged by the party in full & final settlement of all its OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.36 of 41 disputed claims under principal agreement and it has no further dues or claims under the agreement but it is also mentioned that the respondent has been signing the agreement under protest subject to his claims already submitted. That being the position, I do not find merit in the contention of the petitioner that since the respondent had accepted the measurements, bills and final PVC bill without any protest, it is not entitled to raise claims on this count.
40. Coming to interest i.e. claim no. 4, the Arbitrator has rightly considered the contention of the respondent that the said claim does not fall under the cetegory of 'excepted matter'. He referred the judgment in the case of Raveechee Vs. Union of India and Union of India Vs. Pradeep Vinod Construction, MANU/SCOR/30509/2017, stating that the interest is payable. He also considered the contention of the petitioner that claim of interest is against the terms of the contract and held that the Tribunal under Section 31 (7) of the Act has power to grant interest, both for pre-reference petiod as well as pendente lite provided the same is not prohibited under the agreement. He also considered clause 16 (3) of GCC, which interalia provides that no interest is payable on earnest money and security deposit or the amounts payable to the contractor under the contract and clause 64.5 of GCC 1999, which provides that where the arbitral award is for payable of money, no interest shall be payable on whole or part of the money for any period OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.37 of 41 till the date on which the award is made. He held that in the present case, there is not only clause 16 (3) of GCC, which prohibits grant of interest but also the clause 64.5 states that where the award is for payment of money, no interest shall be payable on whole or part of the money for any period till the date, on which the award is made. He held that in view of specific bar under clause 64.5 of GCC for payment of interest, the respondent would not be entitled to interest.
41. So far as the arbitration cost, the Arbitratior referred clause 64.6 of GCC, which interalia provides that the cost of arbitration is to be borne by the respective parties. He has rightly held that both the parties shall bear the respective cost as per clause 64.6 of GCC.
42. I am of the view that the Arbitrator, while deciding the above issue has operated within the four corners of the contract and has not travelled beyond it. He has not decided this issue contrary to the terms of the contract, so it cannot be said that he misconducted himself or the interpretation given by him is not reasonable.
43. In Mc Dermott International Inc v. Burn Standard Co.
Ltd and Ors, CA No. 4492 of 1998, the Supreme Court has observed as under:
"It is trite that the terms of the contract can be express or OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.38 of 41 implied. The conduct of the parties would also be a relevant factor in the matter of construction of a contract. The construction of the contract agreement, is within the jurisdiction of the arbitrators having regard to the wide nature, scope and ambit of the arbitration agreement and they cannot, be said to have misdirected themselves in passing the award by taking into consideration the conduct of the parties. It is also trite that correspondences exchanged by the parties are required to be taken into consideration for the purpose of construction of a contract. Interpretation of a contract is a matter for the arbitrator to determine, even if it gives rise to determination of a question of law."
Conclusion:
44. In the instant case, most of the grounds raised by the petitioner to challenge the award are factual in nature which have been already considered and adjudicated in the impugned award. It is outside the scope of Section 34 of the Act to reappreciate the entire evidence and come to conclusion because such an approach would defeat the purpose of arbitration proceedings. It has been consistently held that when a court is applying the public policy test to an arbitration award, it does not act as a court of appeal and consequently, errors of facts cannot be corrected. A possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the ultimate master of the quality and quantity of evidence to be relied upon when he delivers his arbitral award. Thus, an award based on little evidence or no evidence which does not measure up in quality to a trained legal mind would not be held to be invalid on this score. Once, it is found that the arbitrator's approach is not arbitrary or capricious, then he is the last word OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.39 of 41 on facts. (P.R Shah, Shares & Stock Brokers (P) Ltd v. B.H.H Securities (P) Ltd. [(2012) 1 SCC 594).
45. A bare perusal of the arbitral award shows that the arbitrator has examined all the relevant aspects of the contract, the correspondences made by the parties, the terms of the contract and the conduct of the parties. He has remained inside the parameters of the contract and construed the provisions of the contract. The petitioner has failed to establish that the arbitrator has travelled beyond the terms of the contract.
46. Having examined the various contentions of the petitioner on the touchstone of the parameters of interference as explicitly laid down by the Supreme Court in several judgments referred to above, I am of the view that the impugned Award does not call for interference. This Court cannot re-appreciate evidence or interpret the Clauses of the Agreement which the petitioner is calling upon the Court to do. The contentions of the petitioner are thus rejected having no merit. I am of the view that the arbitration award being a reasoned one and does not suffer from any infirmity or error apparent on the face of the record. It is not for this Court to sit in appraisal of the evidence led before the Arbitrator and this Court will not open itself to the task of being a judge on the evidence placed before the learned Arbitrator which was subject matter of dispute. In the present case, the Arbitrator has deliberated on the issues OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.40 of 41 under reference which were within his competency and as per the agreement entered into between the parties. There are no allegations against the learned Arbitrator of misconduct nor of having misconducted the proceedings which have either been specifically alleged by the petitioner or established. The Arbitrator has duly explained the reasons for arriving at his decisions. There is nothing to indicate that the award violates Section 28 (3) of the Act or that, it is in conflict with the basic notions of justice and the fair play and fundamental policy of Indian law or in contravention of the terms of the agreement or that it lacks reasoning as pleaded in the petition.
47. For the aforesaid discussions, I am of the view that the impugned award does not call for interference.
48. The petition is accordingly dismissed with no orders as to costs.
49. File be consigned to record room.
Announced in open court today i.e. 7th July 2021 (Sanjiv Jain) District Judge (Commercial) - 03 Patiala House Courts, New Delhi OMP Comm No. 27/20 UOI Vs. Rakesh Kumar & Co. Page No.41 of 41