Jharkhand High Court
The State Of Jharkhand Through ... vs M/S Himachal Construction Com. Pvt. Ltd on 10 December, 2024
Author: S. N. Pathak
Bench: S.N. Pathak, Anubha Rawat Choudhary
IN THE HIGH COURT OF JHARKHAND AT RANCHI
Commercial Appeal No. 4 of 2022
The State of Jharkhand through Executive Engineer, Minor
Distribution Division No. 3, Swarnrekha Multipurpose Project, Water
Resources Department, Dimna, Jamshedpur, District East Singhbhum
... ... Respondent/applicant /Appellant
Versus
M/s Himachal Construction Com. Pvt. Ltd. 11, H.I.G. Adarsh Nagar
Sonari, P.O. & P.S.- Sonari, Jamshedpur- 831011 through Sri B.N.
Dikshit, Managing Director, HIG Adarsh Nagar Sonari, P.O. and P.S.
Sonari, Jamshedpur, District- East Singhbhum
... ... Claimant/respondent/ Respondent
---
CORAM : HON'BLE DR. JUSTICE S.N. PATHAK
HON'BLE MRS. JUSTICE ANUBHA RAWAT CHOUDHARY
---
For the Appellant : Mr. Sachin Kumar, AAG-II
: Mr. Ravi Prakash Mishra, Advocate
: Mr. Karamdeo, Advocate
: Ms. Surabhi, Advocate
For the Respondent : Mr. Ajit Kumar, Senior Advocate
: Mr. Indrajit Sinha, Advocate
: Mr. Shresth Gautam, Advocate
: Mr. Rahul Anand, Advocate
---
C.A.V. on 19th September 2024 Pronounced on 10th December 2024
Per, Anubha Rawat Choudhary, J.
1. This appeal has been filed for setting aside the judgment dated 07.02.2020 passed in Original Suit No. 8 of 2018 arising out of Miscellaneous Arbitration Case No. 9 of 2016 whereby the petition filed under section 34 of Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act of 1996) challenging the award dated 06.12.2015 has been dismissed by learned District Judge-I cum Commercial Court, East Singhbhum, Jamshedpur. The Arbitral award has been passed by the sole Arbitrator who is a retired Chief Engineer of Road Construction Department, Government of Jharkhand namely Shri Suresh Mishra.
2. The foundational background regarding the contract. The case arises out of agreement no. 1/SMC/87-88 dated 24.09.1987 for excavation of residual work of Chandil Left Bank Main Canal from km 21.39 to km 22.19, km 30.57 to km 31.03 and km 31.33 to km 31.69. The work relates to the minor distribution division no. 3 (previously minor distribution division no. 5) of the State of Jharkhand.
The background of the case is that the Government of India received credit from International Development Association for Subarnarekha Multipurpose Project, Bihar (now Jharkhand). Tenders were invited by the Chief Engineer, Subarnarekha Multipurpose Project through Tender Notice dated 30.01.1987 which was followed by corrigendum dated 19.03.1987. Pursuant to the tender notice, respondent - M/s Himachal Construction Company Private Limited (hereinafter referred to as the claimant) successfully participated and contract was approved for acceptance in favour of the claimant vide memo dated 09.09.1987 issued by Chief Engineer (Subarnarekha Multipurpose Project), Chandil Complex. The agreement was signed on 24.09.1987 between the Executive Engineer, Subarnarekha Canal Division, Haludbani representing the then Government of Bihar and the director of the claimant. The contract was on item rate basis. In terms of the agreement the claimant was required to do all that was needed to complete the excavation work of the aforesaid Chandil Bank Main Canal to the extent of the kilometers mentioned above and if required, was also to carry out work beyond listed items and quantities for which they were entitled to be paid by taking them as "extra items" and "contract variation" as per Clause 31 and 32 of the General Conditions of Contract.
The estimated cost of work as per tender notice was Rs. 146.32 lakhs and the agreement was valued at Rs. 1,46,34,879.20. The work as per the written order was to commence on 24.09.1987 and the completion period was 15 months from the written order and accordingly, the work was to be completed by 23.12.1988.
3. Extension of time for completion of work The extension of time for completion of work was granted in phases upto 30.06.1991. A recommendation was made to extend the time of completion till 30.06.1992 but the final order extending the time for 2 completion of work till 30.06.1992 was not communicated to the claimant. The work could not be completed within the period of extended time i.e. by 30.06.1991 and the letter granting extension of time till 30.06.1991 was issued by the Chief Engineer, which was letter no. 1400 dated 20.05.1991.
4. The Cause of action for the dispute and the developments thereafter till dismissal of petition filed before the learned Arbitrator under Section 16 of the Arbitration and Conciliation Act, 1996 vide order dated 09.05.2005.
a. The clauses of the contract relevant for this issue are clause nos. 51 and 52 which are quoted as under:
"51. SETTLEMENT OF DISPUTES:
If the Contractor considers any work demanded of him to be outside the requirements of the contract, or considers any drawings, record or ruling of the Executive Engineer on any matter in connection with or arising out of the contract or carrying out of work to be unacceptable, he shall promptly ask the Executive Engineer in writing, for written instructions or decision. Thereupon the Executive Engineer shall give his written instructions or decision within a period of thirty days of such request.
Upon receipt of the written instructions or decision the Contractor shall promptly proceed without delay to comply with such instructions or decision.
Il the Executive Engineer fails to give his instructions or decision in writing within a period of thirty days after being requested, or if the Contractor is dissatisfied with the instructions or decision of the Executive Engineer, the Contractor may within thirty days after receiving the instructions or decision appeal to Superintending Engineer, who shall afford an opportunity to the Contractor to be heard and to offer evidence in support of his appeal. This officer shall give a decision within a period of sixty days after the Contractor has been given the said evidence in support of his appeal.
If the Contractor is dissatisfied with this decision, the Contractor within a period of thirty days from the receipt of the decision shall indicate his intention to refer the dispute to arbitration, failing which the said decision shall be final and conclusive.
52 ARBRITRATION:
3All the disputes or difference in respect of which the decision has not been final and conclusive shall be referred for arbitration to a sole arbitrator appointed as follows:
Within thirty days of receipt of notice from the Contractor of his intension to refer the dispute to arbitration the Chief Engineer, Subernarekha Multipurpose Project, Jamshedpur shall send to the Contractor a list of three officers of the rank of Superintending Engineer or higher, who have not been connected with the work under this contract. The Contractor shall within fifteen days of receipt of this list select and communicate the Chief Engineer the name of one officer from the list who shall then be appointed as the sole arbitrator. If Contractor fails to communicate his selection of name, within the stipulated period, the Chief Engineer shall without delay select one officer from the list and appoint him as the sole arbitrator. If the Chief Engineer fails to send such a list within thirty days, as stipulated, the Contractor shall send a similar list to the Chief Engineer within fifteen days. The Chief Engineer shall then select one officer from the list and appoint him as the sole arbitrator within fifteen days. If the Chief Engineer fail to do Contractor shall communicate to the Chief Engineer the name of one officer from the list, who shall than be the sole arbitrator.
The arbitration shall be conducted in accordance with the provisions of the Indian Arbitration Act, 1940 or any statutory modification thereof. The decision of the sole of arbitrators shall be final and binding on the parties thereto. The arbitrator shall determined the amount of costs of arbitration to be awarded to either parties. Performance under the contract shall continue during the arbitration proceedings and payments due to the Contractor shall not be with-held unless they are the subject matter of arbitration proceedings.
All awards shall be in writing and in case of awards amounting to Rs. 1.00 lakh and above, such awards shall state the reasons for the amount awarded.
Neither party is entitled to bring a claim to arbitration if the arbitrator has not been appointed before the expiration of thirty days after defects liability period."
b. It was the case of the claimant that extension was granted without imposition of any liquidated damages as the extension was primarily on the ground of non-clearance of forest land in the alignment of canal, non-shifting of utility services like high-4
tension electric towers, presence of Jaida (worship place) on the alignment and scarcity of fund for timely payment on account of bills which was evident from the letters of recommendation of extension of time by the concerned officers. The scarcity of fund was also evident from the fact that no payment of work done could be made beyond 16th running on account bill which was paid on 28.12.1989 although the work was going on between the period from 28.12.1989 to 30.06.1991 with slow pace.
c. It was further case of the claimant that it was not unusual for large projects not being completed within time as pre-requisites like land acquisition, mandatory permission from concerned ministries like Ministry of Environment and Forest, shifting of utility services and fund flow required for timely completion of work are not arranged by the employer in advance. Under the tender notice in paragraph no. 6, the status of the project was mentioned and it was stated therein that the land was already acquired and, in some portion, proceeding of transfer of forest land was in progress. It was the case of the claimant before the learned arbitrator that the transfer of forest land could not be made till the progress of the work was going on. d. It was the case of the claimant before the learned Arbitrator that after expiry of the last extension of time upto 30.06.1991, the agreement was neither closed/foreclosed/rescinded nor the claimant was asked to demobilize the plant and machinery from the site and to submit the final bill for final payment. On the contrary, the claimant was asked to extend the validity of bank guarantees. Further it was the case of the claimant that the State, by various correspondences after 30.06.1991, assured the claimant that allotment of fund was expected from Government of Bihar and his portion of the work would fall under priority zone. A letter dated 18.04.1992 was issued by the executive engineer to mobilize plant and machinery. A review of the progress was held in the chamber of Hon'ble Minister of 5 Irrigation of the then State of Bihar on 18.11.1992 and it was decided to take necessary action regarding closure of such contracts which are not in the interest of the project, but to ask those contractors to go ahead with the work slowly which was in the interest of the project. A newspaper report dated 15.12.1993 wherein it was published that work at Subarnarekha Multipurpose Project was to begin in a period of six months gave a ray of hope to the claimant regarding restart of the unfinished work. Another meeting of the officials of the Subarnarekha Project and Builders' Association of India (Jamshedpur Centre) was held on 12.08.1998 which was for the purpose of finding out ways and means to restart the balance work on priority basis as a sum of Rs. 40 crores of allotment was expected during the financial year. In the said meeting between the officials of Subarnarekha Multipurpose Project and Builders' Association of India certain points of agreement were entered into:-
i. Attempts would be made to get the balance work completed by existing contractors and if they are not interested, after due notice final measurement would be taken jointly in presence of existing contractors. ii. On the request of Builders' Association to give allowance for siltation due to stoppage of work for 8 years, it was decided that after taking final measurement by September, 1998, decision in this regard would be taken. iii. For the rate of extra item, it was decided that the schedule of rate applicable at the time of work done would be applicable and not the present schedule of rate. iv. Extension of time will be granted before the balance work is started for which the Chief Engineer was competent.
v. After invitation of tender, if the old contractors are ready to do the work as per terms and conditions of fresh 6 tenders, there would be no objection in awarding the work to them at the same rate.
e. It was further case of the claimant that as a follow-up of the aforesaid meeting, the executive engineer issued a letter dated 27.08.1998 and informed the claimant that his work has been put under 2nd priority and sought consent from the claimant as to whether they were ready to do the balance work at their old rate. It is further case of the claimant that the claimant wrote a letter to the Executive Engineer stating that "since his portion of work has been put under 2nd priority and its date of recommencement is not fixed, they would be able to do the work at the schedule of rate prevailing at the time of work". In the meantime, the Government of Bihar through the Joint Secretary (Irrigation) issued letter dated 11.12.1998 with a direction that if the cost of balance work at the time of invitation of tender for balance work at "1998 schedule of rate" was more than the cost of balance work as per existing contract rate including price escalation up-to-date, old contracts may be revived.
f. The cause of action for the claimant arose when the Executive Engineer invited fresh tender for the remaining work on 27.08.2000 for Rs. 230.00 lakhs. The grievance of the claimant was that the tender was invited without ascertaining whether the estimated cost of balance work as per 1998 schedule of rate is less than the cost of balance work as per the old contract rate including price escalation upto 1998 as directed by the aforesaid letter of the department dated 11.12.1998. It was their case that the Government had issued the direction that if the cost as per old agreement including price escalation is less than the estimated cost as per 1998 schedule of rate, old agreement may be revived to avoid any future litigation. It was their further grievance that the existing contract with the claimant was not finalized before inviting fresh tender for balance work. g. It was further case of the claimant that the engineers who were responsible for taking final measurement were not present on 7 the various dates and time fixed for the purpose and under such circumstances, a legal notice for attending final measurement ought to have been published in the newspaper. Thus, final measurement as agreed by both the parties was never taken nor any effort was made to ascertain the quantities of silt accumulated in the canal during the period of stoppage of work from 30.06.1991 to the date of measurement taken by the group of engineers authorized for taking final measurement. h. The fresh tender for balance work was sent to the Secretary, Water Resources Department vide letter dated 11.01.2001 who reviewed the tender and observed "since most of the tenders relate to balance work of subsisting contracts which have not been finalized/closed and rescinded, chances of court cases are there". Hence the Chief Engineer was directed vide letter dated 14.05.2001 to finalize the subsisting contracts, close the agreements and report and only thereafter, the fresh tender could be considered. By referring to aforesaid communications, the claimant contended that the tender for balance work was invited without finalizing the subsisting contract with the claimant and the contract was not finalized even till 14.05.2001. However, in the meeting of tender committee held on 28.08.2001 the balance work with regard to agreement was allotted to one M/s Shantanu Construction at the cost of Rs. 1,69,10,733/- on the condition that the final bill of the work done by previous agency must have been finalized by 28.08.2001 as per the rule before the new agency takes up the work.
i. In the aforesaid background, the claimant filed a writ petition before this Court being W.P.(C) No. 5465 of 2001 which was also subject matter of consideration in LPA No. 313 of 2002 and ultimately, vide order dated 15.07.2002 liberty was granted to the claimant to invoke arbitration clause as per the agreement, if so desired.
8j. Consequently, the claimant invoked clause 51 of the General Conditions of Contract dealing with 'settlement of disputes' on 16.10.2002 before the Executive Engineer, Minor Distribution Division No. 5 who rejected all the claims on 13.11.2002 against which the claimant preferred appeal before the Superintending Engineer on 04.02.2003 under Clause 51 of the General Conditions of Contract.
k. It is further case of claimant that the Superintending Engineer remained silent for more than 4 months and consequently, the claimant gave notice to the Chief Engineer in terms of Clause 52 of the General Conditions of Contract vide letter dated 08.04.2003, but the Chief Engineer did not abide by the provisions of Clause 52 and did not send panel of 3 prospective arbitrators to the claimant within 30 days for selection of one arbitrator amongst the three. The claimant exercised their right and sent a panel of 3 arbitrators vide letter dated 12.05.2003. Having no reply from the side of the Chief Engineer, the claimant communicated one name out of the list of 3 engineers sent earlier to the Chief Engineer who would be the sole arbitrator vide letter dated 29.05.2003 which according to the claimant was in accordance with the provisions of Clause 52 of the General Conditions of Contract. Thus, the arbitral tribunal was constituted appointing the learned Arbitrator and the letter dated 30.06.2003 was issued by the claimant to the learned Arbitrator with a request to convene preliminary meeting and issue necessary directions.
l. Pursuant to such letter, a preliminary meeting was convened on 26.08.2003 but the executive engineer vide letter dated 26.07.2003 raised objection regarding appointment of sole arbitrator. Thereafter, the executive engineer filed a petition challenging the jurisdiction of the learned Arbitrator vide letter dated 27.09.2003 which was followed by hearing of the objection in terms of section 16 of the Arbitration and Conciliation Act, 1996. A date of hearing was fixed on 9 10.01.2004 on which day, the executive engineer or his counsel did not appear. The claimant appeared and filed a rejoinder. m. By way of last indulgence, the date was fixed on 20.03.2004 and on that day also, nobody appeared on behalf of the executive engineer, however, they sent a time petition dated 17.03.2004 mentioning that Miscellaneous Case No. 3 of 2004 was filed in the Court of Sub-Judge-I, Jamshedpur and sought adjournment, which was objected by the claimant by filing a petition dated 20.03.2004.
n. The learned Arbitrator ultimately gave another chance by way of last chance to the State to make submission on 27.05.2004 and on that day, it was reported that the Miscellaneous Case No. 3 of 2004 was finally heard on 25.05.2004 and the order was reserved. Consequently, the matter was adjourned. The Miscellaneous Case No. 3 of 2004 was dismissed by the learned Sub-Judge- I, Jamshedpur vide order dated 29.05.2004. Subsequently, it was reported that a civil revision petition was filed against the order of the sub-judge. The civil revision petition being Civil Revision No. 139 of 2004 was decided vide order dated 09.02.2005 by the High Court and the order passed by the learned Sub-Judge was affirmed and civil revision was dismissed.
o. Ultimately, vide order dated 09.05.2005 the petition under section 16(i)(ii) and (iii) of the Act of 1996 was dismissed by the learned Arbitrator and with the consent of parties, the next date of hearing was fixed as 16.08.2005.
5. The Claim The claimant filed statement of claim on 05.03.2006. The claimant filed modified claim on 01.05.2011. The claims were primarily in three compartments, that is, claim relating to the work done, claim on account of delay and damages and miscellaneous claims like cost of arbitration etc.
6. The chart relating to the claim/modified claim and awarded amount is as under:
10Claim Briefs of claims In Org. Claim In Mod. Claim Awarded Amt.
No. in C-1 on in C-15 on (Rs.)
05.03.2006 01.05.2011
PART - 1 (for work done)
1 Payment due against "Extra 23,65,244 Rejected
items of work under clause
31 & 32 of General
condition of contract P/11
& including admissible
Price Adjustment
2A Extra Excavation and 12,75,730 Rejected
disposal of ordinary rock of
18,000.00 m3 including nits
disposal beyond 1.0 km
along with admissible Price
Adjustment
3B Amount held up for 2,70,333 2,70,333
disposal of 16,020.0 m3 of
excavated material as per
MB No. 90 p/31 as per 7th
R/A bill paid on 25.3.1988
withadmissible Price
Adjustment
4C Excavation of ordinary rock 18,01,619.00 21,54,781 21,54,781
without blasting of
27,235.356 m3 and its
disposal beyond 2.0 km
after 16th R/A bill and
balance payment of
ordinary rock with blasting
of 99,781.56 m3 paid at
Reduced Rate as per MB
No. 119 P/41 in 16th R/A
bill including admissible
Price Adjustment thereon
5D Claim due to deduction of 77,310 77,310
Amount on account of
Extension of Time paid
even after sanction of EOT
by CE
6E Claim for amount of 96,623 96,623
admissible Price
Adjustment on the value of
work done for Rs.7,73,093/-
in 14th, 15th and 16th R/A
bills
7 Claim for Price Adjustment 2,53,928 2,08,983
on account of material
component (2% of total
work) and POL component
(8% of total work) which
have not been paid from 1st
to 16th R/A bills as per
Modified claim at P/7
8 Interest on fine of Rs. Rejected
1000/- was paid by the
Claimants to the Forest
Dept.
