Bombay High Court
Patel Engineering Limited vs Acron Developers Private Limited on 14 July, 2025
Author: R.I. Chagla
Bench: R.I. Chagla
2025:BHC-OS:10704
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jsn
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
Digitally
signed by
ORDINARY ORIGINAL CIVIL JURISDICTION
JITENDRA
JITENDRA SHANKAR
SHANKAR NIJASURE
IN ITS COMMERCIAL DIVISION
NIJASURE Date:
2025.07.14
14:57:41
+0530 COMM ARBITRATION PETITION NO.26 OF 2021
Patel Engineering Ltd. ...Petitioner
Versus
Acron Developers Pvt. Ltd. ...Respondent
----------
Mr. Venkatesh Dhond, Senior Counsel with Mr. Rohan Kelkar, Mr.
Ravitej Chilumuri, Ms. Muskan Arora and Mr. Kunal Parekh i/b.
Khaitan and Co. for the Petitioner.
Mr. J.P. Sen, Senior Counsel, Mr. Karl Tamboly with Mr. Hrushi
Narvekar, Vivek Vashi, Ms. Shaheda Madraswala, Ms. Rajvi Mehta
and Ms. Khushi Dhanesha i/b. Vashi and Vashi for the Respondent.
----------
CORAM : R.I. CHAGLA J.
Reserved on : 11TH DECEMBER, 2024.
Pronounced on : 14TH JULY, 2025
J U D G M E N T:
-
1. By this Commercial Arbitration Petition, the Petitioner
has sought for quashing and setting aside of the Award dated 1st
February, 2020 of the Majority Arbitral Tribunal ("impugned
Award"). There is a dissenting opinion by Mr. R.G. Kulkarni,
Secretary, Irrigation (Retired) to Government of Maharashtra.
2. A brief background of facts is necessary and referred to
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as under:-
(i) The Petitioner - Patel Engineering Ltd. had engaged an
agency between January to April, 2010 with Company known as
VCon for carrying out construction work at Smondoville
Residential Apartments at Patel Neo Patel Town, Bengaluru.
(ii) The Petitioner had invited tenders of Civil RCC /
Architectural Finishing work for seven towers at Smondoville
Residential Apartments at Patel Neo Patel Town, Bengaluru
("Project") on 3rd June, 2010.
(iii) The Respondent - Acron Developers Pvt. Ltd. submitted its
final offer on 14th and 15th June, 2010 in respect of the project. A
meeting was held between the parties for finalization of the
Contract in respect of six towers, S9, S10, S14, S15, S16 and S17.
(iv) The Letter of Intent ("LoA") was issued by the Petitioner to
the Respondent in respect of six towers on 23rd June, 2010. The
LoA specified that the contract sum would be as under:-
(a) Rs. 860.40 per Sq.ft. (79.93 Sq. mtrs.) for five towers
i.e. S9, S14, S15, S16 and S17.
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(b) Rs.823.50 per Sq. ft (76.50 Sq. mtrs,) for Tower S10.
(c) The measurement of the area would be as per Annexure - I
of the LoA.
(d) There is a mention in the LoA that "This is a Contract based
on the measurable on built up area basis. Payment will be made
based on joint measurement of laid quantity at the site after
completion of the total work carried out by the Contractor..."
(e) The duration of contract was for 16 months i.e. till 22nd
October, 2011.
(f) The contract sum would be Rs.34,15,62,096/- and the
measurement of the area would be as per Annexure I.
(v) The second LoA was issued on 26th July, 2010 by the Petitioner to
the Respondent in respect of the 7th Tower i.e. S11. The LoA
specified as under:-
(a) That the terms and conditions would be the same as the
LoA dated 23rd June, 2010.
(b) The contract sum would be Rs.3,59,97,528/- and the
measurement of the area would be as per Annexure - I.
(c) It is mentioned in the second LoA that " This is a contract
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based on the measurable on built up area basis. Payment will be
made based on joint measurement of laid quantity at the site after
completion of the total work carried out by the Contractor....".
(d) The Respondent would be paid for 'actually executed
quantities at the rates mentioned against payment schedule...'.
(e) Duration of the Contract was for 15 months i.e. till 25th
October, 2011.
(vi) The Respondent mobilized resources for the purposes of
execution of the project in June / July, 2010.
(vii) Good for Construction ("GFC") drawings were issued to the
Respondent by the Development Manager ("DM") periodically / in a
stage-wise manner from July, 2010 onwards.
(viii) The Respondent requested DM on 7th July, 2010 for footing
details in respect of Towers S9 and S14.
(ix) The DM provided Acron with an area statement of the project
on 6th August, 2010.
(x) An email dated 3rd September, 2010 was sent by the
Respondent to the DM seeking details specifications of items of work.
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(xi) An email was sent on 14th September, 2010 by the Respondent
to the DM informing of the stoppage of work due to third parties.
This was followed by an email dated 30th October, 2010 to the same
effect.
(xii) On 11th November, 2010, the Petitioner and the Respondent
executed the contract in respect of the project. It was provided in the
contract, that "the contract is not an item-rate-contract. The
quantities mentioned in the BOQ are only indicative. The contractor
has to verify the quantities from the drawings provided with the
tender. Only a change in drawing will imply verification. The contract
is a lump sum contract calculated on the rate per total built up area
as quoted by the contractor".
Further, the contract sum for all 7 towers was for
Rs.37,75,59,624/- and a total area of 4,45,443.7 Sq. ft. (41,383.07
sq. mtrs.) was agreed upon.
(xiii) There were email exchanged between Respondent and DM
with regard to the drawings to be forwarded; for electrical contractor
to complete works at the earliest and for providing revised
calculations of the built areas for the project.
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(xiv) DM by email dated 12th May, 2011 rejected RA Bill 6A issued
by the Respondent on the ground that the work had not yet been
completed.
(xv) The Respondent by email dated 20th May, 2011 responded to
DM's email / letter of rejections stating that the DM can verify the
measurements as provided by it and the parties can also take joint
measurements for the work completed by the Respondent.
(xvi) The DM by email dated 20th May, 2011 sent to the Respondent
stated that payment can be made on the joint measurement of
executed quantities only after the completion of total work. It was
further stated that the stagewise payment based on the actual area
taken by joint measurement will be released after the structure work
completion of each tower.
(xvii) There were further emails exchanged between the Respondent
and DM dated 15th June, 2011, 20th June, 2011 and 2nd July, 2011
regarding delay due to the plumbing and electrical contractors who
are third parties.
(xviii)The Respondent by email dated 25th July, 2011 sent to the DM
resubmitted the detailed calculation of the increase in As Built Area
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for the Project.
(xix) The DM by email dated 27th July, 2011 sent to the Respondent
requested it to send the concerned person for the area reconciliation
so as to process the Respondent's calculation for additional area.
(xx) By a letter dated 27th July, 2011 the Respondent submitting RA
Bill 9A to the DM for its claim on increase in built up area of the
project.
(xxi) The Respondent by emails sent on 4th and 11th August, 2011
submitted as built calculations and drawings.
(xxii) The Respondent in an email dated 4th October, 2011 sent to
DM stated that the contract needs to be revalidated by extension of
time. The DM in response email dated 4th October, 2011 stated that
contract is work bound and not time bound and therefore, 'a renewal
is not necessary...".
(xxiii)The timeline to complete the project as per the contract came
to an end on 22nd and 25th October, 2011.
(xxiv) The Petitioner terminated the contract vide letter dated 22nd
October, 2011 on inter alia the ground that the Respondent has failed
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to achieve the milestones to complete the project as stipulated in the
contract.
(xxv) The Respondent responded to the termination letter
dated 25th October, 2011 denying the allegations as contained in
the termination letter and requested for a meeting to amicably
settle the issues.
(xxvi) A Deed of Settlement was executed between the
Petitioner and Respondent on 31st October, 2011. It was recorded
therein as under:-
(a) It was recorded in recital 1 that " However, Acron failed to
fulfil its part of the obligations and PEL was constrained to
terminate the Agreement..." .
(b) It was further recorded in Recital 2 of Deed of Settlement
that "Acron requested for an amicable settlement and further
requested for withdrawal of the termination Notice".
(c) In Clause 2, it was recorded that " the Contract stood
revived subject to the modifications as contained in the Deed of
Settlement".
