Bombay High Court
M/S. Angerlehner Structural & ... vs Municipal Corporation Of Brihan on 1 November, 2012
Bench: Anoop V.Mohta
ssm 1 arbp164.09
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO. 164 OF 2009
M/s. Angerlehner Structural & Civil
Engineering Co., a company incorporated
in Austria Having its registered
Office at A-1055, Pucking, Obere
Landstrasse 19 and having its project
office at 2078 "B" Wing,
Oberoi Gardens,
Chandivali Studio Compound,
Saki Vihar Road, Sakinaka, Andheri (East),
Mumbai 400 072 .....Petitioner.
Vs.
Municipal Corporation of Brihan
Mumbai, 3rd Floor, Annexe Building,
Municipal Head Office,
Municipal Corporation of Brihan Mumbai,
Mahapalika Marg,
Fort, Mumbai-400 001. ....Respondent.
Mr. Zal Andhyarujina with Ms. Dohita Lewis, Mr. Javed Gaya
Ms. Vidya Choudhari, Ms. Mona Malvade i/by Chamber of
Javed Gaya for the Petitioner.
Mr. Kevic Setalwad, Senior Counsel with Ms. Daisy Dubash and
Mr. Harshad Pimple i/by S.H. Ujjainwala for the Respondent.
CORAM : ANOOP V. MOHTA, J.
JUDGMENT RESERVED ON : 8 OCTOBER 2012.
JUDGMENT PRONOUNCED ON : 1 NOVEMBER 2012
JUDGMENT :-
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The Petitioner, a contracting company governed by the
laws of Austria and carries out engineering works including
trenchless rehabilitation of underground pipes, sewers and
water construction and also sewer rehabilitation, all over the
world. The Respondent is a statutory body and is in-charge and
responsible for the disposal and maintenance of sewers in the
city of Mumbai.
2 The Petitioner has challenged award dated 11 July 2007
passed by the majority learned Arbitrators. The minority learned
Arbitrator's award is in favour of the Petitioner.
3 The majority Arbitrators have dismissed the claim for
payment of dewatering in the additional stretch and thereby
rejected all other claims. The background of facts as per the
Petitioner revolving around the alleged claim is relevant.
4 In the month of August 1999, bids were invited by the
Mumbai Municipal Corporation (for short, MMC). On 21
September 2000, the MMC addressed a letter to the Petitioner,
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awarding them the Contract that included dewatering (Item
No.3 of BOQ). On 18 February 2000, the Petitioner's
representatives attended a meeting in Mumbai to give a
comprehensive and exhaustive demonstration of the MCS
System to the representatives of the MMC. On 2 March 2001,
the contract bearing reference No. SO-CA-02 ("contract") was
executed and entered into by and between the parties. The
contract was initially for a period of 24 months, but was
extended on justifiable grounds to nearly 29 months with the
date of commencement as 11 January 2001 and the extended
date of completion as 31 May 2003. Under the contract, the
Petitioner was to undertake the rehabilitation of sewers at, inter
alia, package No.9 being rehabilitation of (760 x 1140 mm)
ovoid brick-masonry sewer running along Keshavrao Khade
Marg, which includes sewer line portion from MH No. 1 to 8
and 14 to 21 of the Keshavrao Khade Marg (package No.9). For
unknown reasons the sewer at package No.9 intermitted
sections, i.e. the portion crossing the Western Railways tracks
from manhole no.8 to no.14 near Mahalaxmi Station were left
out in the BOQ/ contract. Therefore, MMC proposed to the
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Petitioner to take up the portion of sewer below the railway
lines (177.5 mm.) in package no.9 (Additional stretch)
5 On 14 March 2001, letter from the Engineer (MMC) to the
Petitioner, informing them that M/s. TTI consultants have been
appointed as the "Consultants" under the contract. On 13
December 2001, the Petitioner offered the consultant to
undertake a feasibility study of Additional Stretch at package
No.9. On 21 December 2001, the Petitioner's letter to the
Consultant informing them that due to the existing silt and high
level of water inside the sewer line, a feasibility study was not
possible unless and until there is a confirmation for desilting.