Total 18,01,619 64,93,949 28,08,030
11
9 Interest on due amount 13% per annum from 01.10.1991 (3 months after
the last date of extension of time of completion i.e. 30.06.1991) till date of award.
PART - 2 (delay damages) A1 Overhead losses for 67,22,287.74 63,90,563 39,39,000 underutilised and unutilised overhead A2 Demand due to need to 7,72,413.6 12,36,418 Rejected restructure rates during extended period A3 Loss due to profit not 47,95,921.89 18,28,530 2,50,000 earned at appropriate time A4 Loss due to underutilised 20,04,91,200 6,03,43,800 92,41,129 and unutilised Tools, Plant and Machineries.
A5 Loss of productivity 18,47,100.84 No detail Rejected
furnish
A6 Opportunity losses 28,29,409.98 24,39,146 Rejected
A7 i) Loss due to Additional As per actual 1,96,80,275 (i) 6,90,484
cost of BG of Rs. & (ii) Rejected
4,38,960.00 for
performance Guarantees
upto 30.06.2014
ii) Loss due to additional
cost of BG for security
Deposit of Rs. 2,82,800.00
revalidated upto 30.6.2009
A8 Loss due to Blocked 12,96,300 No detail Rejected
Material cost furnished
A9 Delay in Payment of bills As per actual 5,45,064 Rejected
(Amount of Interest
Rs.19,526) with compound
interest
B1 Interest Losses As per actual 1,03,99,28,319 To be
calculated
separately
B2 Cost of Arbitration As per actual 14,25,000 2,15,000
9,24,63,796 1,34,30,129.00
+ A7(i)
6,90,484.00
Interest On Rs. 1,34,30,129.00 interest @ 12% per annum
from 26.08.2003 (date of 1st Arbitration meeting) till date of award.
On Rs. 6,90,484.00 interest @13% per annum from 01.07.2014 till the date of award.
On cost of arbitration of Rs. 2,15,000 interest @ 15% per annum from the date of award.
Future interest @ 15% on "the awarded amount together with interest" from the date of award till the date of actual payment.
7. The state filed counter claim which has been rejected as follows:
12 Description of Claimed Amount (Rs.) Amount
Recovery suggested Awarded
by the Respondent (Rs.)
Recovery of Excess 62,83,715.00 Rejected
payment made to
Claimants on the
basis of so-called 17th
& Final bill
8. Under part-I, claim no. 3B, 4C, 5D and 6E have been fully allowed and claim no. 7 has been partly allowed totaling to Rs. 28,08,030.00. So far as delay damages under part -II are concerned, claim no. A1 (overhead losses for underutilised and unutilised overheads) has been partly allowed to the extent of Rs. 39,39,000; claim no. A3 (loss due to profit not earned at appropriate time) has been partly allowed to the extent of Rs. 2,50,000; Claim no. A4 (loss due to underutilised and unutilised tools, plant and machineries) has been allowed to the extent of Rs. 92,41,129. Apart from the aforesaid, loss due to additional cost of bank guarantee relating to performance guarantee upto 30.06.2014 has been partly allowed to the extent of Rs. 6,90,484. Further cost of arbitration has also been allowed to the extent of Rs. 2,15,000/-. Interest as mentioned above has also been allowed.
9. Following issues were framed by the learned Arbitrator:
"1. Are the claims barred by limitation?
2. Are the claims submitted by claimants Arbitrable?
3. Are the claims of claimants maintainable under agreed terms of contract as well as the provision of contract Act?
4. Who is responsible and liable for non-completion of work under the agreement, the claimants or the Respondents?
5. Whether the Respondents are entitled to recover a sum of Rs.62,83,715/- with interest thereon from the due date from the claimants?
6. Is there merit, in various claims of claimants?
7. Interest
8. Cost of arbitration"
10. From perusal of the arbitral award, all the issues were dealt from paragraph 39 onwards and all the issues were decided in favour 13 of the claimant but the claims were allowed only to the extent indicated above.
11. The petition under section 34 of the Act of 1996 filed by the State has been dismissed. The learned Court after considering the materials and the grounds raised in the petition filed under Section 34 of the Act of 1996 recorded that the claimant had invoked arbitration clause 51 at pre-mature stage; the appointment of arbitrator was unilateral and against the clause of the agreement; without any measurement excess amount was paid to the claimant by the department till 16th RA bill; the arbitrator did not consider the counter- claim properly which was based on the final measurement being 17 th R.A. bill whereby a minus bill of Rs. 62,83,715/- was raised; the arbitrator did not consider that against the agreement value of Rs. 1,46,34,879.20, the claimant received Rs. 1,35,90,888/- as 16th R.A. Bill on 28.12.1989 and balance work was only to the extent of Rs. 10,43,991/- then under what circumstances, the claimant claimed that the work done beyond 16th R.A. bill was to the extent of Rs. 64,93,949/- as per modified claim and the learned Arbitrator awarded Rs. 28,08,030/- under the head work done by the claimant plus short payment made in different account of bills. However, the learned Court refused to set-aside the award by observing that as per the judgments "even if two views are possible, reappraisal of material on record by the court and substituting its own view in place of arbitrator's view is not permissible in absence of perversity." The Court observed that once the arbitrator has applied his mind to the matter, the court cannot reappraise the same as if it were in appeal. The learned court in paragraph 15 of the impugned order held that the court is not required to re-appreciate and re-evaluate the findings given by the Tribunal and refused to interfere with the award. Paragraph 14 and 15 of the impugned judgment is quoted as under: -
"14. Although I find that some merit in the contention of learned counsel of the applicant/ respondent is that (a) the Opp. party has invoked Arbitration Clause 51 at pre- mature stage (b) the appointment of Arbitrator Er. Suresh Mishra, Retired Chief Engineer, R.C.D., Govt. of Jharkhand is unilaterally by the claimant/OP against the 14 Clause of the Agreement. (c) Without measurement excess amount was paid to claimant/ Op by the Applicant department till 16th R/A bill. (d) Not properly consider by Ld. Arbitrator counter claim of department of final measurement 17th R.A minus bill Rs. 62,83,715/-.(e) last not least that agreement value Rs. 1,46,34,879=20 OP received Rs. 1,35,90,888/- as 16th R.A bill, on 28-12-1989 having balanced amount of work of Rs.10.43,991/- then how the claimant/ OP claim on the head of work done by claimant beyond 16th R.A. Bill by his Modified claim of Rs.64,93,949/- and ld. arbitrator surprisingly awarded Rs 28,08,030/- head of work done by claimant + short payment made in different account of bills, but in view of the judgment refereed above by the claimant/ OP in which Hon'ble court held that "even if two views are possible, reappraisal of material on record by the Court and substituting its own view in place of Arbitrator's view is not permissible in absence of perversity. Once the Arbitrator has applied his mind to the matter before him, Court cannot reappraise the said matter as if it were in appeal. Further relying upon M/s. Associated Construction Versus Pawanhans Helicopters Pvt. Ltd, Navodaya Mass Entertainment Limited Vs. J.M. Combines, Sutlej Construction Limited Vrs. Union Territory of Chandigarh, Rastriya Ispat Nigam Limited Vrs. Diwan Chand Ramsaran, Associate Builders Versus Delhi Development Authority, Sangyong Engineering & Construction Co. Ltd. Versus National Highways Authority of India (NHAI) (Supra) the Hon'ble Apex Court has held 'an award cannot be set aside. The arbitrator is a Judge chosen by the parties and his decision is final. The court is precluded from reappraising the evidence. Even in a case where the award contains reasons, the interference therewith would still be not available within the jurisdiction of the court unless, of course, the reasons are totally perverse or the judgment is based on a wrong proposition of law'. The Honb'le Apex Court further observed that "the jurisdiction is not appellate in nature and an award passed by an arbitrator cannot be set aside on the ground that it was erroneous. It is not open to the court to interfere with the award merely because in the opinion of the court, another view is equally possible. It is only when the court is satisfied that the arbitrator had misconducted himself or the proceedings or the award has been improperly procured or is otherwise invalid that the court may set aside such award." The Hon'ble Apex Court further observed that " It must also be borne in mind that a court does not sit as one in appeal over the award of the arbitrator and if the view taken by the 15 arbitrator is permissible, no interference is called for on the premise that a different view was also possible." The Hon'ble Apex Court further observed that "Even if on the assessment of material, the court while considering the objections under section 34 is of the view that there are two views possible and the Arbitral Tribunal has taken one of the possible views which could have been taken on the material before it, the court would be reluctant to interfere."
15. Hence this court is not required to re-appreciate and re- evaluate the findings given by the Tribunal. Therefore, in view of the above said discussion and after considering the contentions of the learned counsels for the parties and in view of the authoritative pronouncements discussed above and also as this court is not sitting in appeal against the impugned award the court is not required to re-appreciate or re-evaluate the evidence led before the Arbitral Tribunal, I find that the Respondent/ Applicant herein has failed to make out a case for any interference with the impugned award dated 06-12-2015 passed by the Arbitral Tribunal, U/s. 34 of the Arbitration and Conciliation Act."
12. Submission of the State.
Learned counsel for the State (appellant) has referred to sections 7, 8, 16, 23, 34 and 37 of the Act of 1996 and also Article 137 of the Limitation Act, 1963 to submit that these provisions would fall for consideration by this Court in this appeal. It is also submitted that the learned Commercial Court has failed to duly exercise its power under section 34 of the Act of 1996. He has submitted that in order to challenge the arbitral award, inter alia, following grounds were raised under section 34 of the Act of 1996 but were not properly considered by the learned Commercial Court: -
Jurisdiction of learned arbitrator.
(i) The very appointment of the learned Sole Arbitrator was illegal and arbitrary and contrary to the terms of the contract and the procedure which was to be followed for the dispute resolution under the contract between the parties. Further, the appointment of the arbitrator could only be made under the terms of the Contract and with the consent of the parties, which was not the case at hand. The State had filed an application under Section 16 of the Act of 1996 before the Sole Arbitrator challenging its jurisdiction and composition of the Sole 16 Arbitrator which was contrary to Clause 51 & 52 of General Conditions of contract and accordingly, appointment of the arbitrator was by itself illegal and contrary to the contract containing arbitration clause between the parties.
Claims barred by limitation
(ii) The claims of the Claimant were barred by limitation. The Original Claims of the Claimant made in the year 2002 and the modified claims filed in the year 2011, both were barred by limitation as more than 3 years had passed from the date of cause of action concerning those claims. However, the learned arbitrator, despite the claims barred by limitation and objections was also filed by the Respondent-
State in its written statement before the learned Arbitrator, allowed the claims which were hopelessly barred by limitation. Reliance has been placed on the judgment passed in the case of "Bharat Sanchar Nigam Limited Vs. Nortel Networks" reported in (2021) 5 SCC 738 and also the judgment in "Binod Bihari Singh Vs. Union of India" reported in (1993) 1 SCC 572 to submit that the bar of limitation may be considered if such plea has not been specifically raised. Limitation Act is a statute of repose and bars a cause of action in a court of law, which is otherwise lawful and valid, because of undesirable lapse of time under the limitation Act, is a well-accepted principle of jurisprudence and public policy.
(iii) It has been submitted that the learned Sole Arbitrator has not examined the claims and has recorded a general finding concerning the claims being not barred by limitation instead of analyzing each and every claim as to when its cause of action arose and whether the each and every specific claim thereupon would be barred by limitation.
(iv) A specific plea of limitation was raised before the learned Arbitrator concerning the original claims filed in 2002 by the Claimant being barred by limitation. It is further submitted that since the original claim being barred by limitation, any further modification of the claims and filing of additional claims allowed under section 23(3) of the Act of 1996 is also illegal and all and any such additional claims 17 filed by the Claimant in 2011 would also be barred by the plea of limitation as taken by the State before the learned Arbitrator concerning the claims filed originally in the year 2002.
(v) The last time extension was granted till 30.06.1991. Thereby, the cause of action between the parties concerning the dispute arose in the year 1991 (when the last payment of bill was made) or when the last extension expired between the parties. The claimant submitted its claims in the year 2002, thereby its claims are completely barred by limitation.
(vi) The claimant made no efforts to finalize the contract and submitted no bills after the period of 1991-1992 and thereby its claims were barred by limitation.
(vii) The Executive Engineer's letter No. 713 dated 27.08.1998 asked the claimant whether they were willing to complete the work at the agreement rate which the claimant refused, thereby marking a complete end of contractual relationship between the parties.
(viii) The State in its Written Statement/ Statement of Defence, in addition to aforesaid objection regarding jurisdiction and limitation, disputed all the claims and also their basis stating that the claim was not based on contract between the parties and there was no evidence or documentary data including bills of expenditure incurred to support any of the evidence to support the Claims and the aforesaid submissions were made before the learned Commercial Court while challenging the award under Section 34 of the Act of 1996 .
(ix) The Sole Arbitrator awarded the Claimant high rates of interest, without any basis for the same, whatsoever, being recorded in the Arbitral Award.
(x) The Arbitral Award is liable to be set aside by this Court as the same is patently illegal and has been passed in contravention of 'public policy of India' as the findings are based on no evidence at all and the claims have been allowed by placing reliance on irrelevant materials and assumptions of losses suffered by the Claimant despite no evidence or bills or documents to support or prove the aforesaid losses by the Claimant.
18(xi) The Claims of the Claimant suffer from substantial overlap of claims which have been allowed on the basis of no evidence to support those claims and only on the basis of the presumption of loss made by the Arbitrator on a document i.e. the Report of Rates and Cost Committee published by Ministry of Power and Irrigation, Central Water Power Commission, which is in no way or form can be used for calculating losses or presumption of losses, but rather it is a guideline concerning how estimates of project cost are to be calculated and has no application in the facts and circumstances of the instant case. Rejection of counter claim- all payments are advance payments, subject to clearance of final bill as per clause 33 of the conditions of contract.
(xii) The rejection of the counter claims of the Claimant has been done by the Sole Arbitrator in the most mechanical manner and without assigning any reasons for the same. The work awarded to the claimant could not be completed despite the grant of extension due to the Claimant's negligence, laches, incapacity and mismanagement which was evidenced from the various correspondences made by the Executive Engineer. The State was entitled to recover a sum of Rs. 62,83,715.00 with interest as excess payment made to the Claimant. Further, the claim of recovery was rejected despite such claim being evident from the records of correspondence and section measurement taken of the work done in presence of the parties. The state was entitled to recovery of the excess payment made earlier to the claimant in view of the Clause 33 of the Contract between the parties i.e. 'Payments and Certificates' wherein all interim payments are to be treated as advance payments, subject to clearance of final bill. Award of price adjustment in breach of clause 33 of the general conditions of contract.
(xiii) Clause 33 of the Contract deals with 'Payment and Certificates' and it provides that payment will be made at monthly intervals. Accordingly, the claimant was required to submit bills for the work done to the executive engineer on or before the last day of the month which the claimant in the present case failed to submit. While 19 considering the claims, the learned Arbitrator ignored the aforesaid fact and allowed the claims which included price adjustment and considered the bills submitted after much delay although the claimant had breached the terms of the contract i.e. clause 33.
(xiv) While specifically referring to claim no. 6(E), which was relating to "Claim for price adjustment not paid on the work done for labour component in 14th, 15th and 16th O/A bill paid on 22.09.1989, 12.12.1989 and 23.12.1989" for a sum of Rs 96,623.43 and also Claim No. 7 concerning "Claim for price adjustment for calculating Price Adjustment towards Material and POL Component concerning 1st to 16th R/A bills" for a sum of Rs 2,53,928/-, it is submitted that both the claims i.e. claim no. 6(E) and claim no. 7 were allowed by the learned sole Arbitrator and upheld under section 34 of the Act of 1996 without considering the fact that both the claims were completely barred by limitation. It has been submitted that these claims constituted claims concerning bills paid in the year 1988 and onwards and they were not included in the original statement of claim submitted in the year 2002 before the state or even in the statement of claim filed before the learned sole Arbitrator in the year 2006. These claims were included in the modified claim filed in the year 2011. It is the case of the State that the claim regarding price adjustment could not have been permitted as the claimant never raised these bills in terms of the clause 33 of the agreement between the parties. It is submitted that these aspects of the matter have not been properly considered by the learned Court while considering the petition under section 34 of the Act of 1996.
Award of delay damages.
(xv) Further grievance of the State is in connection with claim no. 2 relating to 'Delay Damages'. It is submitted that there was no evidence in support of such claim and unproved claim of losses made by the claimant without any support of any evidence or bills or actual losses suffered by the claimant. The entire claim on account of 'Delay Damages' is unsubstantiated claim primarily based on mere calculation of assumed losses based on indirect application of 20 'Hudson Formula' without any basis for the same. Particular reference has been made with regard to claim no. A1 concerning 'Overhead losses for underutilised and unutilised overheads', Claim No. A3 concerning 'Loss of profit not earned at appropriate time' and Claim No. A4 concerning 'Loss of underutilised and unutilised tools, plant and machineries' and it is also submitted that the claims under these heads are overlapping and such claims have been allowed by the learned sole arbitrator which is contrary to the law laid down by the Hon'ble Supreme Court in the case of "Batliboi Environment Engineers Vs. Hindustan Petroleum Corporation Ltd and another"
reported in (2024) 2 SCC 375 and also judgment in the case of "M/s Unibros Vs. All India Radio" reported in (2023) SCC Online SC 1366. The learned counsel has referred to paragraphs 16 and 20 to 27 of the aforesaid judgment passed in Batliboi Environment Engineers (Supra). He has also referred to paragraphs 15 and 16 of the aforesaid judgment in M/s Unibros (Supra). It is submitted that the principles in connection with 'delay damages' have been settled by the aforesaid judgments. It has also been submitted that the learned Sole Arbitrator had allowed multiple claims of same nature or specifications of losses that too without any evidence in support of such claims. (xvi) It has been submitted that while deciding the claim, Article 2.36.1 of the Report of Rates and cost committee published by Ministry of Power and Irrigation, Central Water Power Commission has been relied upon by the learned Arbitrator by stating it to be a trade practice. It has been submitted that such approach is entirely wrong and erroneous. It has been further submitted that the aforesaid report concerns calculation of estimates for projects and has no basis whatsoever to allow claim for 'delay damages' and accordingly, the learned Arbitrator has relied upon irrelevant material. Such approach of the learned Arbitrator is patently illegal and is against the public policy of India. It has been reiterated that the claims have been allowed which are based on no real evidence to support the losses and irrelevant document has been relied to make assumption of losses suffered by the claimant despite there being no evidence to support 21 such losses. It has also been reiterated that overlapping claims on account of 'delay damages' under each heading of losses have been allowed in a most mechanical manner without any evidence whatsoever.