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(d) In Clause 5, it was recorded that the Respondent undertook
to complete the project by 31st January, 2012 as per the
milestones set out in Annexure 3.
(e) Further in Clause 9, it was recorded that the Respondent
may raise a bill every 15 days and the Petitioner shall pay the
same within a period of 15 days from the date of submission.
(f) In Clause 11, it was recorded that the Respondent's
fulfillment of its obligations within the time stipulated in the Deed
of Settlement is of the essence.
(g) In Clause 13, it was recorded that, except the modifications
as contained in the Deed of Settlement, all other clauses of the
contract, including the arbitration agreement, shall remain in full
force.
(xxvii) There were emails sent from 3rd January, 2012 to 31st
January, 2012 by the Respondent to DM, regarding the delay due
to third parties i.e. plumbing and electrical contractors.
(xxviii) As per the Deed of Settlement, the timeline to complete
the project came to an end on 31st January, 2012.
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(xxix) A show cause notice was issued by DM to Acron stating that
the Respondent has not completed the works as per the schedule
and called upon the Respondent to clarify as to why the liquidated
damages ought not to be imposed on it.
(xxx) The Respondent in the response to the Show Cause Notice
on 17th February, 2012 stated that any delay was due to inter alia
non-completion of works by other agencies and non-availability of
kitchen granite slabs which were to be supplied by Patel Realty
(India) Ltd. ("PRIL"). The Respondent requested for extension of
time till 31st May, 2012 for completion of works.
(xxxi) There were further emails exchanged between the
Respondent and DM regarding delay due to aluminum contractor
as well as, delay due to pending work by various other third
parties.
(xxxii) An email dated 17th April, 2012 was sent by the
Respondent to DM referring to a meeting of even date wherein
timelines for completion of the project were agreed between the
parties. The last date of hand over was set to 30th June, 2012.
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(xxxiii) There were further emails sent from 14th May, 2012 till
27th June, 2012 by the Respondent to the DM regarding the delay
in payment of RA bills 17 to 19.
(xxxiv) A notice dated 16th July, 2012 was issued by the Petitioner
to the Respondent stating that the Respondent had committed to
complete the project by 30th July, 2012 and there continues to be
delay in around 11 activities by the Respondent. The Respondent
was called upon to provide a proper plan as to how it was going to
achieve the final target by 30th July, 2012.
(xxxv) The Respondent responded on 23rd July, 2012 to
Petitioner's notice stating that all commitments made by the
Respondent were based upon reciprocal promises to make timely
payment of the RA Bills by the Petitioner. Further, owing to the
slow progress of work by the other agencies appointed by the
Petitioner, the Respondent's work has been impacted.
(xxxvi) There were emails sent from 28th August, 2012 till 27th
September, 2012 by the Respondent to DM, regarding the delay
due to the plumbing contractor i.e. relatable to third parties.
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(xxxvii) An email dated 26th October, 2012 was sent by the
Respondent to the Petitioner stating that the final cleaning of
towers S10 and S11 was underway and providing timelines as
agreed at meeting held on even date, for handover of the same.
The last date of hand over was 3rd November, 2012.
(xxxviii) An email was sent by the Respondent to the Petitioner
requesting for release of the delayed payments as the site was just
a few days from handover.
(xxxix) The DM was no longer involved with the project from 30th
November, 2012. According to the Respondent, the project was to
be completed on 31st December, 2012.
(xl) The Respondent handed over the flats to the Petitioner's
representative Arsen Infra Pvt. Ltd. after rectification of the snags
between February to March, 2013.
(xli) The Respondent submitted the final bill to the Petitioner in
respect of the project on 24th August, 2013.
(xlii) An email dated 25th September, 2013 was sent by the
Petitioner to the Respondent requesting the Respondent to send its
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authorized person to meet with Petitioner's employee for
certification of the final bill.
(xliii) The Petitioner sent email dated 25th October, 2013 to the
Respondent providing it with the joint inspection list and
requesting for the handover document along with the bill. It is the
Petitioner's contention that the Respondent abandoned the site in
August, 2013.
(xliv) On 12th November, 2013, an email was sent by the
Respondent to Arsen and the Petitioner stating that it has rectified
the snags as pointed out by Arsen / Petitioner.
(xlv) The Respondent invoked Arbitration dated 18th November,
2013 owing to the Petitioner's failure to certify the final bill and
take joint measurements.
(xlvi) An Arbitration Petition No.62 of 2014 was filed by the
Respondent under Section 9 seeking relief that the Petitioner be
restrained from invoking the bank guarantees; from selling or
otherwise creating any third party rights in the subject property;
or in the alternative be directed to deposit a sum of approximately
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Rs.15 Crores before this Court. This Court declined ad-interim
reliefs in the said Petition on 28th November, 2013.
(xlvii) The Petitioner invoked the Bank Guarantees provided by
the Respondent amounting to a total of Rs.2 Crores on 28th
November, 2013.
(xlviii) The Petitioner responded to the invocation notice on 2nd
December, 2013 stating that the Final Bill submitted by the
Respondent is arbitrary and its authenticity needs to be
ascertained and calling upon the Respondent to discuss the matter
so that the dispute can be amicably settled.
(xlix) On 24th December, 2013, Mr. Anil Nagrath, the Architect
appointed by the Respondent provided his computation of the
area constructed by the Respondent.
(l) The defect liability period i.e. 12 months from 31st December,
2012 came to an end on 31st December, 2013.
(li) The Respondent submitted the final bill on 4th January, 2014
and requested the same to be treated as the final bill.
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(lii) The Petitioner and the Respondent appointed their nominee
arbitrators on 23rd April, 2014 and 27th March, 2014 respectively.
(liii) Statement of Claim was filed by the Respondent on 11th
August, 2014 raising claims of Rs.22,81,23,681/-.
(liv) The Statement of Defence was filed by the Petitioner on 17th
December, 2014.
(lv) The Petitioner filed its counter claim raising claims of
Rs.24,06,73,079/-.
(lvi) The deposit order was passed by this Court on 21st August,
2015 in the Section 9 Petition filed by the Respondent whereby
the Petitioner was directed to deposit a sum of Rs.11 Crores with
the Prothonotary and Senior Master of this Court. It is pertinent to
note that pursuant to several Orders passed, including Contempt
Petition filed by the Respondent, the Petitioner deposited the
amount in tranches with the final deposit made by 1st February,
2019.
(lvii) The issues were framed by the Tribunal on 25th September,
2015.
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(lviii) The impugned Award was passed by the Arbitral Tribunal
on 1st February, 2020 in terms of which the certain claims of the
Respondent were allowed and the Petitioner's counter claims were
rejected. A dissenting opinion was provided by the Petitioner's
nominee Arbitrator, Shri R.G. Kulkarni.
(lix) The captioned Section 34 Petition was filed by the Petitioner
along with Interim Application (L) No.8620 of 2020 for stay on
10th December, 2020.
(lx) A consent minutes of Order dated 12th February, 2021 was
tendered by the parties in terms of which the award was stayed
subject to the Respondent being permitted to withdraw the
deposited amount of Rs.11 Crores along with interest, without
security. Accordingly, the Interim Application (L) No.8620 of 2020
came to be disposed of. It is pertinent to note that the Respondent
has withdrawn the deposited amount along with accrued interest
amounting to Rs.12,41,80,617/-.
(lxi) The Interim Application (L) No.6786 of 2021 filed by the
Petitioner for amendment of the captioned Section 34 Petition was
allowed by the Order dated 16th March, 2021.
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3. Mr. Venkatesh Dhond, the learned Senior Counsel
appearing for the Petitioner has submitted that the impugned Award
is patently illegal and / or perverse. It is in manifest disregard of the
facts on record and settled law. It is also contrary to the terms of the
contract which governed the parties.
4. Mr. Dhond has submitted that the Impugned Award's
factual findings, and its legal conclusions are so irrational and
manifestly flawed that no reasonable person properly instructed in
the law and the facts on record, could possibly have arrived at the
same. The majority view on the matter as a whole, travels far beyond
the scope of the reference, and do not represent a possible view.
5. Mr. Dhond has submitted that the findings on the Deed
of Settlement are perverse, inasmuch as only allegations of coercion
(made to avoid said Deed) were those of "lawful act" coercion. He
has further submitted that no evidence in support of such allegations,
or which could clear the high bar for proving such coercion, was led.