On 3 January 2002, the consultant's letter to the Petitioner
informing that as a result of the site visits in package no.9 the
chief engineer had approved to continue the desilting works
with applicable BOQ rates in the intermediate section at the
railway crossing with a total additional length of 335.4 m.
6 From 12 February 2002 to 27 March 2002, the Petitioner
commenced the desilting works, which could only be carried out
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under dewatered condition. The Petitioner requested the MMC
for approval of further works for Additional Stretch at package
no.9 prior to commencement of works. Consultant completed
his study of variation in quantities and confirmed that works "as
per master plan" to be taken up by all contractors.
7 On 9 September 2002, in accordance with the minutes of
meetings the Petitioner was to proceed with GRP lining works at
the intermitted section (package No. 9) On 8 February 2003,
consultant's letter to the Petitioner.
8 From September 2001 to 8 February 2003, time taken by
the Consultant to conduct the scrutiny of additional works. On
17 February 2003, since the extended completion date of the
contract was 31 May 2003. The Petitioner informed the
Engineer that completion within the contract period was not
possible.
9 On 10 May 2004, the Consultant's letter addressed to the
Petitioner that payment for providing dewatering at package
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no.9 is not to be conceded. On 15 May 2004, the Petitioner's
letter to the Engineer informing him that they did not agree
with the opinion of the Consultant that no payments are due for
dewatering. The Petitioner gave the notification of dispute to
the MMC to call the Dispute Review Expert (DRE). On 31 May
2004, the Petitioner's letter addressed to the MMC informing
them that they will forward the dispute regarding providing
dewatering for additional works under the "master plan" at
package no.9. On 27 July 2004, MMC's reply to the issue
presented by the Petitioner before the DRE. On 6 August 2004,
the Petitioner's response to the reply of MMC.
10 On 23 September 2004, the recommendations of the DRE
recommending the MMC to make payment for dewatering for
the railway crossing portion at 80 USD per meter for the actual
length involved = price adjustment payable under clause 70
corresponding to the relevant period of execution= interest at
the rate provided in the contract for delayed payment from a
date 42 days after date of claim of the Petitioner i.e. 25
November 2003.
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11 On 5 October 2004, notice of Arbitration given by the
Petitioner to the MMC nominated Dr. Harold Wagner as its
Arbitrator. On 19 October 2004, the MMC's letter proposing Mr.
Sharad Upasni to be their Arbitrator in relation to this dispute.
On 15 December 2004, reference made to President of institute
of Engineers (India) to appoint a third and presiding arbitrator.
On 26 April 2005, the president of Institute of Engineers (India)
appointing Mr. S.L. Garg to be the third and presiding arbitrator.
On 7th July 2005, the president of Institute of Engineers (india)
reappointing Mr. S.L. Garg to be the third and presiding
arbitrator. On 27 June 2007, the Arbitral Award of Dr. Harold
Wagner in favour of the Petitioner. On 11 July 2007, the
majority Arbitral Award of Mr. S.P. Upasani and Mr. S.L. Garg
rejecting the Petitioner's claim entirely.
12 The learned Arbitrator, after hearing both the parties and
considering the nature/concluded contract, terms and
conditions and the material placed on record rightly rejected the
claims. Both the learned counsel read and referred the
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documents and material placed on record including the reasons
given by the Arbitrators, the majority, as well as, the minority.
The relevant factors in the present matter as considered by the
majority Arbitrators are in the following words.
"22 We have carefully considered the facts on record,
information filed as per the direction of the Arbitral Tribunal,
legal arguments advanced by both the sides and clarifications/
explanations given by both the parties on points mentioned
during the hearing and all written as well as oral submissions of
both the parties. Following are the admitted facts in this
dispute.
a) The length between MH no.8 to MH 14 of the sewer along
the Keshavrao Khade Marg was not part of the contract No. SO-
CA-02 or package 9.
b) By letter dated 13-12-2001 the Claimant proposed to
undertake the work in the length not covered earlier subject to
feasibility study and arranging permit from the Railway
authority by the Respondent.