Scope of interference in arbitral award.
(xvii) With regard to the scope of interference in Arbitral Award, reliance has been placed on the judgment passed by the Hon'ble Supreme Court in the case of "Ssangyong Engineering & Construction Company Ltd. Vs. NHAI" reported in (2019) 15 SCC 131 (paragraphs 40 and 41) and also the judgment in the case of "DMRC Ltd. Vs. Delhi Airport Metro Express (P) Ltd." reported in (2024) 6 SCC 357 (paragraphs 33 to 42).
(xviii) Apart from the aforesaid judgments, the learned counsel for the state has also relied upon following two judgments:
"Binod Bihari Singh Vs. Union of India" reported in (1993) 1 SCC 572 (paragraph 10) "J.C. Budhraja Vs. Chairman, Orissa Mining Corpn. Ltd." reported in (2008) 2 SCC 444 (paragraphs 20, 21, 25, 26, 29 & 34).
13. Submissions of the Claimant.
Scope of interference I. The application under consideration is one filed under Section 37 of the Act of 1996. Therefore, it has to be tested on the touchstone of section 37 and no more. Section 37 of the Act of 1996 lays down certain grounds which have to be proved by the party who intends to have the arbitral award set aside. II. The Award has been passed by the learned Arbitrator after perusal of several documents consisting of thousands of pages submitted by either party during the Arbitral proceedings which continued for 75 sittings wherein both the parties were represented by their Counsels. Arguments were also advanced by the Executive Engineers and Assistant Engineers representing the case of the State.
22III. The learned Arbitrator has dealt with the matter in details based on the evidences, records and pleas produced before him by both the parties, as the arbitrator is a Retd. Chief Engineer of the Government of Jharkhand as such he is an expert of this field and having special knowledge, has either accepted or rejected the claims within his jurisdiction after application of his mind which has been disclosed in the outcome of the Award which in no ways can be termed as perverse.
IV. The claimant in the written submissions has also referred to the judgment of the Hon'ble Supreme Court delivered on 20.09.2024 in Civil Appeal Nos. 3981-3982 of 2024 in the case of "OPG Power Generation Private Limited Vs. ENEXIO Power Cooling Solutions India private Limited" and has referred to paragraph 68 of the said judgment.
Limitation V. The first ground so taken by the State is with regards to the fact that the claims of the Claimant are for work executed in the year 1991 whereas the section 21 notice invoking arbitration was sent in the year 2003.
VI. The Claimant has filed all detailed list of dates and from perusal of the same it can be verified that the claimant had invoked clause 51 of the agreement on 16.10.2002 and clause 52 containing Arbitration clause on 08.04.2003 whereas the dispute had arisen on 27.08.2000 when the state issued a fresh tender without closing the contract.
VII. As such the period for limitation vis-à-vis arbitration would arise only from the date of dispute that is 27.08.2000. Reference has been made to the judgment of the Hon'ble Supreme Court in the case of "Major (Retd.) Inder Singh Rekhi Vs. Delhi Development Authority" reported in (1988) 2 SCC 338.
VIII. At paragraph 44 of the arbitral award, while dealing with the issue of limitation it has also been stated that on 14.12.2008 the counsel for the state had admitted that the claimants were well 23 within the right to refer the dispute for arbitration and it has been held that the agreement between the parties was very much alive on the date of pressing the claims and demand on 16.10.2002 as it was neither finalized nor foreclosed as per terms of Agreement. The work was kept in abeyance and the contractor was asked to extend the validity of bank guarantee. Further, an ancillary argument has also been made to the effect that a part of the claims was modified on 01.05.2011 which were hit by limitation. Before addressing to the issue no response/objection was ever filed by the State before the learned Arbitrator in this regard.
IX. At paragraph 39 of the Award, the learned Arbitrator has taken note of Clause 35 and Clause 52 of the Agreement for release of claims.
X. It was the case of the claimant all along that the measurement books were under the custody of the state and the same were never provided during the execution of work to the claimant; it was only before the learned Arbitrator that the copies of the measurement books and other documents were filed and also provided to the claimant and then for the first time the claimant came to know that there were certain deductions made from the running bills which were required to be reimbursed to the Claimant as such the claimant had filed the amendment application before the learned Arbitrator which was never objected to by the state.
XI. The claimant has also relied upon the judgment passed by the Hon'ble Supreme Court reported in (2016) 1 SCC 530 (Vasant Balu Patil and others Vs. Mohan Hiranchand Shah and others) to submit that once an amendment is made and no objection is made to such amendment and the same is allowed without any precondition, then under the concept of relation back the relief added/amended shall relate back to the date of filing of the case, that is, in the present case the date of invocation of arbitration under section 21 of the Act of 1996.
24XII. As such, both factually and legally the amendments were made and none of the claims is hit by the laws of limitation. XIII. Lastly to sum up the issue of limitation, it is stated that the last measurement made and measurement book so entered is dated 16.04.2002 and having invoked the arbitration on 29.05.2003, the same cannot be said to be hit by the laws of limitation. XIV. The learned Arbitrator has negated the issue of limitation on these very grounds.
Section 16 of the Act of 1996 XV. During the course of the arbitration proceeding, the appellant had filed the application under section 16 of the Act of 1996 challenging the jurisdiction of the learned Arbitrator. XVI. Clauses which govern invocation of arbitration and the ground for challenge are clauses 51 and 52 of the general conditions of contract which provide for arbitration.
XVII. The grounds so taken by the Appellant are as under:-
(a) Appeal before the Superintending Engineer was not preferred within 30 days of the decision of the Executive Engineer;
(b) Without waiting for the decision of the Superintending Engineer in appeal the arbitration clause was invoked; and
(c) The Sole Arbitrator was appointed unilaterally by the claimant.
XVIII. Clause 51 of the conditions of contract speaks that on emergence of four types of grievances, the contractor shall ask for written decision/instructions from the Executive Engineer and upon the decision of the Executive Engineer being still unsatisfactory, the contractor would prefer an appeal before the Superintending Engineer within 30 days. In the present case the Executive Engineer's decision came on 13.11.2002 which was illegible/faint faxed copy as such the Claimant vide letter dated 05.12.2002 and 22.01.2003 requested the Executive Engineer to provide the readable copy of the said letter which was provided in the end of January, 2003 and the appeal was preferred on 25 04.02.2003. The filing of appeal before the Superintending Engineer beyond 30 days was not challenged before the learned Arbitrator and as such it cannot be raised for the first time before this Hon'ble Court. Such plea is barred under section 4 of the Act of 1996 and as interpreted by the Hon'ble Supreme Court in the case of "Narayan Prasad Lohia Vs. Nikunj Kumar Lohia and others" reported in (2002) 3 SCC 572. Clause 52 of the agreement was invoked on 08.04.2003 praying for appointment of arbitrator.
The appeal under clause 51 of the agreement was made on 04.02.2003 along with evidences, sixty days expired on 04.04.2003 but no communication was received from Superintending Engineer inviting any further evidence or offering any opportunity of hearing till 04.04.2003 and the learned Arbitrator has given a finding that the Superintending Engineer kept mum over the appeal for more than four months and asked for evidence only on 18.06.2003 after being aware of the fact that the sole Arbitrator has been appointed by the claimant and Arbitral Tribunal has been constituted on 29.05.2003 which has been recorded in the award at page 29. The Chief Engineer in terms of Clause 52 of the agreement did not send a list of three prospective arbitrators within 30 days on the receipt of notice invoking arbitration vide Claimant's letter dated 08.04.2003. Then the Claimants in terms of Clause 52 sent a list of three prospective arbitrators to the Chief Engineer to select one. The Chief Engineer failed to select one out of three names proposed by the claimant within 15 days, therefore, the claimant was entitled to finalize one of them, and that is what has happened in this case. It is submitted that there is no challenge set up either under section 16, section 34 or under section 37 of the Act of 1996 claiming that this procedure was incorrect.
XIX. Further, invoking clause 51 of the agreement prior to clause 52 has been negated by the Hon'ble Jharkhand High Court in 26 Arbitration Appeal no. 14 of 2007 holding that Clause 52 is independent to clause 51 as such waiting for the decision was not mandatory. The arbitration clause as provided under Clause 52 of the agreement does not provide for a pre-condition that a decision of the engineer/superintending engineer is required against which only an arbitration can be invoked. Clause 52 provides that any and all disputes can be referred for arbitration as such there was no requirement for availing clause 51 prior to invoking clause 52 of the agreement. Further, if clause 28 is taken into consideration it will clarify that the Engineer's decision cannot be for the sums due as such there was no occasion to wait for the decision of the Superintending Engineer.
XX. In light of the aforesaid facts, the learned Arbitrator had decided this issue vide an order dated 09.05.2005.
Claims
XXI. Claimant claimed in 2 parts:
i. Claim Part-1 deals with claims against work done but not paid.
ii. Claim Part-2 deals with claims which relate to damages under overhead losses, idling of plant and machineries and other losses. Damages XXII. There are two issues to be dealt with under the sub-head which are - (i) whether the claims are overlapping, and
(ii) whether there are any evidences which could have been relied upon by the arbitrator while awarding under this very head.
Claims allowed in the head of 'damages' in the present case are:
a. Overhead losses
b. Idling of plant and machine
c. Loss of profit not earned at the relevant time
d. Bank Guarantee charges
XXIII. Before referring to the issues in support of the claims so
allowed, it has been categorically stated that the
claimant/respondent is not pressing the claim of loss of profit 27 which has been allowed to the extent of Rs.2,50,000/- in Commercial Appeal No. 4 of 2022.
The claim for overhead has been partially allowed. The claimant had claimed overheads @ 10% of the value of job in light of the trade practices so published by the Government of India in regards similar irrigation project works. Section 73 of the Indian Contract Act, 1872 talks about two components i.e. "damages" and "compensation". 'Compensation' means to make good the actual loss whereas the word 'Damages' can include a component which might not be in form of loss but which a person might have gained (e.g. expected profit). The judgment of the Hon'ble Supreme Court in the case of Batliboi Environment Engineers (Supra) had the occasion to discuss the concept of damages and compensation. In the aforesaid judgment at paragraph 10 it was mentioned as under :
"10. BEEL had, as observed above, accepts the position that the loss towards overheads and profits/profitability has to be arrived at by applying the percentage formula, variant with the execution of the work. Thus, in our opinion, the loss towards overheads and profits/profitability is to be computed on the payments due for the unexecuted work, and should exclude the payments received/receivable for the work executed. In other words, based on the value of the work executed by BEEL, the proportionate amount has to be reduced for computing the damage/compensation as a percentage of expenditure on overheads, and damages for loss of profit/profitability. Damages towards expenditure on overheads and loss of profit are proportionate, and not payable for the work done and paid/payable. Delay in payment on execution of the work has to be compensated separately."
The learned arbitrator took note of aforesaid proposition of law and excluded the period during which work was done for the purposes of computation for overhead costs. The concept of profit from unexecuted work and loss of profit owing to delay is required to be understood in terms with para 10 of the judgment in the case of Batliboi Environment Engineers (Supra). In the aforesaid paragraph, it has been provided that 28 for the unfinished work on the basis of the remaining quantum of work, loss of overhead and profit can be granted. Whereas in the present case the claim of loss of profit has been given up.
XXIV. It is submitted that the State has also argued that the claim of overhead so allowed is virtually under the Hudson's formula which is factually not correct for the following reasons:
a) Award in the present case does not carry the element of profit percentage (as taken in Hudson Formula).
b) Award in the present case is on the basis of the sum paid for total work and against work done but not paid. (which means not on the basis of contract sum as taken in Hudson Formula)
c) In the present case, the learned Arbitrator on the basis of total work done (total work paid and award against work done but not paid) has considered that the total effective utilization of Claimants' resources was for 16 months in place of 15 months of the original agreement period [in terms with the judgment in Batliboi Environment Engineers (Supra)].
d) Award in the present case is on the basis of work load as per Contract. (not on the basis of Contract period as taken in Hudson Formulae)
e) Award in the present case for computation of losses has been categorized in 3 parts and not on the basis of total period of delay in a straight line as taken in Hudson Formulae.
(f ) For demand of Overhead losses, neither Loss of Profit has been pleaded nor awarded.
The learned Arbitrator has taken all due care in order to avoid any kind of overlapping in any form and it can be safely said that the learned Arbitrator has not computed and awarded losses of overhead on the basis of Hudson Formulae and the award has been passed upon attendant facts & circumstances which is within the domain and decision of the arbitrator. The method of computation is within the sole jurisdiction of the learned 29 Arbitrator as held in paragraph 15 of the judgment in Batliboi Environment Engineers (Supra).
XXV. As such now coming into the issue of evidence in support of this claim of overhead which has been allowed by the learned arbitrator.
Trade usage or industrial practice have all along been considered as a valid form of evidence.
In order to support Trade usage in form of evidence, documents of Government of India for the purpose of component of Overhead in an irrigation project was brought before the learned Arbitrator by the Claimant vide C-10 which were never objected by the State. The said documents were:
a. Report of rates and cost committee.
b. Report of committee of cost control of river valley
projects.
These documents so produced in form of evidence are in common trade usage while executing this kind of irrigation work and for computation of overhead @ 10% value has been taken note of. This is an estimate for executing the kind of work which was allotted to the claimant/respondent. An estimate by the government agency shows a trade practice which was adopted by the Government while issuing these kinds of tender. The learned Arbitrator in para 84(2) of the Award has given a finding that based on the trade practice as also exhibited vide the report of Rates and Cost Committee published by Ministry of Power and Irrigation, Central Water Power Commission, submitted by Claimant, it is stated under Article 2.36.1 that allowance of 10% could be considered adequate for contractor's actual expenses on Supervisory establishment, field Office and share of Head office charges, Travelling expenses etc. Further finding has been recorded by the learned arbitrator to the effect that taking 10% is a general government practice. Trade practices is a way of doing business that is commonly used in particular industry and have all along been considered to 30 be as a piece of evidence and the same also finds mention in section 28 (3) of the Act of 1996.
It is further submitted that in a similar matter taking note of this very trade practices in form of evidence for computing overhead expenses to the tune of 5% of the Contract, the learned Arbitrator in the case of "Associate Builders v. DDA"
had allowed the claim of overhead. The Division Bench of the Hon'ble Delhi High Court had taken a note of this very fact with regards to claim no. 15. While dealing with this claim, the Division Bench had negated the stand of the arbitrator taking 5% as a trade usage for grant of overhead expenses which finds mention at paragraph 12 of the said judgment. Finally, the Division Bench had set aside the award and modified the same negating trade usage and evidence of 5% under the head of overhead expenses. Matter was then challenged by the claimants i.e. Associate Builders in Civil Appeal No. 10531 of 2014 before the Hon'ble Supreme Court who negated the findings holding therein that while dealing with appeal under section 37 of the Act of 1996, the scope of interference is quite restrictive and the division bench had exceeded its jurisdiction by re-appreciating the quantity and quality of evidence which was impermissible in eye of law. Finally, accepting the evidence so relied upon by the Arbitrator in form of trade usage for taking note of 5% as overhead values in such contract, the said claim was allowed in the appeal and the award of the Arbitrator involved in the said case was restored. It is submitted that it is no more res-integra that trade usage forms part of an evidence which can be taken note of while allowing the claim for overheads.
XXVI. The attempt was made by the government to evolve a comprehensive standard schedule of rates for major items which largely constitute major portion of project estimate. Clause 6.01 of the Report of Committee on Cost Control of River Valley projects provides "needless to say that due to diversity of 31 existing construction practices there is bound to be some variation between prevailing practice and provisions in standard schedule of rates" as such even in the committee's report it has been opined that on the basis of the prevailing practices the rates might fluctuate but the basic rates would be nearly the same and as such the same is required to be considered as a trade usage.
Further, the next document i.e. Report of the Rates and Cost Committee which is again a Government of India formed Committee provides that the Government of India considered it necessary to evolve comprehensive standard schedule of rates including detailed analysis of such rates which can be used for basic schedule for all projects.
Both the aforesaid reports suggest that in similar kind of work it is expected that the overhead cost would be 10% of the value of work as such the same forms part of trade usage or industrial practices which has been accepted all along by the Contract Act, 1872 under section 1 as well as under section 28 of the Act of 1996. Further, trade usage has also been accepted in the aforementioned judgment of Batliboi Environment Engineers (Supra) at paragraph 44. Acceptance of trade usage also find mention in the latest judgment of the Hon'ble Supreme Court in the case of "DMRC Ltd. Vs. Delhi Airport Metro Express (P) Ltd." reported in (2024) 6 SCC 357 at paragraph 35. The learned arbitrator has taken a plausible view and need not be interfered under section 34 or section 37 of the Act of 1996.
XXVII. In regards to the claim of idling of plant and machinery, the learned Arbitrator has reduced the claim into half. Further, the learned Arbitrator has reduced the claim by 15% for major repairs and depreciation and thereupon has granted only 25%, as only 25% of the work was left to be completed. As such, this award under this very head is strictly in terms of the judgment of the Hon'ble Supreme Court in the case of Batliboi Environment Engineers (Supra). Only for such portion of 32 remaining work i.e. 25 %, 1/3rd of the remaining claim has been allowed under this head. The evidence under this claim are the documents enclosed with C-7 (Invoices of Plant & Machineries) and C-10 (Justification for deployment of Plant & Machineries alongwith analysis of rate) and the same has not been controverted before the learned Arbitrator and in the present appeal. The learned Arbitrator has taken note at paragraph 99 of the award that the State admitted in para 13 of their written statement that they were not liable for extra expenditure on Plant & machineries after expiry of the Extended time of Completion (30.06.1991). As such the Ld. Arbitrator has mentioned that the State had admitted that "some tools, plants machineries were deployed at site of work by the claimant but the claimant is not at all entitled for the above amount after expiry of the extended time of completion (30.06.1991). Minus bill.