He has submitted that not only this, but after the Respondent alleging
coercion, and the Tribunal accepting the allegation, both relied upon
Deed itself to seek and to grant relief. He has submitted that this is
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unheard of in law.
6. Mr. Dhond has submitted that the original contract
contained a specific provision [General Conditions of Contract
("GCC") of Clause 1/3.20] making time of the essence. It was so
contended even in the Statement of Defence. He has submitted that
the original contract came to an end on 22nd October, 2011 and the
Petitioner terminated the contract on that date.
7. Mr. Dhond has submitted that pursuant to a request by
the Respondent the termination was revoked and a Deed of
Settlement was executed by and between the parties on 31st October,
2011 and it was also agreed before the Tribunal that time was of the
essence under the same.
8. Mr. Dhond has referred to the Recitals and Clauses of the
Deed of Settlement. He has in particular referred to the Recital which
states, "However, Acron failed to fulfill its part of the obligations and
PEL was constrained to terminate the Agreement vide Notice dated
22nd October, 2011". He has further referred to the Recital, " on the
request of Acron to withdraw the letter dated 22nd October, 2011
(termination letter) and for the following settlement in Order to
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continue the Agreement and to allow Acron to complete all the
unfinished work within the extended period, subject to certain
additional terms and conditions proposed by the PEL and agreed to
by Acron". He has referred to Clauses 6, 11 and 12 of the Deed of
Settlement. He has submitted that the express terms of the Deed of
Settlement (including its recitals) were that; (a) Acron had defaulted
in discharging its obligations under the Original contract; (b) it was
on the express and specific request of Acron to revoke the notice of
termination and revive the original contract and on Acron's solemn
assurances to complete the work within the extended time given to
them, that PEL withdrew the notice of termination, and the original
contract was revived with additional terms as expressly incorporated
in the Deed of Settlement.
9. Mr. Dhond has submitted that despite this the Tribunal
allowed Acron / the Respondent to wriggle out of the consequences
of the Deed of Settlement on the specious plea that it was compelled
to enter into the same under coercion or financial duress. No
evidence whatsoever of such coercion or duress was produced by the
Respondent before the Tribunal. He has referred to the conclusions
on this score which are in paragraphs 82 and 83 of the Impugned
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Award.
10. Mr. Dhond has submitted that mere averments in
pleadings as such the Statement of Claim do not and cannot
constitute evidence. Nevertheless these form the basis of the
Tribunal's findings on coercion.
11. Mr. Dhond has submitted that perhaps aware that
accepting the plea of economic coercion without any semblance of
evidence in support would render its finding vulnerable, the Tribunal
has referred to paragraph 42 on page 20 of the Affidavit of Evidence
of Mr. Velmurugan (CW2) and records that the contents of the said
paragraph constitute evidence of coercion. He has submitted that
mere perusal of the paragraph shows that all that CW2 referred to
was an alleged overdraft facility availed of not by the Respondent,
but by an alleged sister concern in Goa. The letter of the bankers
dated 9th August, 2011 referred to by the Tribunal is one from the
Citizen Credit Cooperative Bank Ltd. again addressed not to the
Respondent but to one Acron Infra Projects Pvt. Ltd.
12. Mr. Dhond has submitted that in paragraph 42 of the
Affidavit of Evidence of CW2 there is not even an assertion making
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any grievance against the Petitioner as being the cause for the
Respondent to avail of such overdraft facility.
13. Mr. Dhond has referred to the Respondent's case of
duress and which is unlawful threat of payment by the Petitioner to
one of the Respondent's supplier; unlawfully withholding payment
from the Respondent; the Petitioner's consultant's turning down of
Respondent's request to reduce Bank Guarantee amount for reasons
that were "incorrect and contrary to the contract terms" and
termination of the contract by the Petitioner on 11th November,
2010.
14. Mr. Dhond has submitted that the Respondent
acknowledged that, due to "several issues" between the parties, it
was "contemplating initiating legal proceedings" against the
Petitioner.
15. Further, the Respondent had called for an amicable
settlement and had agreed to complete the work in December 2011
only if a sum of Rs.2 Crore was released at once. It had also said that
it would revalidate Mobilization Guarantees for a lesser amount and
upon the first termination, it had requested for a settlement for
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"closing and concluding our legal relationship".
16. Mr. Dhond has submitted that the Respondent has relied
upon the Deed of Settlement to support its claims and the Tribunal
relied upon it to grant relief to the Respondent. He has referred to the
Award at paragraphs 40, 55 and 62 to 63 in this context. The
Tribunal itself states that the Deed of Settlement was signed to
"maintain good business relations", "purely out of practical business
sense".
17. Mr. Dhond has submitted that given all of the above, the
findings of the Tribunal refusing to give effect to the Deed of
Settlement are perverse.
18. Mr. Dhond has placed reliance upon the judgment of the
Privy Council in Pao On & Ors. Vs. Lai Yiu Long & Ors. 1 The Privy
Council has held that for coercion which is stated to have resulted
from perfectly lawful acts, the threshold or bar to be cleared to
establish the same is extremely high. There must be present some
factor that could, in law, be regarded as a coercion of his Will
sufficient to vitiate a party's consent. It is material to enquire
1 (1979) 3 WLR 435 at 450-451
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whether, the person alleged to have been coerced did or did not
protest; whether at the time he was allegedly coerced into making
the contract, he did or did not have an alternative course open to him
such as an adequate legal remedy; whether he was independently
advised; and whether after entering the contract he took steps to
avoid it.
19. Mr. Dhond has submitted that the aforementioned Privy
Council judgment had been relied upon by this Court in Balaji
Pressure Vessel Ltd. Vs. Bharat Petroleum Corporation Ltd 2. at
paragraph 12. The said judgment has not been dismissed though
appealed from and the SLP therefrom before the Supreme Court has
been dismissed on 5th August, 2019. This Court has held that in
considering duress in a contractual situation in simple commercial
pressure is not good enough. The pressure so as to constitute duress
must be such that the victim must have entered the contract against
his will, must have had no alternative course open to him, and must
have been confronted with coercive acts by the party exerting the
pressure. In other words, the pressure exercised by the other party
must be such as the law would not regard legitimate.
2 2014 SCC OnLine Bom 1709
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20. Mr. Dhond has submitted that the Respondent in the
present case has even relied on the allegedly 'coerced' Deed of
Settlement to obtain relief. This was despite the fact that it was not
its case that only parts of the Deed were the result of coercion. The
whole of it allegedly was. He has submitted that the Arbitral Tribunal
has not only failed to recognize this, it has replicated the
Respondent's approach in making the impugned Award.
21. Mr. Dhond has relied upon the judgment in the case of
S.K. Jain Vs. State of Haryana & Anr. 3 paragraph 8, where it is held
that, the very "concept of unequal bargaining power has no
application in case of commercial contracts".
22. Mr. Dhond has further relied upon the judgment of the
Courts of England in Times Travel (UK) Ltd. and Anr. Vs. Pakistan
International Airlines Corporation4. It has been held therein that the
Common Law doctrine of duress to include lawful act economic
duress by drawing on the rules of equity in relation to undue
influence and treating as 'illegitimate' conduct which, when the law
of duress was less developed, had been identified by equity as giving
3 (2009) 4 SCC 357.
4 (2021) 3 WLR 727 @727.
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rise to an agreement which it was unconscionable for the party who
had conducted himself or herself in that way to seek to enforce.
23. Mr. Dhond has submitted that in view of the well settled
law on the Common Law doctrine of duress, the factors which
constitute duress have not been met in the present case.
24. Mr. Dhond has submitted that the Respondent has
selectively relied upon Deed of Settlement which is impermissible. He
has placed reliance upon the decision of this Court in Ranjit
Vardichand Jain Vs. Nirmal Gagubhai Chhadwa & Ors.5 at paragraphs
76-78. He has submitted that to allow one party to selectively rely
upon a document and to disallow the other from relying upon the
entirety of the same document, is other than being perversity in itself,
a failure to meet any Tribunal's ingrained obligations; ensuring
'parties shall be treated with equality' and no party is 'otherwise
unable to present his case". He has placed reliance upon Sections 18
and 34(2) (a) (iii) of the Arbitration and Conciliation Act, 1996 in
this context.