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c) In the remarks on retransmitted letter of 13-12-2001 the
Respondent informed the Claimant that under the
circumstances explained, you are requested to undertake the
preliminary surveys so as to add the said Railway Crossing in
between the Contract Lengths and give feasibility report (survey
at your cost).
d) By letter dated 21st December 2001 in reply the Claimant
informed that the feasibility study can only be carried out
subject to condition of confirmation for desilting.
e) By letter dated 3-1-2002 the Engineer approved desilting
with applicable BOQ rates in the intermittent section.
f) By the letter dated 15th April 2002 the Claimant submitted
feasibility report without asking any payment for dewatering.
g) By letter dated 9th September 2002, completion of package
9 was declared without claiming for dewatering.
h) Till handing over the work of package- 9, on 24-6-2003,
the Claimant did not issue any notice of claim for dewatering.
i) Payment for desilting was claimed in IPC of June 2002.
j) Claim for dewatering is made on 25-11-2003.
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23 The Arbitral Tribunal has also noted that there is no
variation order given for work in the Additional Stretch under
the Contract SO-CA-02 in respect of feasibility report. However
there are certain letters exchanged between the parties which
constitute proposal, acceptance and agreement for conduct of
feasibility study. The Arbitral tribunal has also carefully
considered the Clauses 2.2 and 2.3 of the Contract between the
parties under which the Engineer and Consultant have powers
to delegate work to the Contractor. The Tribunal has taken into
consideration the provisions relating to "Interpretation clause"
given in the sections 2(a) on "proposal", 2(b) "acceptance of
proposal", and 2(e) "agreement" in the India Contract Act, 1872
and provisions of section 7 which provides "in order to convert a
proposal into a promise, the acceptance must be absolute and
unqualified".
24 Based on the documents and facts placed before the
Arbitral tribunal and the provisions of the Indian Contract Act
the Tribunal had no hesitation to come to conclusion that
taking into consideration the proposal made by the Claimant on
13-12-2201 to the Consultant for conducting feasibility study,
ssm 11 arbp164.09
the acceptance remarks of the Consultant on the retransmitted
letter of 13-12-2001 that the survey to be conducted at the cost
of the Claimant and subsequent letter dated 21st December 2001
by claimant to the Consultant regarding desilting and reply
dated 3-1-2002 from consultant informing the approval of the
Chief Engineer (SO) for desilting with applicable BOQ rats in
the intermittent section all prove that the Claimant had agreed
to conduct feasibility study on payment for desilting. It is also
on record that by letter dated 15th April 2002 the Claimant
submitted feasibility report without asking any payment for
dewatering. Even in the letter dated 9th September 2002 from
the Claimant declaring completion of the work of Package 9, the
Claimant had not raised the question of payment for
dewatering. No notice of any claim was issued till the work of
package 9 was handed over on 24-6-2003. Thus both on the
basis of documents before us and subsequent conduct of the
party the Arbitral Tribunal has no hesitation to conclude that
the Claimant has failed to establish his claim for payment for
dewatering in the Additional Stretch and hence it is rejected.
Therefore the question in looking into claim on account of
ssm 12 arbp164.09
adjustment clause and interest also does not arise."
13 The reasonings so given above, and also the reasons given
by the learned Dissenter, I am inclined to observe that there is
no case made out by the Petitioner to interfere with the majority
award. It is well within the framework of law and the record.
There is no perversity. The view so expressed is plausible and
possible based upon the nature and the terms and conditions of
the contract. The Petitioner in no way entitled for payment of
dewatering at the additional Stretch, as there was no contract
whatsoever. The Petitioner failed to prove the contract,
specifically for the claim so raised. The learned Arbitrators
rightly considered the nature of contract and the work so
permitted to be carried out by the Petitioner. The scope and
purpose of Section 34 of the Arbitration Act is quite restrictive.
The admitted facts, as recorded above based upon the material,
destroys even the case and the claims so raised. These admitted
documents have been rightly considered by the learned
Arbitrators. The Petitioner failed to destroy the Respondent's
case and/or unable to bring on record further contra material,
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in their support. Admittedly the feasibility report was
submitted. No such demand was raised at the appropriate time.
The party who raises the demand, must prove the same by
leading and supporting the documents including the validity
and the supporting binding contract. In the present case, as
recorded rightly by the learned Arbitrators, that there exists
none. The rejection of other connected claims, therefore, also
need no interference, except the costs so awarded.
14 Resultantly, the Petition is dismissed. No order as to costs.
(ANOOP V. MOHTA, J.)