XXVIII. This issue has been dealt in detail by the learned Arbitrator under issue no.5. By virtue of this final bill itself negative bill has been raised which is the counter-claim. The learned Arbitrator has further recorded the detailed reasons why the final bill cannot be considered, in which there are certain essential points which are required to be taken note of. The learned Arbitrator in minutes of meeting of 43rd, 44th, 59th, 60th, 66th and 67th Sitting has taken a note that the State has admitted that the measurement recorded upto 16th RA bills are true and correct and the final bill has not been checked and passed as per provision. The correctness of the findings of the learned Arbitrator has neither been challenged either before the learned Arbitrator or before this Hon'ble Court.
14. Findings of this Court 14 (A). Scope of interference in arbitral award. 14(A)(i) In the present case, the petition under section 34 of the aforesaid Act of 1996 has been filed after coming into force of the Arbitration and Conciliation (Amendment) Act, 2015 and in view of judgment of Hon'ble 33 Supreme Court in "Ssangyong Engg. & Construction Co. Ltd. vs. NHAI"
(2019) 15 SCC 131, the case will be governed by the law which existed post 2015 amendment regarding the permissible grounds for setting aside an arbitral Award. Since the matter is governed by the Arbitration and Conciliation (Amendment) Act, 2015, it would be useful to compare the provisions relevant for the purposes of this case as it stood prior to the 2015 amendment and post-2015 amendment in the Act of 1996 for appreciating the scope of section 34 in the facts and circumstances of this case.
Pre amendment Post amendment 34. Application for setting aside 34. Application for setting aside arbitral Award - (1) ......... arbitral Award - (1) ..............
(2) An arbitral award may be set aside by (2) An arbitral award may be set aside by the Court only if - the Court only if-
(a) ............................ (a) ..............................................
(b) the Court finds that - (b) the Court finds that-
(i) the subject matter of the dispute is not (i) the subject matter of the dispute is not capable of settlement by arbitration under capable of settlement by arbitration under the law for the time being in force, or the law for the time being in force, or
(ii) the arbitral Award is in conflict with (ii) the arbitral Award is in conflict with the public policy of India. the public policy of India.
Explanation.- Without prejudice to Explanation 1.- For the avoidance of the generality of sub-clause (ii) of clause any doubt, it is clarified that an Award
(b), it is hereby declared, for the is in conflict with the public policy of avoidance of any doubt, that an award is India, only if, - in conflict with the public policy of India (i) the making of the Award was if the making of the award was induced induced or affected by fraud or or affected by fraud or corruption or was corruption or was in violation of in violation of section 75 or section 81. section 75 or section 81; or
(ii) it is in contravention with the fundamental policy of Indian law; or
(iii) it is in conflict with the most basic notions of morality or justice.
Explanation 2. --For the avoidance of 34 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.
(2A) 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.
28(3) In all cases, the arbitral tribunal 28(3) While deciding and making an shall decide in accordance with the award, the arbitral tribunal shall, in all terms of the contract and shall take cases, take into account the terms of into account the usages of the trade the contract and trade usages applicable to the transaction. applicable to the transaction.
14(A)(ii) Prior to coming into force of the 2015 amendment, the Hon'ble Supreme Court in the judgment in "ONGC Limited vs. Saw Pipes Limited"
(2003) 5 SCC 705, held that an Award contrary to substantive provisions of law or the provisions of Arbitration and Conciliation Act, 1996 or against the terms of the contract would be patently illegal, and if it effects the rights of the parties, it would be open to interference by the Court under section 34(2) of the aforesaid Act of 1996. By another judgment in "ONGC vs. Western Geco International Ltd." (2014) 9 SCC 263, the Hon'ble Supreme Court, by further expansion of the phrase "public policy of India" contained in section 34 of the 1996 Act, added three other distinct and fundamental juristic principles which were to form part and parcel of the fundamental policy of Indian law. It was held that without meaning to exhaustively enumerate the purpose of the expression 'fundamental policy of Indian law', three distinct and fundamental juristic principles must necessarily be 35 understood as a part and parcel of the fundamental policy of Indian law which are absence of 'judicial approach', violation of the principles of natural justice and so irrational that no reasonable person would have arrived at the same. It was also held that it was neither necessary nor proper to attempt an exhaustive enumeration of what would constitute the fundamental policy of Indian law. In "Associate Builders v. DDA" (2015) 3 SCC 49, the head "public policy of India" was considered as falling into following heads and subheads:
a. Fundamental policy of Indian Law-
i. Compliance with statutes, Judicial Precedents orders of superior courts in India. (para 27) ii. Need for judicial approach- decision be fair, reasonable and objective. (para 29) iii. Natural Justice compliance- Audi alterem partem rule.
(para 30) iv. Wednesbury reasonableness- Perversity or irrationality. (para 31) b. Interest of India. (Para 35) Related to foreign powers of India c. Justice or morality (para 36), and d. Patent illegality-
i. Contravention of substantive law of India.
ii. Contravention of Arbitration and Conciliation Act, 1996.
iii. Contravention of terms of contract.
Perversity has been considered in the following terms:
"31. The third juristic principle is that a decision which is perverse or so irrational that no reasonable person would have arrived at the same is important and requires some degree of explanation. It is settled law that where:
(i) a finding is based on no evidence, or
(ii) an Arbitral Tribunal takes into account something irrelevant to the decision which it arrives at; or
(iii) ignores vital evidence in arriving at its decision, such decision would necessarily be perverse.36
32. A good working test of perversity is contained in two judgments. In Excise and Taxation Officer-cum-Assessing Authority v. Gopi Nath & Sons [1992 Supp (2) SCC 312], it was held: (SCC p. 317, para 7) "7. ... It is, no doubt, true that if a finding of fact is arrived at by ignoring or excluding relevant material or by taking into consideration irrelevant material or if the finding so outrageously defies logic as to suffer from the vice of irrationality incurring the blame of being perverse, then, the finding is rendered infirm in law."
In Kuldeep Singh v. Commr. of Police [(1999) 2 SCC 10 : 1999 SCC (L&S) 429] , it was held: (SCC p. 14, para 10) "10. A broad distinction has, therefore, to be maintained between the decisions which are perverse and those which are not. If a decision is arrived at on no evidence or evidence which is thoroughly unreliable and no reasonable person would act upon it, the order would be perverse. But if there is some evidence on record which is acceptable and which could be relied upon, howsoever compendious it may be, the conclusions would not be treated as perverse and the findings would not be interfered with."
Justice has been considered in the following terms -
"36. The third ground of public policy is, if an award is against justice or morality. These are two different concepts in law. An award can be said to be against justice only when it shocks the conscience of the court. An illustration of this can be given. A claimant is content with restricting his claim, let us say to Rs 30 lakhs in a statement of claim before the arbitrator and at no point does he seek to claim anything more. The arbitral award ultimately awards him Rs 45 lakhs without any acceptable reason or justification. Obviously, this would shock the conscience of the court and the arbitral award would be liable to be set aside on the ground that it is contrary to "justice".
Patent illegality: Again sub-divided into:
a) Para 42.1- contravention of substantive law of India
b) Para 42.2 - contravention of the Arbitration Act itself.
c) Para 42.3 - arbitrator deciding outside the terms of the contract 14(A)(iii) The expanding nature of the interpretation of the term 'fundamental policy of Indian law' in order to set aside an Award under Section 34 of the Act of 1996 was noticed and was followed by law 37 commission recommendations which ultimately culminated in an amendment of the aforesaid Act of 1996 vide Amendment Act 2015. The entire background and the purpose of the Amendment Act 2015 in the aforesaid Act of 1996 have been fully narrated and explained in the judgment in "Ssangyong Engg. & Construction Co. Ltd." (2019) 15 SCC
131. The expansion of "public policy of India" in "ONGC Ltd. v. Saw Pipes Ltd." (2003) 5 SCC 705 ["Saw Pipes"] and "ONGC Ltd. v. Western Geco International Ltd." (2014) 9 SCC 263 ["Western Geco"] has been done away with and a new ground of "patent illegality" with inbuilt exceptions have been introduced through 2015 amendment.
14(A)(iv) The judgment passed by the Hon'ble Supreme Court in the case of "Ssangyong Engg. & Construction Co. Ltd." (supra) has considered the impact of the 2015 amendment in the Act of 1996 and summarised in paragraph nos. 35 to 41 of the report. Some of the points relevant for the purposes of this case are as under:-
A. The ground for interference insofar as it concerns the "interest of India" has since been deleted.
B. In paragraph 35 it has also been held that 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 paragraphs 36 to 39 of Associate Builders. Para 36 of Associate Builders deals with 'justice' to hold that only such arbitral awards that shock the conscience of the Court that can be set aside on this ground being against justice. C. In paragraph 37 it has been held that insofar as domestic awards made in India are concerned, an additional ground is now available under sub-section (2-A), 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 the public interest, cannot be brought in by the backdoor when it comes to setting aside an award on the ground of patent illegality. D. Reappreciation 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.38
E. para 42.1 of Associate Builders, namely, a mere contravention of the substantive law of India, by itself, is no longer a ground available to set aside an arbitral award.
F. The change made in Section 28(3) by the Amendment Act really follows what is stated in paras 42.3 to 45 in Associate Builders, 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(2-A). Para 42.3 to 45 of the judgement passed in the case of Associate Builders (supra) are quoted as under:-
"42.3. (c) Equally, the third subhead of patent illegality is really a contravention of Section 28(3) of the Arbitration Act, which reads as under:
"28. Rules applicable to substance of dispute.-- (1)-(2) * * (3) In all cases, the Arbitral Tribunal shall decide in accordance with the terms of the contract and shall take into account the usages of the trade applicable to the transaction."
This last contravention must be understood with a caveat. An Arbitral Tribunal must decide in accordance with the terms of the contract, but if an arbitrator construes a term of the contract in a reasonable manner, it will not mean that the award can be set aside on this ground. Construction of the terms of a contract is primarily for an arbitrator to decide unless the arbitrator construes the contract in such a way that it could be said to be something that no fair-minded or reasonable person could do.
43. In McDermott International Inc. v. Burn Standard Co. Ltd., this Court held as under: (SCC pp. 225-26, paras 112-13) "112. It is trite that the terms of the contract can be express or 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. [See Pure Helium 39 India (P) Ltd. v. Oil and Natural Gas Commission and D.D. Sharma v. Union of India.]
113. Once, thus, it is held that the arbitrator had the jurisdiction, no further question shall be raised and the court will not exercise its jurisdiction unless it is found that there exists any bar on the face of the award."
44. In MSK Projects (I) (JV) Ltd. v. State of Rajasthan, the Court held:
(SCC pp. 581-82, para 17) "17. If the arbitrator commits an error in the construction of the contract, that is an error within his jurisdiction. But if he wanders outside the contract and deals with matters not allotted to him, he commits a jurisdictional error.
Extrinsic evidence is admissible in such cases because the dispute is not something which arises under or in relation to the contract or dependent on the construction of the contract or to be determined within the award. The ambiguity of the award can, in such cases, be resolved by admitting extrinsic evidence. The rationale of this rule is that the nature of the dispute is something which has to be determined outside and independent of what appears in the award. Such a jurisdictional error needs to be proved by evidence extrinsic to the award. (See Gobardhan Das v. Lachhmi Ram, Thawardas Pherumal v. Union of India, Union of India v. Kishorilal Gupta & Bros., Alopi Parshad & Sons Ltd. v. Union of India, Jivarajbhai Ujamshi Sheth v. Chintamanrao Balaji and Renusagar Power Co. Ltd. v. General Electric Co.)"
45. In Rashtriya Ispat Nigam Ltd. v. Dewan Chand Ram Saran, the Court held: (SCC pp. 320-21, paras 43-45) "43. In any case, assuming that Clause 9.3 was capable of two interpretations, the view taken by the arbitrator was clearly a possible if not a plausible one. It is not possible to say that the arbitrator had travelled outside his jurisdiction, or that the view taken by him was against the terms of contract. That being the position, the High Court had no reason to interfere with the award and substitute its view in place of the interpretation accepted by the arbitrator.
44. The legal position in this behalf has been summarised in para 18 of the judgment of this Court in SAIL v. Gupta Brother Steel Tubes Ltd. and which has been referred to above. Similar view has been taken later in Sumitomo Heavy Industries Ltd. v. ONGC Ltd. to which one of us (Gokhale, J.) was a party. The observations in para 43 thereof are instructive in this behalf.
45. This para 43 reads as follows: (Sumitomo case, SCC p.
313) '43. ... The umpire has considered the fact situation and placed a construction on the clauses of the agreement which according to him was the correct one. One may at the highest say that one would have preferred another construction of 40 Clause 17.3 but that cannot make the award in any way perverse. Nor can one substitute one's own view in such a situation, in place of the one taken by the umpire, which would amount to sitting in appeal. As held by this Court in Kwality Mfg.
Corpn. v. Central Warehousing Corpn. the Court while considering challenge to arbitral award does not sit in appeal over the findings and decision of the arbitrator, which is what the High Court has practically done in this matter. The umpire is legitimately entitled to take the view which he holds to be the correct one after considering the material before him and after interpreting the provisions of the agreement. If he does so, the decision of the umpire has to be accepted as final and binding.'"
G. A decision that is perverse as understood in paragraphs 31 and 32 of Associate Builders, while no longer 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 that ignores vital evidence in arriving at its decision would be perverse and liable to be set aside on the ground of patent illegality. Paragraphs 31 and 32 of the judgement passed in the case of Associate Builders(supra) are quoted above. 14(A)(v) In "Sutlej Construction Limited Vs. Union Territory of Chandigarh" (2018) 1 SCC 718, it has been held that when the Arbitrator has taken a reasonable view on the basis of a plausible view there is no scope of reappreciation of evidence and substitute its view unless the view taken by the Arbitrator shocks the conscience of the Court. 14(A)(vi) The judgement of Hon'ble Supreme Court delivered on 20.09.2024 in Civil Appeal Nos. 3981-3982 of 2024 in the case of "OPG Power Generation Private Limited Vs. ENEXIO Power Cooling Solutions India private Limited" has held in para 68 as under -
"Scope of interference with an arbitral award
68. The aforesaid judicial precedents make it clear that while exercising power under Section 34 of the 1996 Act the Court does not sit in appeal over the arbitral award. Interference with an arbitral award is only on limited grounds as set out in Section 34 of the 1996 Act. A possible view by the arbitrator on facts is to be respected as the arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon. It is only when an arbitral award could be categorized as perverse, that on an error of fact an arbitral award may be set aside. Further, a mere erroneous application of the law or wrong appreciation of 41 evidence by itself is not a ground to set aside an award as is clear from the provisions of sub-section (2-A) of Section 34 of the 1996 Act."
14(B). Jurisdiction (objection under section 16 of the Act of 1996) a. The order dated 09.05.2005 passed by the learned Arbitrator whereby the objection under section 16 of the Act of 1996 was dismissed has been placed on record.
b. It was the case of the State before the learned Arbitrator that the claimant submitted their claim to the Executive Engineer vide letter dated 16.10.2002 which was rejected. The claimant preferred appeal before the Superintending Engineer who in turn was to give his decision within a period of 60 days only after the claimant had offered evidence in support of appeal and the claimant had been heard by the Superintending Engineer. It was their case that the period of 60 days for giving decision by Superintending Engineer commences from the date when the claimant has been heard and offered evidence in support of the appeal. It was their further case that vide letter dated 18.06.2003 the Superintending Engineer had directed the claimant to produce evidence in support of the appeal and a reminder was also given vide letter dated 10.07.2003 and thereafter, the Chief Engineer vide letter dated 21.08.2003 directed the claimant to produce evidence in support of appeal, but no evidence was produced. It was their specific case that in absence of decision of Superintending Engineer, the claimant had no right under the agreement to invoke arbitration clause for appointment of arbitrator. It was their further case that ultimately the Superintending Engineer had rejected the claims of the claimant vide letter dated 31.01.2004 and the claimant had not indicated their intention to refer the alleged dispute to arbitration, hence the decision in appeal by the Superintending Engineer had become final and conclusive and the arbitration was beyond the scope of submission to arbitration and consequently, the learned 42 Arbitrator had no jurisdiction to consider, arbitrate and decide the alleged dispute raised by the claimant.
c. On the other hand, it was the case of the claimant at the stage of petition under section 16 of the Act of 1996 before the learned Arbitrator that the petition was misconceived. It was submitted that the claimant had communicated the name of sole arbitrator to the respondents vide letter dated 29.05.2003 which was duly received by them on 29.05.2003/30.05.2003. A reference was made to the order dated 29.05.2004 passed by the learned Sub- Judge in Miscellaneous Case No. 3 of 2004 wherein it was observed that the miscellaneous case was a device to delay the disposal of the arbitral proceedings.
d. The attention of the learned Arbitrator was also drawn by the claimant to the order dated 09.02.2005 in Civil Revision No. 139 of 2004 arising out of Miscellaneous Case No. 3 of 2004 whereby the High Court observed that the order of the Sub- Judge did not suffer from any infirmity or improper and illegal exercise of jurisdiction, warranting interference by the High Court.
e. It was the further case of the claimant before the learned Arbitrator that the appointment of sole Arbitrator was done in accordance with the arbitral agreement between the parties which was preceded by the order passed by the High Court dated 15.07.2002 in LPA No. 312/313 of 2002. It was their case that the claimant submitted their demand before the executive engineer which was rejected without any germane reason. Consequently, the claimant preferred appeal before the Superintending Engineer enclosing all documentary evidence of correspondences with respect to dispute and statement of demand (dues and damages). However, the Superintending Engineer, instead of fixing a date of hearing, chose to sleep over the matter and did not fix a date of hearing within stipulated 60 days nor gave any decision in the matter of appeal despite all documentary evidence on which settlement of dispute rested 43 was submitted by the claimant. It was their case that the Superintending Engineer should have afforded an opportunity to the claimant to be heard and offer additional evidence in support of appeal, if at all required.
f. It was further case of the claimant that on account of no response from the Superintending Engineer, a notice was given to the Chief Engineer in terms of Clause 52 of the agreement vide letter dated 08.04.2003 and even the Chief Engineer did not abide by the provision of Clause 52. Upon expiry of period of 30 days for sending a panel of prospective arbitrators, the clamant in exercise of their right to send the panel within 15 days, submitted a list of 3 eminent engineers vide letter dated 12.05.2003 and having received no reply from the Chief Engineer, the claimant communicated the name of one of the officers to the Chief Engineer from the list who would be the sole arbitrator as per clause 52 of the agreement vide letter dated 29.05.2003.
g. It was their case that the claimant had acted strictly in terms of the provisions under the agreement and the time-frame recorded in clause 52 of the agreement to ensure that the period of limitation i.e. 15 days given to the contractor (claimant) may not expire.
h. It was further case of the claimant that the letter written by the Superintending Engineer after expiry of the time prescribed under the agreement was an afterthought to cover up the lapses/laches to save the authorities concerned after appointment of the sole arbitrator. It was also submitted on behalf of the claimant that it was incorrect on the part of the State to say that the decision of the Superintending Engineer by which claim had been rejected vide letter dated 31.01.2004 had become final and conclusive and it was equally wrong to argue that the arbitration was beyond the scope of arbitration. The arbitral tribunal was constituted on 29/30.05.2003 and the authorities had no jurisdiction to write any letter to the claimant 44 and the Superintending Engineer was not competent to reject the claim of the claimant vide alleged letter dated 31.01.2004. i. After having recorded the submission of respective parties, the learned Arbitrator has recorded his finding as follows:
"Perused the record and considered the arguments made on behalf of both the parties. I find that the only grievance of the Respondents is that before the decision was taken by the Superintending Engineer, the appointment of Er. Suresh Mishra as Arbitrator is illegal. I also find that the matter has gone to Hon'ble High Court in L.P.A. No. 312/313 of 2002 and in pursuance to the said order steps were taken by the Claimants resulting in appointment of Er. Suresh Mishra as Sole Arbitrator. I find that Arbitral Tribunal has been constituted on 29/30-5-2003 and thereafter many correspondences have been made by the authorities concerned. It has been fairly conceded by the Special G.P. appearing on behalf of the Respondents that appeal was preferred before the Superintending Engineer on 04/2/2003 and the Superintending Engineer directed the Claimants vide annexure 8 and 9 i.e. letter No. 1101 dated 18/6/2003 to produce evidence in support of his appeal. The Superintending Engineer did not fix a date of hearing for about five months. He should have afforded opportunity to the Claimants to produce evidence in support of Appeal if at all required. Rightly when the Claimants did not get any response in pursuance of said Appeal from the Superintending Engineer, proceeded with the terms of Arbitration Agreement resulting in constitution of Arbitral Tribunal. The Claimants have established beyond doubt that the Arbitral Tribunal has been constituted legally and lawfully following the terms of Agreement between the parties. I do not find any force in the submissions advanced by the Special G.P. appearing on behalf of the Respondents and hence the Petition dated 10/4/2005 filed by the Respondent U/S16(i), (ii) and (iii) of the Arbitration and Conciliation Act, 1996, is hereby dismissed.