25. Mr. Dhond has submitted that the claim of the
5 2023 SCC OnLine Bom 1095.
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Respondent for additional built-up area has been allowed dehors the
terms of the parties contract, and in the face of several clear
admissions by Respondent's Chief Witness.
26. Mr. Dhond has submitted that there is a distinction
between 'constructed area' and 'built up area'. He has submitted that
the Respondent in the present case was in a position to ascertain (a)
amount of construction and / or (b) what the built up area would be.
The contract itself identified with fair certainty what such built area
would be per building, per floor, apart from other facilities like lifts,
overhead water tanks, lift machine rooms, staircases, balconies etc.
The Respondent was in no element of doubt on two things namely
(a) it would be paid not with the reference to the construction
actually put up i.e. the area actually constructed but with reference to
built up area; and (b) the co-relation between the built up area and
the construction actually put up i.e. the actual area that it was
required to construct. It was in this context that the Respondent was
required to quote a rate. He has submitted that this is akin to a
situation where the gross and net figure are both known, but the
parties quote with reference to the net figure. In such a case, a person
who quotes with reference to a net figure is going to be paid on net
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basis, and cannot, subsequently, use a rate for net and multiply it
with the gross amount of work.
27. Mr. Dhond has submitted that since there was no
material change between the tender drawings and construction
drawings, the Respondent was only entitled to be paid for the built
up area (which did not materially change).
28. Mr. Dhond has submitted that the Respondent initially
made a claim for work citing that this consisted of new elements that
were absent in the tender drawings. This was demolished in cross
examination. The Respondent then tried to recover the same amount
by referencing it to the area actually constructed without giving any
weightage to the mode of measurement as provided in the contract,
when all that it was entitled to, and did receive, was for the built up
area it actually constructed.
29. Mr. Dhond has submitted that the elements that the
Respondent identified as constituting "excess built up area" were
present in the tender drawings as well. There was no real / material
difference between the tender drawings and the GFC drawings. He
has submitted that as long as the Respondent built as per the tender
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drawings / GFC drawings it could not demand anything more. It
could only claim more where it could demonstrate that the work it
did was different than that shown in the drawings. He has submitted
that the entire theory propounded with reference to additional built
up area being constructed by reason of elements which materialized
only in the GFC drawing was dishonest.
30. Mr. Dhond has submitted that submissions of the
Respondent on claim for additional built area is contrary to the
Respondent's pleaded case and its evidence and should have been
rejected by the Tribunal at the threshold. The Tribunal in taking
cognizance of this, has committed a grave error which has resulted in
a serious violation of natural justice and / or a miscarriage of justice
that ought to shock the conscious of this Court. He has placed
reliance upon the judgment of the Supreme Court in Ssangyong
Engineering and Construction V/s. National Highways Authority of
India (NHAI)6, paragraphs 35, 70 and 76.
31. Mr. Dhond has submitted that the Tribunal by totally
ignoring and making no reference to the complete change of case of
the Respondent, constitute perversity. The Tribunal has further
6 (2019) 15 Supreme Court Cases 131.
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committed a serious error in accepting the Respondent's case and
disregarding the terms of the contract, pleadings of the parties, and
evidence before it.
32. Mr. Dhond has further submitted that, the Tribunal's
findings and its acceptance of the Respondent's claim of additional
built up area in the sum of Rs.4,33,60,124.70, plainly constitutes
'patently illegality' within the meaning of Section 34(2) (a) of the
Arbitration and Conciliation Act, 1996. He has placed reliance upon
the judgments of Supreme Court in Patel Engineering Ltd. Vs. North
Eastern Electric Power Corporation Ltd., 7 paragraphs 3, 4, 13 and 16
- 22; State of Chhatisgarth & Anr. V/s. Sal Udyog Pvt. Ltd. 8
paragraphs 1, 4, 6, 14-17, 23 and 24 and judgment of this Court in
Interocean Shipping (India) Pvt. Ltd. Vs. Oil and Natural Gas
Corporation Ltd.9 paragraphs 1-3, 17, 24-26, 30 and 33.
33. Mr. Dhond has submitted that in so far as the other claim
of the Respondents namely for an amount of INR 1,10,59,673/- for
additional work done at site beyond what has been certified by the
Respondent Viz. Claim No.1 (04), the Petitioner admitted to an
7 (2020) 7 SCC 167.
8 (2022) 2 SCC 275.
9 (2022 SCC OnLine Bom 1699.
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amount of INR 52,41,930/-. The Tribunal has awarded an amount to
the tune of INR 86,10,441/- and thus the disputed difference under
this claim is of INR 33,68,511/-.
34. Mr. Dhond has submitted that the claim of various
additional items of work purportedly executed by the Respondent
which were billed by it under the supplementary final bill dated 4 th
January, 2014, admittedly was not certified by the consultant. He has
submitted that in the absence of that certification by the consultant, it
was incumbent upon the Respondent to prove the exact quantity of
the concerned item of work purportedly executed as well as the rate
that it was claiming in respect of the said work.
35. Mr. Dhond has submitted that the Tribunal while
awarding the claim of Rs. 28,15,413/- for the Respondent using Kota
stone for the staircase, has relied upon evidence of CW4 and rate
analyzing at C-198 (colly) at pages 822-839, Volume C-7. He has
submitted that the observation of the Tribunal in this context is
demonstrably perverse in as much, firstly, no such rate analysis was
produced. The document to which reference has been made by the
Tribunal is a mere statement of calculations set out in tabular form.
1-carbp-26-2021.doc
This is neither been signed, authenticated nor certified by any person,
much less by the Respondent's witness CW4. He has submitted that
even if the Respondent had in fact produced a rate analysis such a
rate analysis could not have constituted evidence by any stretch of
imagination because a rate analysis too is merely a notional breakup
of a rate claimed by the Respondent whereas its individual
components and the costing thereof is still required to be proved by
the requisite bills, invoices, master rolls, invoices for hiring of
machinery, etc.
36. Mr. Dhond has made submissions with regard to Claim
No.5 of the Respondent in the Statement of Claim which is for an
amount of Rs.2,85,21,280/- towards alleged additional expenditure
incurred by it as a result of alleged delay caused by the Petitioner
resulting in overstay of the Respondent at the site beyond the
schedule date of completion viz. 22nd October, 2011. He has
submitted that the Tribunal has relied upon evidence of CW4 which
though having referred to alleged accounts of the Respondent, no
such accounts were produced in evidence. He has submitted that
save and except for reference to Annexure CA - 10 of the Statement
of Claim, CW4 did not make reference to any other documents in
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support of the Respondents Claim No.5. He has submitted that
insofar Annexure CA-10 to the Statement of Claim is concerned that
even a cursory perusal thereof would show that it was merely a list of
certain items and various amounts claimed against them set out in a
tabulated form not unlike particulars of claim annexed at the end of a
Plaint in a money Suit. He has submitted that such particulars of
Claim as Annexure CA-10 does not and cannot constitute 'evidence'.
He has submitted that the Tribunal in awarding such claim on no
evidence whatsoever, is perversity, as understood in Ssangyong
Engineering and Construction Co. Ltd. (Supra).
37. Mr. Dhond has submitted that the Tribunal has recklessly
granted Respondent's claim No.6 which was for alleged additional
expenditure for alleged prolongation of use of machinery, tools, plant
and other construction equipment beyond the period of deployment
originally contemplated under the contract. An amount of
Rs.74,90,758/- which had been claimed by the Respondent and
awarded in its entirety by the Tribunal.
38. Mr. Dhond has submitted that the Tribunal in awarding
Claim No.6 has relied upon Annexure CA-11, CA-12 and CA-13 which
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are nothing but notional calculations and particulars put in a
tabulated form and which were unsigned, uncertified and
unauthenticated by any person. He has submitted that the Tribunal
inspite of total absence of evidence has awarded the said claim.
39. Mr. Dhond has submitted that the Tribunal in awarding
Claim No.6 has relied upon paragraphs 43 and 44 of CW-4's Evidence
Affidavit which is in the nature of secondary evidence within the
meaning of Section 63 (5) of the Indian Evidence Act, 1872 and
could only be given under the circumstances that could satisfy
Section 65(g) of the Act. He has submitted that the witness was
wholly incompetent under either of those sections. He has placed
reliance upon the judgments of the Delhi High Court in Fortuna Skill
Management Pvt. Ltd. Vs. Jaina Marketing and Associates 10
paragraphs 30 and 31 and Fortuna Skill Management Pvt. Ltd. Vs.
Jaina Marketing and Associates11 paragraphs 37 and 38.
40. Mr. Dhond has submitted that the Respondent has raised
a claim for interest on alleged delayed payments in respect of the
alleged additional area allegedly constructed. The claim for interest
10 2024 SCC OnLine Del 1972 -SJ.
11 2024 SCC OnLine Del 4685 - DB.
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on delayed payments was under the two separate heads viz. Claim
No.7 and Claim No.8. Claim No.8 is for interest on delayed payment
against the additional area allegedly constructed. The said claim has
been awarded by the Tribunal for an amount of Rs.64,33,292/-. He
has submitted that for the reasons mentioned regarding additional
built up area, this claim ought to have failed. He has submitted that
the impugned Award to the extent that it awards this claim is in
violation of the terms of the contract and is thus liable to be set aside.
41. Mr. Dhond has referred to the terms of the contract
namely payment will be made based on joint measurements of laid
quantity at site after completion of total work carried out by the
contractor. He has submitted that the terms of the contract further
provided that no claim for interest or damage will be accepted by the
DM with respect to any money, which may be in its possession, owing
to any dispute, difference or misunderstanding between the DM and
the contractor. He has submitted that the terms of the contract were
thus clear and unambiguous inasmuch as firstly, the contractor was to
raise its interim bills in terms of the agreed payment schedule. If the
contractor was desirous of claiming any additional amount towards
construction of any allegedly additional area, the payment regarding
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the same was to be made only after joint measurements were
recorded after the final completion of work. He has submitted that
the Petitioner was not bound to entertain, much less release any
payment in respect of such bills until the final recording of
measurements after the entire completion of work, as per express
terms of the contract. He has accordingly submitted that the
Respondent could not claim interest from the Petitioner by alleging
that payments of such bills were delayed.
42. Mr. Dhond has submitted that the Claim of interest under
Claim 8 was in respect of amounts which were in dispute between
the Respondents and DM and hence, the claim was barred by the
provisions of Clause 1/6.9.1 of the contract. He has submitted that on
this ground also, the Impugned Award granting such a claim is in
violation of the express terms of the contract between the parties and
liable to be set aside.
43. Mr. Dhond has submitted that the Petitioner has raised a
total of 12 heads of claim in its counter claim before the Arbitral
Tribunal. Out of 12 heads, Nos.1, 2, 9 and 11 were for damages. Each
of these heads have been rejected by the Arbitral Tribunal.
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44. Mr. Dhond has submitted that in so far as counter claim
1 which was claim for liquidated damages under Clause 1/3.21 of the
Contract, he has submitted that the Petitioner was entitled to recover
a sum of Rs.1,88,77,981/- for the period from 31st July, 2012 to 31st
December, 2012. Out of the said sum, the Petitioner had recovered
Rs.40,00,000/- by making deductions from the Respondent's running
Bill Nos. 22, 23 and 24. This left outstanding a sum of
Rs.1,48,77,981/-.
45. Mr. Dhond has submitted that Clause 11 of the Deed of
Settlement specifically makes time of the essence of the contract. The
Deed of Settlement required the work to be completed on or before
31st January, 2012. The Petitioner had given the Respondent
extension beyond the period specified in the Deed of Settlement i.e.
till 30th July, 2012. No extension beyond 30th July, 2012 was
expressly sought or expressly granted. The Respondent however
continued work till 31st December, 2012 and made promises to
complete the work. The Petitioner however, did not terminate the
contract, nor did the Petitioner call upon the Respondent to stop
work. The Tribunal has found that, after 31st January, 2012 time
ceased to be of the essence and / or was put at large.
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46. Mr. Dhond has referred to the findings of the Tribunal on
the counter claim 1. He has submitted that the findings are perverse
and patently illegal. The Tribunal has in the first set of findings, held
that there was no lawful notice under Section 55 of the Contract Act.
There is an alternative finding that the Petitioner has waived its right
to levy liquidated damages at the rate of 5% of the contract value as
per Clause 1/3.21. There is a finding that the Petitioner was
responsible for the delay that resulted in the Respondent having to
stay at site until 31st December, 2012 and therefore, cannot claim
damages from the Respondent on that score.
47. Mr. Dhond has submitted that these findings are
untenable. He has placed reliance upon Section 55 of the Indian
Evidence Act, 1872 which provides that effect of failure to perform at
fixed time, in contract in which time is essential. He has submitted
that from a plain language of the Section it means that: (a) in the
case of a contract of which time is intended to be of the essence, a
promisor's failure to perform his promise within the time specified
renders the contract voidable at the option of the promisee; (b) in
the case of a contract of which time is not intended to be of the
essence, the promisor's failure to perform his promise within the time
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specified does not render the contract voidable, but entitles the
promisee to claim damages for the delay and (c) where the contract
was voidable under (a), and the promisee, rather than avoid it,
[under (a)], accepts performance at a later time, his right to seek
damages [under (b)] is subject to his giving the promisor notice of
his intention to seek such damages at the time that he accepts
performance.
48. Mr. Dhond has submitted that the Tribunal has clearly
misconstrued the requirement noted in paragraph 9(c) as one for a
'notice to make time...as of essence of contract', rather than one
merely notifying the promisor of the promisee's intention to claim
damages. That is all that Section 55's plain terms require and that is
all that the letter dated 16th July, 2012 in fact did. He has placed
reliance upon the judgment of this Court in ONGC Vs. Soconord
OCTG & Anr.12 paragraphs 49 - 53 in this context.
49. Mr. Dhond has submitted that the alternative finding of
the Tribunal on alleged 'waiver' is also equally untenable. He has
relied upon the judgment of the Supreme Court in All India Power
12 2014 SCC OnLine Bom 1277.
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Engineering Federation & Ors. Vs. Sasan Power Ltd. & Ors. 13 at
paragraph 21, where the Supreme Court has reiterated the oft-stated
principle that waiver is "the intentional relinquishment of a known
right", but that this implies, " unless there is a clear intention to
relinquish a right that is fully known to a party, a party cannot be said
to waive it". He has submitted that applying this principle to the facts
in the present case, the Tribunal's finding on waiver is perverse.
50. Mr. Dhond has submitted that the Tribunal in finding
that the Petitioner was responsible for delay until 31st December,
2012 has relied upon mere ipse-dixit of CW1 on delay in supplying
drawings and contradicts the express provisions of the contract
between the parties. He has submitted that the finding on delay in
making payments is an impossible one, since delay in making
payments makes a payor liable to pay interest, not to be held liable
for the payee's failure to complete its work on time. Further, the
findings on delay due to obstructions also contradict an express term
in the parties' contract. The delay in supply of granite is based on no
evidence whatsoever. He has submitted that the finding that the
Petitioner was responsible for the delay until 31st December, 2012 is
13 2017 1 SCC 487.
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legally unsustainable.
51. Mr. Dhond has submitted that the Respondent's case on
delay during the original term of the contract was that the delay was
because of the Petitioner and not the Respondent. He has submitted
that the Respondent has alleged that the delay was in issuing
drawings by the Petitioner which has found favour with the Tribunal.
He has submitted that this is legally perverse as the question of
"delay" was not part of the Petitioner's case. The Respondent wished
to prove delay, and in order to prove it, wished to rely upon certain
state of facts. The Petitioner was not asked either by the Respondent
or the Tribunal to produce any old drawings or "details of more
area". There was no suppression by the Petitioner or any "admission"
of delay. The Tribunal's findings on adverse inference against the
Petitioner for not producing the drawings and to hold the delay was
on the Petitioner's account is perverse and contrary to settled law. He
has placed reliance upon the decision of the Supreme Court Standard
Chartered Bank Vs. Andhra Bank Financial Services Ltd. and Ors. 14 at
paragraph 49 - 53 in this context.
52. Mr. Dhond has accordingly submitted that the impugned
14 (2006) 6 Supreme Court Cases 94.
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Award suffers from perversity and is patently illegal and accordingly
requires to be set aside.