Next date of hearing is fixed on 16.08.2005 at 11.30 A.M. at the same venue (MIG, B/21, Harmu Housing Colony, Ranchi - 834012) and both the parties are hereby directed to submit their respective Claims / Counter Claims on the date fixed."
j. The learned Arbitrator while giving the final award again considered the point regarding arbitrability and maintainability of claim vide issue Nos. 2 and 3 and again recorded the sequence of events in connection with taking of steps by the 45 claimant and the stage relating to clause 51 and 52 of the General Conditions of Contract and also recorded the specific stand of the State that the claimant did not act in pursuance of clause 51 of the General Conditions of Contract on the basis of which it was argued that the claims were not arbitrable and not maintainable under the agreed terms of contract. The learned arbitrator again considered the submissions vide paragraph Nos. 45, 46 and 47 of the impugned award and recorded its finding in paragraph Nos. 46 and 47 as under: -
"46. Replying the argument made by the counsel for respondents, the learned counsel for claimants submitted that the issues in dispute (issue no 2 & 3) have attained their finality as this Arbitral Tribunal has given its verdict in 10th sitting on 19/5/2005 which has never been challenged by the state of Jharkhand and prior to that misc. case no. 3 of 2004 and civil Revision no 139 of 2004 have been dismissed by the learned sub judge-1 of Jamshedpur as well as the Hon'ble High court of Jharkhand respectively. After the Arbitral Tribunal was constituted on 29/5/2003, the Superintending Engineer directed the claimants through his letter no. 1101 dated 16.06.2003 to file evidence in support of his appeal which was filed on 4/2/2003 He submitted that the issues raised by the learned counsel of Respondents has no force of law as the Superintending Engineer did not act on appeal for more than four months.
Considering the arguments made on behalf of both parties, I find that the only grievance of Respondent is that before the decision on appeal was taken by the superintending Engineer, the appointment of Er. Suresh Mishra as sole Arbitrator is illegal. The issue of appointment of sole Arbitrator was discussed in detail and verdict has been given by the Sole Arbitrator on 9/5/05 in the 10th sitting of Arbitral Tribunal which has never been challenged by the Respondents. I also find that the matter has also gone to Hon. High court in LPA no 313 of 2002 and in pursuance of the order dated 15/10/2002 of the Hon'ble High Court in this case, steps were taken by claimants resulting in appointment of Er suresh Mishra as Arbitrator. The Arbitral Tribunal has been constituted on 29/5/2003 and thereafter, correspondence have been made by authorities concerned. It has also been finally conceded by the Special Govt. Pleader appearing on behalf of Respondents that appeal was preferred by the claimants before the Superintending Engineer on 4/2/03 and the Superintending Engineer directed the claimants for the first 46 time on 18/6/2003 after a lapse of 134 days to produce evidences in support of appeal. Thus the Superintending Engineer did not fix a date of hearing on the basis of evidence submitted with the appeal within 134 days. The Superintending Engineer should have at least afforded an opportunity to claimants to be heard at the earliest and to produce additional evidence in support of appeal if at all required. The question arises how long the claimants should have waited for any response and opportunity to be heard by the Superintending Engineer with regard to his appeal. Clause 51 of condition of contract specifies that if the contractor is dissatisfied with the decision of the Executive Engineer, he may within 30 days appeal to Superintending Engineer, who shall afford an opportunity to the contractor to be heard and to offer evidence in support of his appeal. But he kept mum over the appeal for more than four months and asked for evidence only on 18/6/2003 after being aware of the fact that the sole Arbitrator has been appointed by the claimants and Arbitral Tribunal has been constituted on 29/5/03.
Rightly when the claimant was not afforded even an opportunity to be heard by SE, he proceeded with the terms of Arbitration Agreement contained in clause- 52 of general condition of contract resulting in the constitution of Arbitral Tribunal after the Chief Engineer also did not act upon the issue of appointment of sole arbitrator as per clause -52 of General Condition of Contract.
The claimants have established beyond doubt that the Arbitral Tribunal has been constituted legally and lawfully following the terms of Agreements between the parties.
47. I do not find any force in the arguments of Respondent's counsel regarding the Arbitrability and maintainability of claims, hence, the submission urged on behalf of Respondents on the issue of arbitrability and maintainability of claims under issue no. 2 and 3 are squarely rejected. It is held that the claims of the Claimants are arbitrable and maintainable under the terms of the agreement."
k. Upon considering the materials on record, the learned Arbitrator clearly held that although clause 51 of the General Conditions of Contract specifies that if the contractor is dissatisfied with the decision of the Executive Engineer, he may within 30 days appeal before the Superintending Engineer, who shall afford an opportunity to the contractor to be heard and to offer evidence in support of his appeal, but the Superintending engineer kept 47 mum over the appeal for more than 4 months and asked for evidence only on 18.06.2003 after being aware of the fact that the sole arbitrator has been appointed by the claimant and Arbitral Tribunal has been constituted on 29.05.2003. The learned Arbitrator also held that when the claimant was not offered even an opportunity to be heard by the Superintending Engineer, he proceeded with the terms of contract contained in clause 52 of the General Conditions of Contract resulting in constitution of the Arbitral Tribunal and after having held that the Chief Engineer also did not act upon the issue of appointment of sole arbitrator as per clause 52 of the General Conditions of Contract, the learned Arbitrator decided the issue Nos. 2 and 3 in favour of the claimant by holding that the claims were arbitrable and maintainable.
Consideration of the Findings of the learned Commercial Court on this point.
l. This Court finds that the learned commercial Court, while observing in the impugned judgement that the claimant had invoked arbitration clause 51 at pre-mature stage, has not at all considered the findings recorded by the learned Arbitrator while deciding the issue Nos. 2 and 3 as framed by the learned arbitrator regarding arbitrability and maintainability of the claims and also has not at all considered the decision of the sole Arbitrator on 09.05.2005 by which the petition filed under Section 16 of the Act of 1996 was rejected. However, the learned Court has refused to interfere with the award even after holding that the claimant had invoked arbitration clause 51 at pre-mature stage by observing that even if two views are possible, reappraisal of materials on record is not permissible. m. This Court is of the considered view that the said observation of the learned Commercial Court has been passed without any deliberation and without taking care of the findings recorded by the learned Arbitrator on 09.05.2005 while rejecting the petition under Section 16 of the Act of 1996 and also without 48 considering the finding recorded in the arbitral award whereby issue Nos. 2 and 3 as framed by the learned arbitrator regarding arbitrability and maintainability of the claim was decided in favour of the claimant. However, the fact remains that the learned commercial court has refused to interfere with the findings in connection with arbitrability and maintainability by stating that there is no scope for reappreciation of the materials on record and to come to a different finding. This Court has discussed the findings of the learned Arbitrator as recorded while disposing the petition filed under section 16 of the Act of 1996 and also the decision of the learned Arbitrator on issue nos. 2 and 3 on the point of arbitrability and maintainability of the dispute and finds no scope for interference in the limited jurisdiction as the findings are backed by reasons and based on appreciation of materials on record.
n. In the judgment passed by this Court in Arbitration Appeal No. 14 of 2007 decided on 17.03.2023 wherein similar clause 51 and 52 of the agreement were subject-matter of interpretation, this Court has recorded that it was the specific case of the appellant-State that the claimants having not exhausted appellate remedy under clause 51 of the agreement could not invoke clause 52 of the agreement to appoint an arbitrator. In the facts and circumstances of the said case and considering the judgment passed by the concerned commercial Court, this Court held in the said case that the claimants were entitled to invoke clause 52 of the arbitration clause without resorting to remedies provided under clause 51 of the agreement. This Court is of the considered view that the interpretation given to clause 51 and 52 of the agreement involved in Arbitration Appeal No. 14 of 2007 may not have any bearing in this case in view of the fact that the learned Arbitrator in the present case has held while deciding the petition under Section 16 of the Act of 1996 and also in the final award while deciding issue Nos. 2 and 3 that the procedure prescribed under clause 51 as well as 52 of the 49 General Conditions of Contract were duly followed by the claimant.
o. Considering the scope of interference in the arbitral award as discussed above, this Court finds that the order dated 09.05.2005 passed by the learned Arbitrator rejecting the petition under section 16 of the Act of 1996 and also the decision on issue nos. 2 and 3 deciding the point regarding arbitrability and maintainability of the claims are well reasoned and did not call for any interference under section 34 and now under section 37 of the Act of 1996.
p. The point regarding jurisdiction of the learned Arbitrator dealing with arbitrability and maintainability of the claims is decided against the State and in favour of the claimant.
14 (C). Limitation I. The point of limitation was decided by the learned Arbitrator vide paragraph Nos. 39 to 44 of the award.
II. The learned Arbitration referred to Article 137 of the Limitation Act and observed that the period of limitation is 3 years which commences from the date when the right to apply accrues and the question when such right to apply accrues will depend on the facts and circumstances of each case. The learned Arbitrator referred to clause 35 of the General Conditions of Contract and quoted the same and observed that it relates to release of claims. Clause 35 as quoted in the award and not disputed by the parties is as under: -
"After completion of work and prior to final payment, the contractor shall furnish to the Executive Engineer, a release of claims against the Government arising out of the contract, other than claims specifically Identified, evaluated and excepted from the operation of the release by the contractor."
III. The learned Arbitrator also referred to clause 52 of the General Conditions of Contract and observed that as per the said clause neither party is entitled to bring claims to arbitration if the arbitrator has not been appointed before the expiration of 30 days after defect liability period. Thus, the learned Arbitrator referred 50 to Article 137 of the Limitation Act as well as different clauses of the Contract to deal with the point of limitation. IV. Thereafter, the learned Arbitrator in paragraph 40 of the award dealt with the point as to when the right to apply accrued in the case and observed that the original time of completion was extended from time to time and last extension was granted up to 30.06.1991. Thereafter, the extension of time was recommended up to 30.06.1992, but the final order was not communicated to the claimant and it was perhaps due to stoppage of world bank credit. It was further observed in paragraph 41 of the award that if the respondents wanted to close/foreclose or rescind the contract, the Executive Engineer ought to have given notice in writing as per clause 44 of General Conditions of Contract and ought to have asked the contractor to submit final bill. The learned Arbitrator recorded that the claimant could have been asked to demobilize the plant and machinery from the site of work, instead the work was kept in abeyance and the contractor was asked to extend the validity of bank guarantee. V. Thereafter, the learned Arbitrator referred to the various correspondences which would reveal that the agreement was neither closed nor foreclosed/rescinded beyond 30.06.1991. The learned Arbitrator referred to the letter dated 03.04.1992 whereby the Executive Engineer wrote to the claimant that his portion of work falls under priority zone fixed by the department and allotment of funds is expected during the period 1992-93 and a request was also made to mobilize the plants and machinery. The learned Arbitrator further recorded that a review of progress of work was held on 18.11.1992 in the office chamber of the concerned Minister which revealed that various actions were contemplated to get the balance work completed and the regional officers were directed to review all cases and report; a reference was also made to a high level meeting held on 12.08.1998 and various options to restart the work were discussed keeping in mind the expected allotment of fund of Rs. 40,00,00,000/-
51(rupees forty crores) from Water Resources Department and it was also decided in the said meeting that attempt would be made to get the work done by the existing contractor.
VI. The learned Arbitrator, after referring to the aforesaid communications to show that the matter was still under consideration, referred to the action of the Executive Engineer on 27.08.2000 who invited tender for balance work without finalizing the subsisting agreement of the claimant. This action was followed by filing of a writ petition by the claimant being W.P. (C) No. 5465/2001 which was also subject matter of consideration in L.P.A. No. 313/2002 before the High Court and finally vide order dated 15.07.2002 liberty was granted to the claimant to invoke arbitration. Consequently, the claimant filed their claims vide their letter dated 16.10.2002 addressed to the Executive Engineer with a request to pay the dues and compensation within 90 days failing which it would be construed that the dispute will be required to be adjudicated as per conditions of contract. The learned Arbitrator ultimately recorded his finding in paragraph 44 of the award that the agreement was alive on the date of pressing the claims and demands on 16.10.2002 and the fresh tender was issued to complete the balance work without finalizing the subsisting contract and the State failed to substantiate their argument by showing any definite date as to when the cause of arbitration arose. The learned Arbitrator also observed that even the measurement of the work done by the claimant was not finalized and therefore there could not have been any frozen dispute between the parties and ultimately held that the claim was not barred by limitation. Paragraph 44 of the award is quoted as under: -
"44. The Agreement between the parties was very much alive on the date of pressing the claims and demands on 16.10.2002 as it was neither finalized nor foreclosed as per terms of Agreement. The counsel for the Respondents Shri C.S.P Sinha Special Govt. Pleader during his argument on the issues on 14/12/08 admitted that the claimants were well within their right to refer the disputes to Arbitration on 16.10.2002.52
Therefore, the statement of the Respondents as mentioned in the written statement and issue suggested that the claims of claimant are barred by limitation has only got to be rejected as the claims are not barred by limitation as the right to apply accrued after the balance work was put to tender without finalizing the subsisting contract as the Respondents have failed to substantiate their argument by showing any definite date as to when cause of action for Arbitration arose. In fact, even the measurements for the work done by the claimants were not finalized by the Respondents and therefore, there could not have been any frozen dispute between the parties. It is held that the claims of the Claimants are not barred by limitation."
VII. Upon perusal of the discussions made by the learned Arbitrator with regard to the point of limitation, this Court finds that there is no specific or separate discussion with regard to the limitation of the amended claim but the limitation with regards to the claims /amended claims has been discussed in totality in the light of the clauses of the contract and correspondences between the parties and also the materials placed on record. The State even failed to satisfy the learned Arbitrator as to when the cause of action in terms of the contract arose to raise the claim. The claim was filed before the learned Arbitrator on 05.03.2006 and the claimant had modified their claim vide their submissions dated 30.04.2011. The learned Arbitrator has specifically recorded in paragraph 59 (relevant at page 43 of the award) that the claimant had modified their claims vide their submission dated 30.04.2011 depending upon the materials brought on record by the respondents. The number of claims had increased on submission of copy of measurement books containing running account bills showing kept back amounts and items paid at reduced rate. The claims have increased only in such cases where on submission of documents by the respondents during argument, the records have revealed that the items of works were paid at reduced rate due to indecision at proper level. The aforesaid finding of the learned Arbitrator is quoted as under: -
"59...53
I shall state them at the end of the Award in one schedule. At this stage, I only wish to state that as the hearing proceeded, the claimants modified their claims vide their submission dated 30.04.2011 depending upon the materials brought on record by the Respondents. The number of claims have increased on submission of copy of MB's containing Running A/C bills showing kept back amounts and items paid at reduced rates. The claims have increased only in such cases where on submission of documents by Respondent during argument, the records have revealed that the items of works were paid at reduced rate due to indecision at proper level. The claimant has submitted Modified claim in C15 from p/1 to p/43 based on records submitted by the Respondent."
VIII. It is further not in dispute that the point of limitation was raised by the State when initial claim was filed but there was no separate plea taken when the modified claim was filed through submission dated 30.04.2011 and it appears that on account of such reason, there is no specific discussion with regard to the point of limitation with respect to the submission dated 30.04.2011 while dealing with issue No. 1. However, the learned Arbitrator while considering the claim has come to the aforesaid finding that the revision of claim was occasioned due to submission of copy of measurement book containing running account bills showing kept back amounts and items paid at reduced rates; the modified claim was raised as per clauses of the contract and they could be raised at that stage and even the state could not say as to when the cause of action arose to raise the claim.
IX. This Court finds that the learned Arbitrator has sufficiently applied his mind on the point of limitation with regards to the original claim as well as the modified claim even though he has not dealt with the point of limitation with respect to the modified claim separately. The learned commercial court has not discussed this point separately and has refused to interfere with the award by stating that there is no scope for interference in the arbitral award by re-appreciating the evidences.
54X. Considering the scope of interference in the matter of arbitral award as discussed above and considering the aforesaid discussions made on the point of limitation and also the findings recorded by the learned Arbitrator with regard to entire claim, this Court is of the considered view that the learned Arbitrator has cited the reasons to entertain the claim and modified claim and has certainly taken a possible view which is reasoned and based on materials on record and therefore the findings of the learned Arbitrator on the point of limitation did not call for interference under limited jurisdiction under section 34 of the Act of 1996 and now also does not call for interference under section 37 of the Act of 1996. The point of limitation is accordingly decided against the State and in favour of the claimant.
14 (D) Examination of claims in the limited jurisdiction under the Act of 1996.
Claims have been allowed in two major parts, they are: (I) for work done under claim nos. 3B, 4C, 5D, 6E and 7 and (II) for delay damages, extension of bank guarantee, cost of arbitration.
Original claim Modified Claim
3B - No claim. 3B-
Amount held up for disposal of
16,020.0 m3 of excavated material as
per MB No. 90 p/31 as per 7th R/A bill
paid on 25.03.1988 admissible Price
Adjustment.
4C- Work done after 16th RA 4C- Work done after 16th RA Bill.
Bill. Excavation of ordinary rock of
Excavation of ordinary rock of 27,235.356 m3 @ Rs. 40/m3.
27,235.356 m3 @ Rs. 38/m3. - Rs. 10,89,414.24
- Rs. 10,34,943.53 Extra cost for disposal of aforesaid
Extra cost for disposal of aforesaid ordinary rock beyond 2 km @ ordinary rock from 1 km to 2 km Rs.23/m3 - Rs. 6,26,413.18 @ Rs.28.15/m3 - Rs. 7,66,675.27 Arrear of excavation of ordinary rock Total Rs. 18,01,618.80 of 99781.56 m3 x 40/m3 = Rs.
1,99,563.12 Price adjustment on this for labour :
0.75 x (90/100) x 1915390.55 x 55 {(762.84 - 643.66)/643.66 = Rs.239391.00 Total Rs. 21,54,781.63 5D- No Claim. 5D- Deduction prior to extension of time which became payable after grant of extension of time with respect to 14th, 15th and 16th RA Bill dated 22.09.1989, 16.12.1989 and 26.12.1989 -
Rs. 77,310.00 6E- No Claim. 6E -Price Adjustment on 14th, 15th and 16th RA Bill on total of Rs. 7,73,093.
Claim amount Rs. 96,623.41 [0.75 x (90/100) x 773093 x {(762.84
- 643.66)/643.66 = Rs. 96,623.41] 7- No Claim. 7- Claim for Price Adjustment on account of material component (2% of total work) and POL component (8% of total work) which have not been paid from 1st to 16th R/A bills as per Modified claim at P/7 Each on Rs. 1,82,85,301/-
On Material & POL:
The figures are not available for increase/decrease in cost of materials content & similarly for POL. So, the Claimants are taking the same % of increase in that of labour.
Price Adjustment on Materials [0.75 x (2/100) x 18285301 x {(762.84
- 643.66)/643.66 = Rs. 50785.56 Price Adjustment on POL [0.75 x (8/100) x 18285301 x {(762.84
- 643.66)/643.66 = Rs. 203142.23 Total Rs. 253927.79 A-1] A-1] OVERHEAD LOSSES OVERHEAD LOSSES The total contract value was Rs. The Overhead cost constitute the 1,46,34,879.20 and the job was to following elements of expenditure :-
be done in 15.00 months. The (a) Establishment charges including work load contracted was worth those for the Head Office and the field:
Rs 9,75,658.61 per month. The (i) Salaries (technical and non-
amount of work done is technical) including leave & other
56
Rs.1,53,92,507.00. Therefore, the charges
effective Time of Contract is 16.00 (ii) Stationary, printing, postage & months only. The total stay on job telephone charges has been 162 months and therefore (iii) Staff cars and travelling the idle stay on job is 29 months allowances and idle period in suspension is (iv) Entertainment and publicity
133. The overheads provided in (v) Housing, medical & other welfare this highly skilled industry is facilities about 10% of the job amount, i.e. (vi) Legal expenses @ Rs. 97,565.86 per month and (vii) Contingencies 3% of the job during idle period in (b) Consultant's Fees suspension i.e. @ Rs.29,269.75 (c) Audit Charges thus we have lost overheads (d) Other hidden expenses amounting to Rs.67,22,287.74 and this amount may please be paid to The total contract value was us. Rs.1,46,34,879.20 and the job was to be done in 15 months The work load contracted was worth Rs.9,75,658.61 per month. The amount of work done is Rs.1,82,85,301.00. Therefore, the effective Time of Contract is 19 months only. But due to late hand over of a portion of site, non-shifting of electric transmission tower, long time taken in dewatering of previously accumulated water, presence of Jaida in portion of the canal, possession of forest land, long strike of gazetted and non gazetted staff, non-payment of monthly bill, the progress of work badly suffered and the Claimants' had to stay for a very long period. The total stay on job has been 179 months and therefore the underutilised/underemployed stay on job is 25 months and idle period in suspension is 135 months. Though the actual overhead expenditure is much more than 10% of the work value, the Claimants have charged only 10% of the job value in this highly skilled project ie. Rs.97,565.86 per month and 3% of the job, i.e. @ Rs. 29,269.75 per month on idle period in suspension.
Thus Claimants have lost overheads amounting to Rs.63,90,563.00 [(97,565.86 x 25 + 29269.75 x
135)=24,39,146.50+39,51,416.43= 57 63,90,563.00] and this amount may please be paid to the Claimants with due interest.
A-3] A-3] LOSS DUE TO PROFIT NOT LOSS DUE TO PROFIT NOT EARNED AT APPROPRIATE EARNED AT APPROPRIATE TIME:
TIME: claim given up by the claimant A-4] A-4] LOSS DUE TO UNDER- LOSS DUE TO UNDER-UTILISED UTILISED TOOLS, PLANTS TOOLS, PLANTS AND AND MACHINERIES: MACHINERIES:
We had at the site deployed tools, The Claimants have submitted the list plants, machineries whose of tools, plants and machineries and collective rental value or Hire- the same has been categorized as C-7, charges amount to Rs 12,37,600 perusal of which indicates that the per month. As computed, total idle Claimants own large no. of dumper, period is 162 months. We have Hydraulic Excavator, Drill Machine, therefore lost Rs. 20,04,91,200.00 Air compressor, Dozer, Tractor, car, worth Rental / Hire charges. Jeep, truck etc. worth Rs.1,61,13,491/-
ownership and price indications have also been filed besides Tax Token and Insurance receipts. The Claimants had to pay very substantial amount to the bank as interest as the tool, plants and machineries were purchased after obtaining loan from the bank. The Claimants had utilized those tools, plants and machineries in the execution of the work result of which was very positive in nature and upto May 1989, 2,38,000 m3 of excavation work was performed. The losses occurred due to Respondent's fault are categorized as follow-
(i) The underutilised period from 24/4/89 for 25 months i.e. upto 23/5/1991
(ii) The remaining idle period of 135 months i.e. upto 31/8/2002 (upto 31/08/2002, the effective idle period including underutilised is 160 months from 24/04/1989) Annual rent per year is Rs.45,26,160.00 58
15. Claim on account of work done and price adjustment under claim nos. 3B, 4C, 5D, 6E and 7.
The clauses of the General Conditions of Contract relevant for the claim of work done are clause 33 dealing with 'payments and certificates' and clause 58 dealing with 'price adjustment'. The said clause 58 provides for price adjustment for labour, material and POL. Though the formula is the same but the variables are different for each one of them. This will be apparent from the following chart:
Labour Material POL
VL = Increase or decrease VM = Increase or decrease VP = Increase or decrease
in the cost of work during in the cost of work during in the cost of work during
the quarter under the quarter under the quarter under
consideration due to consideration due to consideration due to
changes in rates for labour. change in the rates for change in rates of POL.
materials other than POL.
R= The value of the work R= The net value of work R= The net value of the
done in rupees during the done in rupees during the work done in rupees
quarter under quarter under during the quarter under
consideration. consideration. consideration.
io = The average consumer io = The average wholesale io = The average official
price index for industrial price index (all price of high speed diesel
values applicable to commodities except POL) at the consumer pump
Jamshedpur (wholesale for quarter in which nearest to work site.
price) for the quarter in tenders were opened as
which tender were opened published in Reserve Bank
as published in GOI of India Bulletins.
Ministry of Labour
Bureau, Simla and
available in Reserve Bank
of India Bulletins for the
quarter under
consideration.
i = The average consumer i = The average wholesale i = The average official
price index for Industrial price index (all price of high speed diesel
works (wholesale prices) commodities except POL) for the quarter under
for the quarter under for the quarter under consideration.
consideration. consideration.
PL= Percentage of labour PM= Percentage of PP= Percentage of POL
components to be taken materials components component which shall be
90% of the value of work which shall be considered considered 8% (percent)
done during the quarter. as 2% of the value of work of the value of the work
done during the quarter. done during the quarter.
59
16. The records reveal that in the Original Claim dated 05.03.2006 filed before the learned Arbitrator an amount of Rs.18,01,619.00 was claimed on account of excavation of ordinary rock without blasting and its disposal to the extent of 27,235.356 m3 which was done after 16 th on account bill. Subsequently, the claim was modified and the rate was changed to Rs.40/m3 instead of Rs.38/m3 and further the arrear amount for excavation of ordinary rock to the extent of 99,781.56 m3 was claimed which was made on the basis of measurement book filed by the State. The claimant had also claimed price adjustment in the modified claim. Under the contract, there is a provision for price adjustment under Clause 58 of the General Conditional of Contract. The modified claim was filed on 01.05.2011.
17. It is the case of the State that the claim regarding price adjustment could not have been permitted as the claimant never raised the bill in terms of the clause 33 of the General Conditions of Contract between the parties. Clause 33 of the Contract deals with 'Payment and Certificates' and it provides that payment will be made at monthly intervals and accordingly, the claimant was required to submit bills for the work done to the executive engineer on or before the last day of the month which the claimant in the present case failed to submit.
18. This Court finds that the entire claim on account of price adjustment was raised for the first time in the modified claim filed on 01.05.2011 and no bill was ever raised or even if raised no claim was made on account of price adjustment at the time of invocation of arbitration or even at the time of filing claim before the learned Arbitrator in the year 2006. The learned Arbitrator exercised his power under section 23(3) of the Act of 1996, though opposed by the State, and allowed the modified claim to be taken up for consideration. However, upon perusal of the award it appears that for price adjustment of labour component, no serious objection was raised and rather it was agreed by the State to some extent and the Clause 33 does not prescribe that the claim on price adjustment has to be necessarily raised along with the bill. Under such circumstances, the award on account of price adjustment so far as the labour component is concerned cannot be said to be patently illegal or perverse calling for any interference under section 34 or 37 of the Act of 1996.
60So far claim of price adjustment regarding material and POL is concerned, the claimant did not produce the figures for its calculation and the same calls for interference as discussed below under claim no.7.
19. The different claims under work done and price adjustment which have been allowed are as under:-
i. CLAIM NO. 3B- Amount held up for disposal of 16,020.0 m3 of excavated material as per measurement book in terms of 7th R/A bill paid on 25.03.1988 with Price Adjustment.
The claim has been introduced in the modified claim and is based on measurement book. The amount as claimed is based on amount withheld on 25.03.1988 for the extra work of disposal of excavated material beyond 1 K.M. amounting to Rs. 2,40,300/- and price adjustment of Rs. 30,033/-, total being Rs. 2,70,333.00. The learned Arbitrator allowed the claim and also price adjustment by referring to the price adjustment on labour component as per clause 58 of the General Conditions of Contract. Paragraph 64 of the award wherein calculation with regard to the aforesaid claim has been made, is quoted as under:
"64. On the basis of the record submitted by respondent, the claimant has claimed the difference of rate of disposal of excavated material within 1 km and beyond 1.0 km.
On perusal of photocopy of MB No. 91, page 36, it is apparent that the excavated material of 16,020.0 m3 has been disposed off in areas which is beyond 1.0 km as per certificate of Junior Engineer and signed by other officials. This 7th O/A bill has been passed on 25.03.1988 as recorded on P/40 of Mb No. 91. The claimant has demanded the difference of rate and price adjustment on difference of amount as per Clause-58 of General Condition of contract. The Agreemented rate for disposal upto 1.0 km is Rs.8/- per m3 and the rate for disposal beyond 1.0 km up to 2 km has been sanctioned as Rs.23/- per m3 by SE vide his order No. 1185, dated 7/12/89 as mentioned on MB No. 91 P/43. Thus, the difference of rate is (Rs.23-
8) Rs15/ per m3.
Difference of amount for 16,020.0 m3 = Rs.2,40,300.00 Admissible PA as clause 58 of General Condition of Contract = 0.75 x (90/100) x 2,40,300 x 762.84 - 643.66 643.66 = Rs.30,033.00 Total = 2,40,300 + 30,033 = 2,70,333.00 Therefore, I award a sum of Rs.2,70,333 against Claim No. 3B. The interest on award will be payable from the date it fell due on 25.03.1988 to the date of award @13% per annum."
61So far as award of amount under this head including award of price adjustment is concerned, the learned Arbitrator has passed a well - reasoned award and applied the formula of price adjustment as applicable for labour component and there was no scope for interference in the award under this head under the limited scope for interference under section 34 and now under section 37 of the Act of 1996. However, at the same time the learned Arbitrator, while considering the claim under this head, has also awarded interest @13% from 25.03.1988 till the date of the award which is in conflict with the award of interest on the same component at the same rate but for a different period, that is, from 01.10.1991 (three months after the last date of extension of time for completion of work i.e. 30.06.1991) till the date of the award and this contradiction in the award is apparent on the face of the award and cannot be reconciled in any manner. Such conflict on the face of the award certainly calls for interference under limited jurisdiction even under section 34 and now under section 37 of the Act of 1996 but is certainly not a ground to set aside the entire award. The award of interest under this head (claim no. 3B) being clearly severable, is accordingly set-aside.
Thus, award of claim under claim no. 3B is interfered only on the point of interest awarded till the date of the award and is accordingly decided in favour of the state and against the claimant only to this extent.
ii. Claim no. 4C - Excavation of ordinary rock with/without blasting of 27,235.356 m3 and its disposal beyond 2.0 km after 16th R/A bill and balance payment of ordinary rock with blasting of 99,781.56 m3 paid at Reduced Rate as per MB No. 119 P/41 in 16 th R/A bill including admissible Price Adjustment thereon. The learned Arbitrator allowed the aforesaid entire modified claim No. 4C vide paragraph-65 onwards which was to the tune of Rs.21,54,781.63. The learned Arbitrator, while allowing the claim under claim no. 4C, recorded that as per the 16th R/A Bill which was paid to the claimant, for a total quantity of 99,781.56 m3 of removal of ordinary rock, with or without blasting, payment was made at the rate of 62 Rs.38/m3 instead of agreement rate of Rs.40/m3 and consequently, the claimant added Rs.2/m3 for 99,781.56 m3 of excavation which comes to Rs.1,99,563.12. Further, the total amount of claim for unpaid quantity of 27,235.356 m3 of excavation and its disposal up to 2 km @ Rs.40/m3 was allowed. The amount was quantified as Rs.19,15,390.54. Price adjustment on labour component in terms of Clause 58 of General Conditions of Contract was also allowed to the extent of Rs.2,39,391.09 and the total amount claimed under Claim No. 4(C) was computed to Rs.21,54,781.63 as claimed by the claimant. The finding in paragraph 72 of the award is as follows:-
"72. Based on records, I am of considered view that the 17th and so called final bill prepared by the respondents cannot be accepted. Also, the bill submitted vide letter no. 264 dtd. 31/05/2002 from P/67-72 of Annexure C-6 by the Claimant based on section measurement amounting to Rs.21,54,781.64 as per details given herewith is allowed. For excavation in ordinary rock with/without Rs.10,89,414.24 blasting 27,235.356 m3 x Rs. 40.00/m3 Disposal beyond 2 km.
27,235.356 m3 x Rs.23.00 /m3 Rs. 6,26,413.19
Rs.17,15,827.43
Previous quantity of 99,781.56 m3 x Rs.2/- per Rs. 1,99,563.12
m3
{earlier paid at reduced rate Rs.(40 - 38)=2}
Rs.19,15,390.55
Price Adjustment for Labour component (+) Rs.2,39,391.09
Rs.21,54,781.64
I award Rs.21,54,781.64 in favour of the Claimant to be paid by the Respondents under this claim."
Although the computation of price adjustment has not been given in the award, but the computation of the modified claim under this head reveals that the same has been computed on the labour component in the same manner and taking the same variables as that of computation for claim no. 3B taking into account the value of work done. The learned arbitrator has passed a well -reasoned award on this point and there was no scope for interference in the award under this head 63 under the limited scope for interference under section 34 and now under section 37 of the Act of 1996.
iii. Claim no. 5D was on account of the amount which was deducted prior to grant of extension of time and was not paid even after sanction of extension of time. This related to the amount deducted from 14th, 15th and 16th O/A Bills amounting to Rs.77,310/-. The learned Arbitrator recorded that the extension of time was sanctioned by the Chief Engineer first up to 30.06.1989, next upto 30.06.1990 and finally up to 30.06.1991 and therefore, the claimant was entitled for payment of Rs.77,310.00 deducted for want of extension of time (EOT) on 23.09.1989, 16.12.1989 and 28.12.1989 for which the extension of time was granted on 29.05.1991 up to 30.06.1991.
The learned Arbitrator has passed a well -reasoned award on this point and there was no scope for interference in the award under this head under the limited scope for interference under section 34 and now under section 37 of the Act of 1996.
iv. Claim no. 6E and 7 were totally for price adjustment and were introduced for the first time in the modified claim. v. Claim no. 6 E - Claim for amount of admissible Price Adjustment on the value of work done for Rs.7,73,093/- in 14th, 15th and 16th R/A bills.
The learned Arbitrator recorded the payment of 14th, 15th and 16th bills on 23.09.1989, 16.12.1989 and 28.12.1989 respectively and the total amount paid was recorded as Rs.7,73,093/- and it was further recorded that the price adjustment was not paid. The learned Arbitrator also observed that the price adjustment was being allowed on the basis of data given by the claimant and agreed by the State amounting to total of Rs. 96,623.43 which was further recorded to be on the labour component.
This Court finds that the computation of price adjustment on account of labour component was in the same manner and taking the same variables as that of computation for claim no. 3B and 4C taking into account the value of work done.