53. Mr. J. P. Sen, the learned Senior Counsel appearing for
the Respondent has submitted that in so far as Claim No.1 (1) on
completion of works, there was no delay attributable to the
Respondent and delay was attributable only to the Petitioner. All
works were duly completed by the Respondent and for which reliance
has been placed on the documents on record. Further, reference is
made to the dates and events. He has submitted that after
considering the evidence and documents on record, the Tribunal
rightly came to the conclusion that the work had been completed by
the Respondent.
54. Mr. Sen has submitted that there is no tenable ground in
the captioned Petition challenging the finding of the Tribunal. The
findings of the Tribunal are arrived at after going through the
evidence before it and the Tribunal has arrived at not only a plausible
but also a correct conclusion. He has submitted that in a Section 34
Petition, the evidence cannot be re-appreciated. He has placed
reliance upon the decision of the Supreme Court in Associate Builders
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Vs. Delhi Development Authority15, paragraphs 32, 52 and 56;
Maharashtra State Electricity Distribution Co. Ltd. Vs. Datar
Switchgear Ltd.16, paragraphs 45 - 90; Ssangyong Engineering and
Construction Co. Ltd. Vs. National Highways Authority of India
(NHAI)17, paragraphs 36, 37 and 38; State of Jharkhand Vs. HSS
Integrated Sdn.18, paragraphs6 & 7.1; Delhi Airport Metro Express
Pvt. Ltd. Vs. Delhi Metro Rail Corporation Ltd.19, paragraphs 28, 29 to
32 and Netaji Subhash Institute of Technology Vs. M/s. Surya
Engineers & Anr.20 paragraphs 54, 66, 67 & 69.
55. Mr. Sen has submitted that in so far as Claim 1(2) for
non tender items there is no dispute over this claim.
56. Mr. Sen has submitted that regarding Claim No.1 (3) for
additional built up area, the contract itself provided that, the
Respondent was required to construct the area 4,45,443.7 Sq.ft.
(equivalent to 41,383.07 Sq. mtrs.). Further, the contract provided
for certain deductions to be made for the purposes of calculating the
payable area of the contract, as per Annexure III thereof. The contract
15 (2015) 3 Supreme Court Cases 49.
16 (2018) 3 Supreme Court Cases 133.
17 (2019) 15 Supreme Court Cases 131.
18 (2019) 9 Supreme Court Cases 798.
19 (2022) 1 Supreme Court Cases 131.
20 OMP (Comm.) 48 of 2020 and I.A. No.1401 of 2024.
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also provided for the rates per square feet agreed to be paid to the
contractor.
57. Mr. Sen has submitted that realizing this is a construction
contract and eventually the areas as first stated may increase or
decrease, an omnibus clause was incorporated in the contract which
inter alia provided that the Respondent will be paid at the agreed
rates for the area which is actually constructed. He has submitted
that this is also reflected in the LoA's which LOA's have been
incorporated in the contract by reference.
58. Mr. Sen has submitted that the aforementioned term in
the contract stands to good reason because the Respondent being a
contractor is entitled to receive money for the work actually done. If
the work actually done exceeds the area set out in the tender, then
the Respondent will not be paid for any additional work carried out
by it. Therefore, the Petitioner will be permitted to unjustly enrich
itself.
59. Mr. Sen has submitted that admittedly no joint
measurements were taken by the parties after completion of the
works. Therefore, the evidence had to be led by the parties as regards
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the quantum of area actually constructed by the Respondent.
60. Mr. Sen has referred to the evidence on record of the
RW-3, Architect in employment of the Petitioner and the Respondent's
Witness (CW-5, Architect) as to the area constructed. The reason for
the difference in the payable area between the two witnesses is due
to the additions and deductions made by them to the profile area.
61. Mr. Sen has submitted that taking into account the
contractual provisions and the evidence led by the parties, the
Tribunal came to the conclusion that the Respondent is liable to be
paid for the (a) additional area of 50,395.31 Sq. ft. (4,681.87 Sq.
mtrs.) which was constructed by it; and (b) at the contractual rate of
Rs.860.40 per sq. ft.
62. Mr. Sen has submitted that the conclusions arrived at by
the Tribunal is on the basis of relying upon the contractual provisions
contained in the Contract which provided that the Respondent would
be paid for actually executed quantities. The Tribunal has relied upon
the letter dated 12th May, 2011 and DMs letter dated 20th May, 2011
to buttress the finding. He has referred to paragraphs 15, 34, 58 (c-3)
to (c-9) to 58(c-10) of the Award in this context.
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63. Mr. Sen has submitted that the Tribunal has considered
each addition and deduction made by the parties' witnesses to the
constructed area and accordingly arrived at its finding that the
Respondent had constructed an extra area of 50,395.31 sq. ft.
(4,681.87 Sq. mtrs.).
64. Mr. Sen has submitted that the findings are based on
appreciation of evidence on record. It is impermissible for the
Petitioner to question the merits of the findings and seek re-
appreciation of the evidence. He has submitted that the law is well
settled that an Arbitral Tribunal is the master of the evidence and
findings of fact arrived at by an arbitrator is on appreciation of the
evidence on record and are not to be scrutinized as if the Court was
sitting in Appeal. He has submitted that even assuming that the
Section 34 Court may take a view different from that in the Award,
nevertheless that is not a ground for setting aside an Award. He has
placed reliance upon State of Jharkhand (Supra) and Maharashtra
State Electricity Distribution Co. Ltd. (Supra).
65. Mr. Sen has made submissions with regard to Claim No.1
(4) which is for the non-tender items for the project amounting to
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Rs.1,10,59,673/-, the details of which formed part of the Final
Supplementary Bill dated 4th January, 2014 submitted by the
Respondent to the Petitioner. Out of the claimed amount of
Rs.1,10,59,673/-, the Petitioner admitted to the fact that an amount
of Rs.52,41,930/- stood due to the Respondent for this claim. The
Tribunal awarded a sum of Rs.86,10,441/- to the Respondent
towards this claim.
66. Mr. Sen has submitted that the main disputed item by
the Petitioner is the amount claimed for Kota works for staircase done
by the Respondent amounting to Rs.31,31,493/-. The Petitioner
contended that as per items 4.6 and 4.7 of the BOQ provided with
the contract, the staircase work was to be done in Epoxy Paint and
not Kota. Further, it was due to bad quality work done by the
Respondent that Kota stone was used in lieu of Epoxy Paint.
Therefore this sum according to the Petitioner was not payable.
67. Mr. Sen has submitted that as per Annexure III,
Milestone 2 of the Deed of Settlement, the same provided for 'kota
for steps'. He has submitted that Kota work was carried out at the
instance of the Petitioner, as agreed in the Deed of Settlement. The
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Petitioner's contention that the Respondent had carried out poor
quality of work due to which kota was provided in lieu of epoxy paint
is belied by the Deed of Settlement and unsupported by any
documentary evidence whatsoever.
68. Mr. Sen has submitted that the Final Bill included with it
measurement sheets which provided the total quantity of Kota used
for the staircase in each tower. He has relied upon the evidence of the
Respondent's witness i.e. CW-4, who has personally verified the
quantities of such works executed and also the rates adopted for its
payment in the final bill submitted by the Claimant. He has submitted
that there was no cross examination by the Petitioner on the evidence
led by CW-4 in this regard.
69. Mr. Sen has submitted that considering evidence on
record, the Tribunal has awarded a sum of Rs.28,15,413/- to the
Respondent for the Kota work done by it after deducting the rate of
Epoxy Paint as provided for in the Contract BOQ.
70. Mr. Sen has submitted that as regards the other non-
tendered items for which claims were allowed by the Tribunal, the
Petitioner had admitted to the fact that such work was executed by
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the Petitioner but contested either the quantum of work done or the
rate charged by Respondent for the same. He has submitted that the
Tribunal considered evidence on record including documentary
support filed by the Respondent with the final bill and the evidence
of CW-4, whilst granting the same.
71. The Tribunal's conclusions are based on appreciation of
the evidence on record and hence it is impermissible for the
Petitioner to question the merits of these findings and seek re-
appreciation of the evidence. He has submitted that the law is well
settled that an Arbitral Tribunal is the master of evidence and the
same cannot be scrutinized as if the Court was sitting in Appeal.