64The learned arbitrator has passed a well -reasoned award on this point and there was no scope for interference in the award under this head under the limited scope for interference under section 34 and now under section 37 of the Act of 1996.
vi. Claim No. 7 related to Price Adjustment on account of materials component (2% of total work) and POL component (8% of total work) which was not paid right from 1st to 16th R/A Bills. Claimed amount was Rs. 2,53,928/- as per the modified claim. The learned Arbitrator while considering Claim No. 7 recorded that in absence of price index figures for calculating price adjustment, same price index adopted in case of Labour was claimed by the claimant which was accepted. The learned Arbitrator awarded Price Adjustment and partly allowed the claim to the extent of Rs. 2,08,983.00. This Court finds that while granting price adjustment on account of materials component (2% of total work) and POL component (8% of total work) under claim no.7 using the parameters of labour component, the learned arbitrator has ex-facie travelled beyond the contract in as much as the components which go into the formula for calculation of price adjustment on labour component are totally different from that for material component and POL component as prescribed under clause 58 of the General Conditions of Contract. The fact remains that the claim for price adjustment on account of material component and POL component was never raised at the time of raising and payment of on account bills right from 1st to 16th on account bill and when the claimant raised the claim on these counts, it did not produce the required data/figures for computing the claim and submitted that in absence of required figure/data of price index figure for calculating price adjustment of material and POL, same price index, as was adopted for calculation of price adjustment for Labour component, be adopted. This court finds that this was accepted by the learned Arbitrator on mere asking of the claimant as mentioned above without realizing that such a course would be beyond the contract. Accepting such submissions and proceeding to assess the price adjustment for material and POL on the basis of a component which is alien to the formula prescribed for calculation of 65 price adjustment for material and POL was beyond the terms of the contract, perverse, patently illegal and shocking on the face of the award and called for interference while deciding the case under section 34 of the Act of 1996. In fact, the learned commercial court has upheld the entire award by observing that there is no scope for re-appreciating the evidences without considering that the learned Arbitrator has travelled beyond the terms of the contract while making the award under claim no.7.
In view of the aforesaid findings, the award of price adjustment for material and POL under claim no. 7 calls for interference under section 37 of the Act of 1996. Accordingly, the award under claim no. 7 is set aside being clearly severable from the rest of the award.
Delay damages
20. Under the heading of 'Delay Damages', the learned Arbitrator allowed the claim under claim nos. A1, A3 and A4. Under each head, the claim was partly allowed as projected in the aforesaid chart. The learned Arbitrator analysed the various claims of delay damages under paragraph-84 of the award in different sub-paragraphs.
i. Claim no. A1 was relating to overhead losses for underutilised and unutilised overhead.
ii. Claim no. A3 was on account of "loss due to profit not earned at appropriate time". This claim has been given up by the learned counsel for the claimant during the course of argument. iii. Claim no. A4 was relating to loss due to underutilised and unutilised tools, plant and machineries.
21. Claim under A3 having been given up, what remains for consideration are claim nos. A-1 and A-4.
22. The claim under claim nos. A-1 and A-4 are based on common computation of underutilised and unutilised period, therefore such computation of period is dealt first.
Computation of underutilised and unutilised period for claim nos. A-1 and A-4.
6623. Claim no. A1 was relating to idle and under-utilised over heads for which the claim was for an amount of Rs.63,90,563.00. It was argued that the overhead which were provided in the price bid and actually spent and deployed was @10% of the value of job which amounted to Rs.9,75,658.00 per month. The claimant computed the period and claimed that the job remained idle for 135 months as per revised claim. For the same idle and underutilised period, the claimant made revised claim for tools, plant and machineries under claim no. A-4. The computation for the idle or underutilised period is the same for both A-1 and A-4.
24. Some of the salient points with regard to the work have been recorded in paragraph 85 of the award as under: -
1 Date of Agreement 24/9/1987 2 Stipulated date of completion 23/12/1988 3 Total work done excluding price 1,82,85,301.00 Adjustment 4 Original cost of work as per Agreement 1,46,34,879.20 5 Period of completion 15 months up to 23/12/88 6 Cost of work done excluding PA upto Rs. 1,21,03,208/-
stipulated date of completion (1,28,17,795-7,14,577) 7 Cost of work done up to the date of Rs. 1,82,85,301/-
suspension up to 30/6/91 8 Work load as per contract Rs. 9,75,758/- per month (1,46,34,879/15) 9 Total period of work done 45 months (24/9/87 to 30/6/91) 10 Total period on job
i) Total period 176 months (24/9/87-
23/5/2002)
ii) Period of suspension 131 months (July'91 to May'02) 11 Effective Period on job 19 months- changed later on to 16 months based on actual work done. Amount of total 67 work done reduced means effective period reduced.
12 Underutilised period 26 months (45-19)
13 i. Idle period on suspension 131 months (7/91 to
5/2002
ii. Total period on job including
active period + underutilised + 176 months (24/9/87 to idle 23/5/2002) 14 Total Amt of work done till date of Rs. 1,82,85,301/-
suspension without price adjustment 15 Amt of work done beyond 23/12/88 till Rs. 61,82,093/-
date of suspension without Price
Adjustment
16 Period of work done 45 months
17 Expected work would have been done by
30/4/89 of (1,82,85,301- 1,46,34,879 =
36,50,422/-
18 Amt of work done beyond contracted Rs. 61,82,093/-
period
N.B.: Some of the above figures which were based on certain assumptions, have been revised later on with the change in quantity/amount of actual work done."
25. The learned Arbitrator recorded the underutilised and unutilised period of work in paragraph 92 and finally in 94 of the Award as under: -
92. The work was executed for 45 months from 24.09.87 to 30.06.1991 (the last date of extension of time). The effective utilisation of Claimants' resources was only for 16 months keeping 29 months of underutilisation of resources. So, out of (176-16) 160 months, there were site activities for 29 months and 86 months were unutilised period of Claimants' resources at site attributable to Respondents and the remaining 45 months were due to concurrent delay when both the parties were in dormant state.
94................... In final analysis based on records, scrutiny of bills, correspondences and after hearing the parties, following is the breakup of 176 months of stay at site:-
1 Effective utilisation of Claimant's 16 months resources 2 Delay attributable to Respondents with 29 months full idle resources of claimants 68 3 Delay attributable to Respondents with 86 months skeletal or fractional of resources other than the idle Equipment and Machineries.
4 Concurrent delay when both the parties 45 months were in dormant state (No compensable delay to either party) Although the claimant claimed under-utilised period as 25 months but the learned Arbitrator has considered the under-utilised period as 29 months without any explanation. This has resulted in grant of more relief than claimed for under-utilised period, both under claim nos. A-1 and A-4.
Modified claim Awarded overhead loss was @10% for 25 overhead loss was @8% for 29 months when partial work was going months when partial work was going on and @ 3% for 135 months the on and @ 2% for 86 months the period when no work was going on at period when no work was going on at the site which comes to Rs.63,90,563/- the site which comes to Rs.
(Rs. 97,565.86 x 25 + Rs. 29,269.75 x 39,39,000/- (Rs. 78,000/- x 29 + Rs.
135). 19,500/- x 86).
26. After having dealt with idle and underutilised period which is common for both overhead losses and on account of tools, plant and machineries, the modified claims under heads A-1 (overhead losses) and A-4 (tools, plant and machineries) are further considered as follows: -
Further points regarding claim head A-1 (overhead losses)
27. The different component under overhead losses as mentioned in the modified claim are as follows:
Salaries (technical and non-technical) including leave and other charges;
Stationary, printing, postage and telephone charges; Staff cars and traveling expenses;
Entertainment and publicity;
Housing, medical and other welfare facilities;69
Legal expenses;
Contingencies;
Consultation fee, audit charges and other hidden expenses.
28. Although no evidence was led with regards to actual amount spent on overheads as claimed under different sub-heads mentioned above , but before the learned arbitrator the claimant relied upon so called trade practice exhibited vide the report of the year 1956 on estimate of Rates and Cost Committee published by the Ministry of Power and Irrigation, Central Water Power Commission, and referred to Article 2.36.1 thereof to submit that the allowance of 10% could be considered adequate for contractor's actual expenses on Supervisory establishment, field office and share of Head Office charges, Travelling expenses etc. Said Article 2.36 is quoted as under: -
"2.36. CONTRACTORS' OVERHEADS AND PROFITS 2.36.1. Overheads - An allowance of 10 per cent would be adequate for the contractor's actual expense on supervisory establishment, field office and share of head-office charges, travelling expenses, publicity, interest and insurance of damage to plant and injury to labour.
2.36.2. Profits- We believe that in normal circumstances an allowance of 10 per cent of the prime cost as contractor's profit is reasonable."
29. The claimant had prayed for damages on loss of overheads by applying a fixed percentage based on the value of contract calculated per month taking 10% for under-utilised and 3% for unutilised period. The claimant also advanced their arguments before the learned arbitrator on the basis of Hudson's and Eichley's formula. The award was also made on percentage basis , that is, 8% for under utilised period and 2% for unutilised period by taking monthly value of allocation of work calculated by dividing agreement value of contract by period of 15 months . This was without any evidence on actual loss suffered and reference was made only to Government method of preparation of estimate which as mentioned above provided for 10% profits and 10% overheads as estimates. Even the loss of profit was calculated and awarded on 10% basis without any evidence of actual losses but the claim on account of loss of profit has been given up by the claimant during the course of hearing of this case as discussed above. The findings of the learned arbitrator with regards to the overhead losses are as under: -
70"95. Looking at lean rate of progress, the overhead could not be considered as exceeding 8% of job, although the prevailing practice is to allocate 10% as seen by document brought before the Forum and also as admitted to be the practice in Government method of preparation of estimate. Accordingly, considering the anticipated work load of Rs.9.75 lacs per month (contract value Rs.146.34 lacs with time of completion of 15 months), the overhead as it would be Rs.0.78 lacs per month @8%.
96. As explained above, for underutilised period of 29 months against the claimed idle period of 157 months, I award a sum of Rs.22,62,000/- @Rs.0.78 lac. per month. In addition, overhead loss @Rs.19,500/- per month @2% only is admitted for period of 86 months when no site work was executed but extended Head Office overhead and Skeletal site office remained for which the awarded amount is 86 months x Rs.19,500/- i.e. Rs.16,77,000/-. For remaining period of 45 months, no compensation is awarded. Total compensation awarded under this claim comes to Rs.22,62,000 + 16,77,000 = Rs.39,39,000/-, I award a sum of Rs.39,39,000/- against sub claim No. A1."
30. Admittedly, no evidence has been led with regard to claim on account of overhead expenses from the side of the claimant. The claimant admittedly did not produce any books of accounts, bills, vouchers, etc. to substantiate its claim for overhead expenses. However, reliance was placed on section 28(3) of the Act of 1996 that the Arbitral Tribunal has to decide the case not only in accordance with terms of the contract but has also to take into account the usage of trade applicable to the transaction. The only material which has been relied upon by the claimant and also by the learned Arbitrator is Report of Rates and Cost Committee and the Report of Committee on Cost Control of River Valley projects published by Government of India which was said to be the norms for preparation of estimate for issuance of government tenders, as quoted above.
31. It has been rightly pointed out by the learned counsel appearing on behalf of the State that Article 2.36.1 of the Report of Rates and cost committee published by Ministry of Power and Irrigation, Central Water Power Commission which concerns calculation of estimates for projects is an irrelevant material to allow delay damages on account of overhead expenses. This Court is of the considered view that such approach of the learned Arbitrator and reliance on such material dealing with preparation of estimates for projects goes to the root of the matter and by no stretch of imagination the same can partake character of trade usage much less trade usage pertaining to the transaction. The term used in section 28(3) of the Act of 1996 is trade 71 usage pertaining to the transaction. When seen in the light of the aforesaid judgments regarding scope of interference in arbitral award, this Court is of the view that the award of delay damages on account of loss of overheads is ex- facie perverse being based on no evidence and by taking into consideration irrelevant material in the name of 'trade usage' as explained above. This Court is of the considered view that no fair minded or reasonable person would adopt such a course and is not even a possible view which could have been taken by the learned Arbitrator.
32. It is further not in dispute that out of agreement value of Rs. 1,46,34,879.20, the claimant received an amount of Rs. 1,35,90,888/- upto 16th R.A. Bill on 28.12.1989 having balance amount of work of Rs. 10,43,991/- and the claim allowed on account of losses due to overhead expenses for underutilised and unutilised period is to the extent of Rs. 39,39,000/- out of modified claim of Rs. 63,90,563.00.
33. The law laid down by the Hon'ble Supreme Court in the case of "Batliboi Environment Engineers Vs. Hindustan Petroleum Corporation Ltd and another" reported in (2024) 2 SCC 375 vide Paragraphs 10, 15, 16 and 23 is put in points as follows: -
a) When the loss towards overheads and profits/profitability has to be arrived at by applying the percentage formula, variant with the execution of the work, such losses are to be computed on the payments due for the unexecuted work, and should exclude the payments received/receivable for the work executed.
b) Based on the value of the work executed, the proportionate amount has to be reduced for computing the damage/compensation as a percentage of expenditure on overheads, and damages for loss of profit/profitability.
c) Damages towards expenditure on overheads and loss of profit are proportionate, and not payable for the work done and paid/payable.
d) Delay in payment on execution of the work has to be compensated separately.
e) Sections 55 and 73 of the Contract Act, 1872, which deal with the effect of failure to perform at fixed time in contracts where time is of essence, and computation of damages caused by breach of contract, respectively, 72 these sections neither lay down the mode nor how and in what manner computation of damages for compensation has to be made. As computation depends upon attendant facts and circumstances and methods to compute damages, how the quantum thereof should be determined is a matter which would fall within the domain and decision of the arbitrator. This is without doubt, a sound legal and correct proposition.
f) However, the computation of damages should not be whimsical and absurd resulting in a windfall and bounty for one party at the expense of the other. The computation of damages should not be disingenuous. The damages should commensurate with the loss sustained.
g) In a claim for loss on account of delay in work attributable to the employer, the contractor is entitled to the loss sustained by the breach of contract to the extent and so far as money can compensate. The party should to be placed in the same situation, with the damages, as if the contract had been performed.
h) The principle is that the sum of money awarded to the party who has suffered the injury, should be the same quantum as s/he would have earned or made, if s/he had not sustained the wrong for which s/he is getting compensated.
i) Ordinarily, when the completion of a contract is delayed and the contractor claims that the contractor has suffered a loss arising from depletion of income from the job and hence turnover of business, and also for the overheads in the form of workforce expenses which could have been deployed in other contracts, the claims to bear any persuasion before the arbitrator or a court of law, the contractor has to prove that there was other work available that he would have secured if not for the delay, by producing invitations to tender which was declined due to insufficient capacity to undertake other work. The same may also be proven from the books of accounts to demonstrate a drop in turnover and establish that this result is from the particular delay rather than from extraneous causes.
j) If loss of turnover resulting from delay is not established, it is merely a delay in receipt of money, and as such, the builder/contractor is only 73 entitled to interest on the capital employed and not the profit, which should be paid.
Thus, it has been held by the Hon'ble Supreme Court that a percentage formula can be applied for award of damages on account of expenditure on overheads, loss of profit/profitability but same has to be computed taking into account the payments due for the unexecuted work and should exclude the payments received/receivable for the work executed. It has also been held that the computation of damages should not be whimsical and absurd resulting in a windfall and bounty for one party at the expense of the other; the computation of damages should not be disingenuous and the damages should commensurate with the loss sustained so that the party should be placed in the same situation, with the damages, as if the contract had been performed. The principle is that the sum of money awarded to the party who has suffered the injury, should be the same quantum as she/he would have earned or made, if she/he had not sustained the wrong for which she/he is getting compensated. Paragraphs 10, 15, 16 and 23 of the judgment passed by the Hon'ble Supreme Court in the case of Batliboi Environment Engineers (Supra) are quoted as under:
"10. BEEL had, as observed above, accepts the position that the loss towards overheads and profits/profitability has to be arrived at by applying the percentage formula, variant with the execution of the work. Thus, in our opinion, the loss towards overheads and profits/profitability is to be computed on the payments due for the unexecuted work, and should exclude the payments received/receivable for the work executed. In other words, based on the value of the work executed by BEEL, the proportionate amount has to be reduced for computing the damage/compensation as a percentage of expenditure on overheads, and damages for loss of profit/profitability. Damages towards expenditure on overheads and loss of profit are proportionate, and not payable for the work done and paid/payable. Delay in payment on execution of the work has to be compensated separately."
15. McDermott International Inc. refers to Sections 55 and 73 of the Contract Act, 1872 (for short "the Contract Act"), which deal with the effect of failure to perform at fixed time in contracts where time is of essence, and computation of damages caused by breach of contract, respectively, and states that these sections neither lay down the mode nor how and in what manner computation of damages for compensation has to be made. As computation depends upon attendant facts and circumstances and methods to compute damages, how the quantum thereof should be determined is a matter which would fall within the domain and decision of the arbitrator.
7416. This is without doubt, a sound legal and correct proposition. However, the computation of damages should not be whimsical and absurd resulting in a windfall and bounty for one party at the expense of the other. The computation of damages should not be disingenuous. The damages should commensurate with the loss sustained. In a claim for loss on account of delay in work attributable to the employer, the contractor is entitled to the loss sustained by the breach of contract to the extent and so far as money can compensate. The party should to be placed in the same situation, with the damages, as if the contract had been performed. The principle is that the sum of money awarded to the party who has suffered the injury, should be the same quantum as s/he would have earned or made, if s/he had not sustained the wrong for which s/he is getting compensated.
23. Ordinarily, when the completion of a contract is delayed and the contractor claims that s/he has suffered a loss arising from depletion of her/his income from the job and hence turnover of her/his business, and also for the overheads in the form of workforce expenses which could have been deployed in other contracts, the claims to bear any persuasion before the arbitrator or a court of law, the builder/contractor has to prove that there was other work available that he would have secured if not for the delay, by producing invitations to tender which was declined due to insufficient capacity to undertake other work. The same may also be proven from the books of accounts to demonstrate a drop in turnover and establish that this result is from the particular delay rather than from extraneous causes. If loss of turnover resulting from delay is not established, it is merely a delay in receipt of money, and as such, the builder/contractor is only entitled to interest on the capital employed and not the profit, which should be paid."
34. In the aforesaid judgement passed by the Hon'ble Supreme Court in the case of Batliboi Environment Engineers (Supra), in paragraph 10 [which has been heavily relied upon by the learned counsel for the claimant] the claimants accepted the position that the loss towards overheads and profits/profitability was to be arrived at by applying the percentage formula, variant with the execution of the work.
35. In the present case also the claimant had prayed for damages on loss of overheads by applying a fixed percentage based on the value of contract calculated per month taking period of contract as 15 months and the learned Arbitrator has also allowed the claim on percentage basis @8% per month for period of under-utilisation taken as 29 months and @2% per month for unutilised period taken as 86 months.
36. Since the claim on account of overheads has been allowed on percentage basis, the learned counsel for the claimant by relying upon paragraph 10 of the aforesaid judgement Batliboi Environment Engineers (Supra), has submitted 75 that the learned arbitrator has taken note of aforesaid proposition of law and excluded the period during which work was done for the purposes of computation for overhead costs. It has been submitted that in the aforesaid paragraph of the judgement, it has been provided that loss of overhead and profit can be granted for the unfinished work on the basis of the remaining quantum of work, whereas in the present case the claim of loss of profit has been given up. This Court is of the considered view that giving up of the claim on account of loss of profit at this stage has no bearing in the matter as loss on account of overheads are totally different from loss of profit. This Court also finds that the award of damages on account of loss of overheads has not been passed in tune with paragraph 10 of the judgement in Batliboi Environment Engineers (Supra). The part of the period during which work was done has been included for the purposes of computation of Overhead expenses in the shape of overhead expenses for under-utilised period from 24.09.1989 to 30.06.1991 on percentage basis that too without any evidence of actual Overhead expenses and without any evidence to the extent of utilisation/ non- utilisation.
37. This Court also finds that the learned Arbitrator while computing the value of monthly allocation of work for the purposes of computation of loss of overheads per month has taken into consideration the scheduled period of work of 15 months (24.09.1987 to 23.12.1988) and not the extended period of work, that is, 45 months (24.09.1987 to 30.06.1991) and has awarded damages on percentage basis as follows: -
29 months of under-utilised period 8% per month as mentioned above from 24.09.1989 to 30.06.1991(extended date of completion of contract work) 86 months of unutilised period i.e. @ 2% per month as mentioned from 01.07.1991 to 31.08.1998 [the above.
date on which the claimant refused to complete the work at the contractual rate]
38. In view of the aforesaid findings, the award of delay damages on account of loss on account of overheads is shockingly whimsical and absurd and is patently illegal which could not have been sustained even under the amended provision of section 34 of the Act of 1996. However, having noted the 76 aforesaid figures, the learned Commercial Court failed to examine the claims even under the limited scope under section 34 of the Act of 1996 and has failed to consider the aforesaid aspects of the matter and has mechanical observed that there is no scope of reappreciation of evidences and an award is to be sustained when the view taken by the arbitrator, is a plausible view. Further points in connection with Claim no. A-4, i.e. Loss due to underutilised and unutilised Tools, Plant and Machineries.
39. The findings of the learned Arbitrator are at paragraphs-99 to 101, which read as follows: -
"99. SUB CLAIM NO. A4 (Loss due to underutilised Tools, Plants and Machineries) In respect of Sub Claim A4, the same computation of idle period as in case of Claim A1 would be held valid and is held valid. It will not be out of reference to mention here that the Arbitral Proceeding of Agreement No. 3/SMC/88-89 is also being conducted by the same Arbitrator although nothing has been submitted by the Respondent in this regard, it was imperative on my part to take into consideration of the losses claimed on account of underutilised Tools & Plant in agreement No. 3/SMC/88-89 while deciding their claim of Agreement No. 1/SMC/87-88.
The claimant have stated in their original Claim (C1) at P/18 that the collective rental value of hire charges amount to Rs.12,37,600/- per month and total claim amount under this sub claim (A4) has been indicated as Rs.20,04,91,200/-.
But in modified claim (C16), this has been modified and the Annual Rental Value has been mentioned Rs.45,26,160/- per year i.e. Rs.3,77,180/- per month based on details furnished in Annexure-C10 at P/17.
The Respondent in their written statement in para-13 have submitted that the claimants are not entitled for a sum of Rs.20,04,91,200.- on account of rental value of underutilised/unutilised Tools, Plants, Machineries at site. They have admitted that some Tools, Plants, Machineries were deployed at the site of work by the claimants but the Claimants are not at all entitled for the above amount after expiry of the Extended time of Completion (30.06.91).
100. The Respondents have not authenticated the entire list of Plants and Machineries as listed by the claimants in Annex 7 and Annex 10. Moreover, the same Plants Equipment and Machineries bearing the same registration no. have been mentioned in the list of Machineries enclosed in their another Agreement i.e. Agreement No. 3/SMC/88-89 in Annexure C7. Arbitration for which is also being conducted by me. The period of work in both the agreements is common from 17.1.89 to 30.6.91. In view of above fact, it may be assumed that only 50% of the Plants, Equipment and Machineries have been utilised under the work related to Agreement No. 1/SMC/87-88 during this period and hence, the rental value of plants 77 and machineries under this agreement will come down to Rs.1,88,590/- per month. But, looking at the long period of idle stay at least 15% of rental value will have to be reduced for major repairs and depreciation etc. and hence, the rental value will be reduced by 15%. So, Rental value of idle Plant and Machineries is being takes as Rs.1,60,301/- per month.
101. Further, from the perusal of work done by claimants at the end of last date of extension of time (30.06.91), it is evident that approximately 25% of total work as per Agreement was left out to be done. Hence, it was imperative from the doctrine of mitigation of losses to keep maximum one third of the P/E plant and Machineries if at all they were kept at site to complete the balance work and hence, the rental value of Plant and Machineries kept beyond 30.06.91 may be assumed and taken 1/3rd of Rs.1,60,301/- per month i.e. Rs.53,434/- per month or Rs.53,400 per month only."
40. In the original claim under claim no. A-4, the claim was stated to be in connection with payment of rent for under-utilised and un-utilised tools, plant and machineries, but in the modified claim it was stated that the claimant had purchased the tools, plants and machineries by taking loan from the bank and was paying the hire charges to the bank.
41. In the award, it has been recorded that the claimant had given the same list of tools, plants and machineries for another contract with the State in the same project operative for the same period and consequently the entire claim was considered at 50% by the learned Arbitrator. The learned Arbitrator reduced 15% of hire charges on account of major repairs, depreciation etc. and arrived at the rental value of the tools, plants and machineries at Rs. 1,60,301/- per month. The learned Arbitrator recorded that since till the last date of extension of time (30.06.1991) 25% of total work was left to be done, it was imperative from the doctrine of mitigation of losses to keep maximum 1/3 rd of tools, plants and machineries if at all they were kept at the site to complete the balance work and hence rental value of tools, plants and machineries considering the doctrine of mitigation of losses was assumed to be 1/3 rd of the machines beyond the last date of extension of time (30.06.1991) and thus assumed to be 1/3rd of Rs. 1,60,301/- per month i.e. Rs. 53,434/- per month.
42. Further, since no evidence was produced as to whether the claimant had any other available work where the plant and machineries could have been utilised or whether the claimant was prevented from participating in any other tender where these plant and machineries were required to be utilised, no amount could have been awarded under claim no. A-4. In order to claim damages on account of under-utilisation/ un-utilization of tools, plants and 78 machineries (claim no. A-4) it was incumbent upon the claimant to produce evidence with respect to any other available work where the plant and machineries could have been utilised and because of this contract they could not be used or to produce evidence to the effect that the claimant was prevented from participating in any other tender where these plant and machineries were required to be utilised and because of this contract they could not participate in such tender/contract. Further, it was never the case of the claimant that due to non-availability of tools, plant and machineries for other work/contract/tender they suffered any losses /damages much less any evidence on such point. In view of the aforesaid discussions and in absence of any such evidence as mentioned above, the award on account of losses due to un-utilised or under-utilised tools, plant and machineries is patently illegal based on no evidence to support any loss/damages on this head.
43. This Court is of the view that the award on account of under-utilised and un-utilised overheads, loss of profits and expenditure on account of under- utilised and un-utilised plant and machinery is shockingly disproportionate as the balance value of work to be performed was Rs. 10,43,991/- till the date of payment made under 16th R/A bill when compared to the total value of work and is also contrary to the judgement passed by the Hon'ble Supreme Court in the case of Batliboi Environment Engineers (Supra). If the amount of award under the head regarding work performed is taken into consideration, the total work performed till the last date of extended period is much more than the agreement value of work as fully explained above. The award on account of delay damages under head A-1, A-3 and A-4 is whimsical, absurd and shocking resulting in a windfall and is not at all commensurate to the losses, if any. The award on account of delay damages under head A-1, A-3 and A-4 is patently illegal which could not have been sustained even under the amended provision of section 34 of the Act of 1996.
44. This Court finds that although the learned Commercial Court has recorded that after the receipt of 16th RA Bill the balance work left to be completed by the claimant was to the extent of Rs. 10,43,991/- and expressed surprise as to how such huge amount was claimed on account of balance work but has completely failed to undertake the scrutiny of the award under various heads under the limited scope under section 34 of the Act of 1996 and has refused to 79 interfere with the award by simply stating that there was no scope of reappreciation of evidence led before the learned Arbitrator. Before this Court the learned counsels have advanced their arguments, records produced and referred during the course of arguments and matter has been considered as above.
45. Accordingly, the award of losses/ damages under the claim nos. A-1, A-3 and A-4 being clearly severable from rest of the award are set-aside. It is reiterated that the claimant has given up the claim in connection with loss of profit (A-3) during the course of arguments.
Counter claim of the State.
46. So far as counter-claim of the state is concerned, the same was covered by the issue no. 5 as framed by the learned Arbitrator. The State had claimed that they are entitled to recover a sum of Rs. 62,83,715/- with interest from the due date from the claimant. The issue no. 5 has been dealt with by the learned Arbitrator from paragraph 56 till 58 and also in paragraph 112 of the award.
47. It was the specific case of the State as recorded in paragraph 57 of the award itself that a sum of Rs. 1,35,90,888.00 was paid to the claimant upto 16 th RA bill but the cost of work done as per final bill, i.e. the 17 th Bill was evaluated to be of Rs. 73,07,173.00 only and hence a sum of Rs. 62,83,715/- was recoverable from the claimant. The learned Arbitrator recorded that the State failed to substantiate the recovery and under what circumstances such a huge amount was paid in excess of the work done. The learned arbitrator also observed that the State failed to justify the correctness of measurements recorded in the 17th bill, the so-called final bill.
48. On consideration of the entire materials, the learned Arbitrator recorded as many as 6 reasons to reject the counter-claim based on so-called 17th final bill. They are as under:
"(i) All on account bills have been recorded on the basis of section measurement and no correspondence regarding excess payment was made with the contractor or departmental Engineers upto 16th R/A bill.
(ii) The so called final measurement of work (17th final bill) was recorded in MB in May 2002 after stoppage of work for almost 12 years without associating the claimant in final measurement. The claimants have not accepted the final measurement and have not signed the final measurement.80
(iii) The basis of measurement for the work done by the claimant has been completely changed while measuring the work in 17th and so called final bill. Upto 16th R/A bill, work was being measured on the basis of balance work done by claimant as per level of excavation left out by previous contractor but in the so called 17th and final bill, total work done by previous contractor and the claimant (Himanchal Const. Co. Pvt. Ltd) has been measured together and work done by previous contractor has been deducted to arrive at quantity done by the claimant (Himanchal Const. Co.
Pvt. Ltd) but, no such method was adopted upto 16th R/A bill. As a result of this, a total quantity of excavation (in all categories of soil) of 2,47,835.517 M3 has been reduced to 1,81,238.147 M3.
(iv) A huge quantity of siltation during 12 monsoon period from 1991 to 2002 and also during the period between stoppage of work by previous contractor and Himanchal Const. Co. Pvt. Ltd in 1987, cannot be denied which has not been taken into consideration, leading to the difference in quantities of excavation of 16th R/A bill and so called 17th final bill.
(v) From the perusal of 16th & 17th bill, it is also clear that a total quantity of 2,41,779.079 m3 of excavation was paid upto 16th R/A bill for disposal of excavated material beyond 160M but all these items have been deleted in 17th and final bill. From the perusal of records mentioned in MB no.119p/43. It is clear that sanction for extra lead has been accorded by Chief Engineer (SMP) vide his order no. 1466 dated 27.05.1989 and Superintending Engineer's No. 1185 dated 07.12.1989 on the recommendation of field officers:
Vide MB No. 119p/43 as mentioned in payment of 16th R/A bill.
(vi) The Chief Engineer (SMP) under his order No. 1916 dated 06.10.1998 (based on Deptt's letter No.04.09.1998) authorized a team of Engineers comprising of three Executive Engineers, two assistant Engineers and concerned Junior Engineers to take final measurement. They were required to sign the measurement. But from the perusal of final bill on MB No. 39 p/5, it is evident that only two Junior Engineers and one Assistant Engineer have signed the measurement. The bill indicating an amount of (-) Rs.62,83,715.00 has neither been signed nor passed by the Executive Engineer concerned."
49. The learned Arbitrator has also held in paragraph 58 of the award that after analyzing the method adopted for taking final measurement the State's version of final bill was not based on any standard practice of taking the final measurement nor it seemed feasible to refute claimant's bill considering the method used which lacked reasonable accuracy. The learned Arbitrator also recorded that no final bill seemed to have been prepared. The learned Arbitrator recorded that the proposed recovery was without any evidence or 81 data and ultimately recorded that the excess payment claimed to the tune of Rs. 62,83,715/- was not substantiated and could not be proved as the very basis of the measurement made by the State was not acceptable.
50. Further, in paragraph 112 of the award the learned Arbitrator recorded that the State did not lodge any formal counter-claim but had simply mentioned in paragraph 8 of the written statement that a sum of Rs. 62,83,715/- was paid in excess upto 16th RA bill and was recoverable from the claimant. The learned Arbitrator referred to the detailed reasons which have been assigned while deciding issue no. 5 and recorded that while discussing the issue with both the parties during arguments , the learned counsel for the State had also agreed that there was no basis for reducing the quantitates and the amount mentioned in 16th R.A. bill in the alleged 17th final bill as the final bill was neither signed by the Executive Engineer in charge of the division nor was signed by the members of the authorized group especially named by the Chief Engineer vide his letter no.1916 dated 06.10.1998.
51. It has also been recorded by the learned Arbitrator that during the course of arguments the State was asked to produce witness in support of their counter-claim but the State did not wish to produce any witness in support of recovery of the amount mentioned in their statement of claim.
52. The learned Arbitrator further recorded that while analyzing the process of preparation of actual bill by the State, it had come to light:
(a) The level (not sectional) in the alleged final bill has been taken on the existing level of silt after 12 years of stoppage of work left out in 1991 and no effort was made to ascertain the pre-level and consequently, the quantum of silt and debris deposited during 1991 to 2002 monsoons have not been taken into consideration while taking the alleged final measurement.
(b) The quantities of disposal of excavated materials paid after sanction of lead chart by competent authorities were completely deleted in the alleged final bill resulting in reduction in amount, and
(c) The basis and method of measurement followed upto 16 th RA bill was completely changed in the alleged final bill.82
53. It has also been recorded by the learned Arbitrator that earlier the measurement of excavation work used to be taken with reference to the pre- level existing at the time of allotment of work to the claimant, but in 17 th alleged final bill it was linked to work done by the contractor who executed the work prior to the claimant and the work done by the claimant was worked out on the basis of total work done by both the contractors and deducting the work done by the previous contractor from total work done, which was not the practice in preparation of on account bills and therefore, the measurements made in 17th final bill was held to be not acceptable.
54. The learned Arbitrator also held that the method adopted for taking final measurement and denying the amount of payment made upto 16th R.A. bill was against the set process of measurement and rejected the claim of recovery/counter-claim.
55. This Court finds that the learned Arbitrator has passed a reasoned order in connection with the rejection of counter-claim by taking into consideration all the facts and circumstances. Learned counsel appearing on behalf of the State has not been able to point out any ground calling for interference in the said findings while rejecting the counter-claim of the State by the learned Arbitrator under section 34 or under section 37 of the aforesaid Act of 1996.
56. This Court also finds that the learned Commercial Court, while considering the petition under section 34 of the Act of 1996, has recorded that counter-claim of the State based on final measurement of 17 th bill was not properly considered. However, there is no discussion in the entire impugned order as to how the learned Court came to such a finding. The fact remains that the learned Court refused to interfere with the award on the ground that there was no scope for reappreciation of evidences on record and coming to a different finding.
57. The learned Arbitrator having considered the materials on record to reject the counter-claim of the State seeking refund of Rs. 62,83,715/- based on so- called measurement being 17th bill/final bill by a well-reasoned findings and therefore, the refusal by the learned commercial court to interfere with the award rejecting the counter-claim of the state did not call for any interference under section 34 of the Act of 1996, much less under section 37 of the Act of 1996.
8358. Conclusion The point of limitation and the point of jurisdiction of the learned Arbitrator are decided in favour of the claimant.
Award on account of price adjustment on material and POL under claim no.7; award of interest till date of award with respect to claim no. 3B and award on account of delay damages under claim nos. A-1, A-3 and A-4 are set-aside. The rest of the award being clearly severable is sustained. The summary is as follows: -
Claim Heads Decision of this Court
3B- Partly set-aside to the extent
Amount held up for disposal of 16,020.0 m3 it relates to interest on this of excavated material as per MB No. 90 component till the date of p/31 as per 7th R/A bill paid on 25.03.1988 the award being inconsistent admissible Price Adjustment and interest. with the operative portion of the award.
th 4C- Claim for work done after 16 RA Bill. No interference in the award.
5D- Deduction prior to extension of time No interference in the which became payable after grant of award.
extension of time with respect to 14th, 15th and 16th RA Bill dated 22.09.1989, 16.12.1989 and 26.12.1989.
6E -Price Adjustment on 14th, 15th and 16th No interference in the
RA Bill on total of Rs. 7,73,093/-. award.
7 -Claim for Price Adjustment on account of Set-aside.
material component (2% of total work) and Ex-facie the formula applied
POL component (8% of total work) which is contrary to the terms of
have not been paid from 1st to 16th R/A bills the contract.
as per Modified claim at P/7
Each on Rs. 1,82,85,301/-
A-1 Set-aside
Overhead losses for underutilised and
unutilised overhead
A-3 Set-aside
Loss due to profit not earned at appropriate claim given up by the
time: claimant
A-4 Set-aside
Loss due to under-utilised and un-utilised
84
tools, plant and machineries.
Counter claim No interference in the award
refusing to allow counter
claim
59. This appeal is partly allowed to the aforesaid extent.
60. Pending interlocutory application, if any, is closed.
(Dr. S. N. Pathak, J.) I Agree.
(Dr. S. N. Pathak, J.) (Anubha Rawat Choudhary, J.) Jharkhand High Court, Ranchi Dated: 10th December, 2024 Pankaj A.F.R 85