72. Mr. Sen has submitted that in so far as Claims 1(5) to
1(7) relating to service tax, the Petitioner has not disputed its liability
for payment and there is no ground of challenge in the Section 34
Petition raised as regards the Tribunal's findings on these claims.
73. Mr. Sen has submitted that with regard to claims 1(8) to
1(11) regarding extra over basic rate there is no ground of challenge
in the Section 34 Petition raised as regards the Tribunal's findings on
these claims.
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74. Mr. Sen has submitted that as regards Claims 1(12) and
1(13) i.e. material supplied by PRIL there is no ground of challenge
in the Section 34 Petition as regards the Tribunal's findings on these
claims.
75. Mr. Sen has submitted that regarding Claims 2 and 4,
these claims were rejected by the Tribunal.
76. Mr. Sen has submitted that Claims 3, 5 and 6 are
regarding delay. He has submitted that, it was the case of the
Petitioner before the Tribunal that the project was delayed by the
Respondent and that this fact has been allegedly admitted by the
Respondent in a recital recorded in the Deed of Settlement dated 31st
October, 2011.
77. Mr. Sen has submitted that it was the case of the
Respondent before the Tribunal that the project was delayed due to
various circumstances beyond its control and for no fault of the
Respondent. He has referred to the main cause of delay attributed by
the Respondent, during the contract period i.e. upto 22nd October,
2011 being delay in issuing of drawings; delay due to obstructions by
third parties and delay by the Petitioner in making payments. He has
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submitted that the main cause of delay attributed by the Respondent
post execution of the Deed of Settlement was due to delay in supply
of kitchen granite; delay due to obstruction by third parties; delay in
issuance of certain drawings and delay by the Petitioner in making
payments. He has submitted that the Tribunal upon considering the
submissions of the parties and evidence on record came to the
conclusion that the delay in completion of the project was not
attributable to the Respondent.
78. Mr. Sen has submitted that it was in light of the findings
of the Tribunal that it held in paragraph 31 of the Award that "not
much importance should be given to" the recital in the Deed of
Settlement as sought to be so heavily relied upon by the Petitioner as
the same are "formal recitals....which are usually found for
maintaining good relations as long as the work is completed and full
payment is received".
79. Mr Sen has submitted that it is trite law that evidence
can be led to explain any recital of statement in a document. He has
placed reliance upon Hindu Public Vs. Rajdhani Puja Samithee21,
21 (1999) 2 SCC 583.
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paragraph 20 and Manickathamal Vs. Nallsami Pillai22, paragraphs 5,
6 & 8.
80. Mr. Sen has submitted that in so far as Claim No.(3) is
concerned, as per Clause 3 of the Deed of Settlement, the Respondent
was to furnish four performance guarantees of Rs.50 lakh each
amounting to a total of Rs.2 Crores to the Petitioner. Further, under
Clause 6 of the Deed of Settlement, the Petitioner was conferred a
right to terminate the contract and invoke the Bank Guarantees, if the
Respondent failed to achieve the Milestones set out in Deed of
Settlement.
81. Mr. Sen has submitted that it is an admitted position that
after execution of the Deed of Settlement, the Petitioner did not
terminate contract and time was extended to complete works by the
Respondent from time to time. He has submitted that therefore, the
invocation by the Petitioner of the Bank Guarantees on 28th
November, 2013 i.e. after all the works were completed and snags
were attended to by the Respondent, was unjustified and not in
accordance with the Deed of Settlement.
22 1976 SCC OnLine Mad 32.
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82. Mr. Sen has submitted that it has therefore, been held by
the Tribunal that the invocation of Bank Guarantees by the Petitioner
was wrongful and the Tribunal has correctly granted this claim to the
Respondent.
83. Mr. Sen has submitted that regarding Claim Nos.5 and 6,
it is the case of the Respondent that due to the delay caused to the
project, for no fault of the Respondent, the Respondent was required
to incur additional expenditure during the extended period of
contract amounting to Rs.2,84,60,550/- as per the details provided in
Annexure C-10 of the Statement of Claim. Further, the Respondent
was required to incur additional expenditures for retaining its
machinery, tools and other construction equipments at the site during
the extended period of Contract, which caused loss to extent of
Rs.74,90,758/- to the Respondent (Claim 6) as per details provided
in Annexures C-11 to C-13 of the Statement of Claim.
84. Mr. Sen has referred to the evidence of CW2 and CW4 on
these claims. He has submitted that there is no cross examination by
the Petitioner on this claim whatsoever. It is settled law that in the
absence of questions being put to a witness, a party cannot seek to
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discredit the witnesses testimony. He has relied upon Laxmibai Vs.
Bhagwantbuva23, paragraph 40 in this context.
85. Mr. Sen has submitted that considering the evidence, the
Tribunal has correctly granted these claims in favour of the
Respondent; especially given the fact that it came to the conclusion
that the delay was not attributable to the Respondent. He has
submitted that the findings of the Tribunal are not only plausible but
also a correct view of the matter and merits no interference in a
Section 34 Petition.
86. Mr. Sen has submitted that regarding Claims 7 and 8
which are for interest due to delayed payments made by the
Petitioner towards (a) running accounts bills and (b) payments for
additional constructed area, these claims are based on Clause 1/6.6.1
of the Contract and Clause 9 of the Deed of Settlement. These
Clauses provide that RA Bills are required to be paid by the Petitioner
to Respondent within specified time period.
87. Mr. Sen has submitted that the Petitioner has incorrectly
relied upon Clause 1 /7.6.9 of the contract. He has submitted that the
23 (2013) 4 SCC 97.
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said Clause provides that there would be no claim for interest in
respect of amounts which are lying in the possession of the DM due
to any dispute between the DM and the Contractor. He has submitted
that no instance of any such dispute has been referred to by the
Petitioner. He has submitted that since no amounts were lying in the
possession of DM and the Petitioner having demonstrably failed to
make payment of the RA bill within the stipulated time, the
Respondent was entitled to claim interest on the delayed payment.
88. Mr. Sen has submitted that the Respondent had proved
that it had constructed an additional area beyond what was
contemplated in the Contract but the Petitioner failed to make
payment of the same. Accordingly, the Respondent has rightly claim
for interest, in respect of Claim No.8, on the sum due to it for such
additional constructed area.
89. Mr. Sen has submitted that based on evidence on record,
the Tribunal correctly came to the finding that Claim Nos. 7 and 8
regarding interest ought to be granted. As regards, Claim No.8, the
Tribunal reduced the claim amount proportionately in view of its
findings as to the quantum of the additional area constructed by the
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Respondent.
90. Mr. Sen has submitted that regarding Claim Nos.9 and
10, namely for (i) pendente lite interest due against outstanding
amounts payable by the Petitioner to the Respondent based on RA
bills and Final Bills, and (ii) future interest on the Award sum, there
are no oral submissions made by the Petitioner contesting the claims.
91. Mr. Sen has submitted that regarding Claim No.11, costs,
there are no oral submissions made by the Petitioner contesting the
claim in the present proceedings.
92. Mr. Sen has submitted that all 12 counter claims have
been rejected by the Tribunal. During the course of arguments in the
present proceedings the Petitioner has only contested the rejection of
one of its Counter Claims i.e. Counter Claim No.1 for liquidated
damages. The Petitioner's Counter Claim No.1 was premised on the
allegation that the Respondent was responsible for delays caused to
the project and the Respondent failing to complete the works at site.
The Petitioner claim damages at the 5% of the contract sum as per
Clause 1/3.21.1 of contract.
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93. Mr. Sen has relied upon the findings of the Tribunal
concurring with the Respondent's submission that the delays caused
to the project are attributable to the Petitioner and not the
Respondent.
94. Mr. Sen has submitted that in view of such findings the
Tribunal has rightly rejected the Petitioner's claim for liquidated
damages.
95. Mr. Sen has submitted that the Tribunal has found that
the Petitioner failed to produce the best evidence in defense of the
Respondent's allegations that the Petitioner failed to timely provide
GFC drawings. He has submitted that the Tribunal has relied upon
the evidence on record to arrive at such finding. He has submitted
that it is settled law that, if the party fails to produce evidence, which
it could produce to prove a particular fact that it asserts, then the fact
of non production of the same ought to be presumed as the evidence
being unfavourable to it and adverse inference with respect to the
same ought to be drawn. He has relied upon Section 114 (g) of the
Evidence Act in this context.
96. Mr. Sen has submitted that the Tribunal has rightly come
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to finding that the Respondent has proved its case on delay and that
the Petitioner failed to produce its best evidence to disprove the
same. The findings of the Tribunal cannot be faulted; especially in the
scope of Section 34 Petition.
97. Mr. Sen has accordingly submitted that the present
Commercial Arbitration Petition ought to be dismissed with costs.
98. Having considered the submissions, the Petitioner has
impugned the findings of the Arbitral Tribunal predominantly on the
ground that the Tribunal had refused to give effect to the Deed of
Settlement, where in the Recital it is recorded that the Respondent
had failed to fulfil its part of its obligations. It is further recorded that
the Petitioner was then constrained to terminate the agreement vide
notice dated 22nd October, 2011. It is the Petitioner's contention that
the Tribunal has allowed the Respondent to wriggle out of the
consequences of the Deed of Settlement on a plea that it was made to
execute the said instrument by coercion or under financial duress,
neither of which the Respondent produced even a shed of evidence.
The Petitioner further contends that the findings of the Tribunal
refusing to give effect to the Deed of Settlement is perverse.
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99. In my view, this ground of challenge to the impugned
award merits non acceptance in view of the Tribunal after
considering the pleadings and the evidence on record coming to the
conclusion that the delay in completion of the project was not
attributable to the Respondent. Although, the Tribunal has referred to
the pleadings of the Respondent / Claimant, wherein it was asserted
by the Respondent had been coerced into entering into the Deed of
Settlement by the Petitioner and there is an assertion of duress /
coercion raised by the Respondent, this was not the basis for the
Tribunal not giving importance to the Recital in the Deed of
Settlement. The Tribunal has considered the aforementioned Recital
in the Deed of Settlement as being a formal recital which is usually
found for maintaining good relations as long as the work is
completed and full payment is received.
100. The Supreme Court in Hindu Public (Supra) relied upon
by the Respondent has held that the evidence can be led to explain
any recital or statement in a document. In the said decision, it has
been held in paragraph 20 as under:-
"20. It is in the evidence of witnesses examined on
behalf of the "Hindu Public" before the Assistant
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Commissioner that para (a) of the aims and objects
was introduced along with paragraph (b) so as to
ensure that the request for grant of lease of this very
land was not rejected by the Government on the
ground that land could not be leased exclusively for
religious purposes. On this aspect, the Assistant
Commissioner rejected the oral evidence as
inadmissible as it contradicts the recitals in the deed
of registration of the Society in view of Section 91
and 92 of the Evidence Act, 1872. In our view, this is
not correct in law. Oral evidence could be adduced
to show that the recitals in a deed were nominal or
were not intended to be acted upon or that they
were not meant to alter the existing state of affairs.
Oral evidence could therefore, be adduced to show
that the Society's main concern was the celebration
of the Durga Puja festivals etc. and that other
activities were subsidiary. Therefore, the Deputy
Commissioner was right in relying on this part of the
oral evidence."
101. The Supreme Court has placed reliance upon Sections 91
and 92 of the Evidence Act, 1872 which provides that oral evidence
could be adduced to show that the recitals in a deed were nominal or
were not intended to be acted upon or that they were not meant to
alter the existing state of affairs.
102. This has also been held in Manickathammal & Ors.
(Supra), relied upon by the Respondent. In paragraph 5, the Madras
High Court has held that "There are cases and cases like the one in
the instant case, whereunder if a genuine doubt is raised about truth
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of the recital then, Courts are not helpless but they are in a position
to make a further probe into the truth or falsity of the recital and
come to a conclusion".
103. The Tribunal has carried out the aforementioned exercise
of appreciating the evidence on record and thereafter deciding the
issue as to whether the delay in completion of the project was
attributable to the Respondent as recorded in the recital. The genuine
doubt of the Recital was raised by the Respondent in the arbitral
proceedings. It has been the Respondent's contention that the delay
was not attributable to it and was attributable to the Petitioner. It is
after appreciating the evidence on record that the Tribunal has held
in favour of the Respondent on the issue of delay in completion of the
project.
104. The Tribunal has held that the Petitioner had not
considered time to be of the essence of the contract, and this after
considering that the Petitioner had upon execution of the Deed of
Settlement not terminated the contract and instead from time to time
extended the time to complete the works by the Respondent. The
material on record shows that the Respondent completed the work at
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site after the timeline set in the contract and Deed of Settlement by
attending to all snags pointed out by the Petitioner from time to time.
There were delays which were attributable to third parties and not to
the Respondent as borne out from the material on record.
Accordingly, the Tribunal has held that the invocation of the Bank
Guarantees by the Petitioner was wrongful and granted the Claim of
the Respondent.
105. The Tribunal has also appreciated the evidence on record
whilst granting the Claims in favour of the Respondent regarding
additional expenditure incurred by the Respondent during the
extended period of the contract and additional expenditure incurred
for retaining its machinery, tools and other equipment at site during
the extended period of contract. This upon finding that the delay is
not attributable to the Respondent. There was no cross examination
by the Petitioner on the claim of additional expenditure incurred by
the Respondent. These findings of the Tribunal are not only a
plausible but a correct view and in any event merits no interference
in a Section 34 Petition.
106. It is well settled that in a Section 34 Petition, the
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evidence cannot be re-appreciated, particularly where the Tribunal
has appreciated the evidence and come to a possible view. In
Associate Builders (Supra) the Supreme Court has held in paragraph
33 that "A possible view by the arbitrator on the facts has necessarily
to pass muster as the arbitrator is the ultimate master of the quantity
and quality of evidence to be relied upon when he delivers his
arbitral award". A similar view has been taken in MSEDCL (Supra) at
paragraph 51 and Ssangyong Engineering (Supra) at paragraph 38 as
well as Delhi Airport Metro Express Pvt. Ltd. (Supra) at paragraph
29, which have been relied upon by the Respondent. The Petitioner
by raising such grounds of challenge to the impugned award is
treating the Section 34 Court as if it is a Court of First Appeal and
which the aforementioned decisions relied upon by the Respondent
militate against.
107. The Claims which have been raised by the Respondent
on completion of works; for additional built up area; for non tender
items; apart from the aforementioned Claim for delay are Claims
which have been considered by the Tribunal after appreciation of
evidence and thereafter finding in favour of the Respondent. Further,
the Tribunal has interpreted the contract and which interpretation is
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a possible view which in no event can be disturbed by a Section 34
Court. Thus, it is not open for a Section 34 Court to go into the
details of each Claim and / or consider whether the Tribunal has
appreciated the evidence appropriately. This given the settled law
that a Section 34 Court can only disturb the Award where there is a
patent illegality on the face of the Award or perversity in the findings.
This Court finds that neither of the aforementioned have been
established by the Petitioner in their challenge to the Arbitral Award
under Section 34 of the Arbitration and Conciliation Act, 1996.
108. The findings on interest and costs by the Tribunal in
favour of the Respondent is also upon appreciation of the evidence on
record viz. that the delay was not attributable to the Respondent.
Hence these findings also call for no interference by a Section 34
Court.
109. I further find that the Tribunal having come to the
conclusion that the delay was not attributable to the Respondent has
rejected the counter claim of the Petitioner for liquidated damages
and this too after appreciating of evidence and interpretation of
contract which interpretation is a possible view, and hence this Court
cannot interfere with such findings of the Tribunal.
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110. I am also of the view that the finding on adverse
inference to be drawn against the Petitioner for non production of the
best evidence in defence, by upholding the Respondent's claim that
the Petitioner failed to timely provide the GFC drawings are on an
appreciating of evidence. Further, it is settled law that where a party
fails to produce evidence which could have produced to prove a
particular fact that it asserts then that fact of non production of the
same ought to be presumed as the evidence being unfavourable to it
and an adverse inference with respect to the same ought to be drawn
as per Section 114(g) of the Evidence Act.
111. I find no valid grounds of challenge to the impugned
Award has been raised in the Petition by the Petitioner. This upon
considering that the grounds of challenge do not fit within the
parameters of the Section 34 of the Arbitration and Conciliation Act.
112. Accordingly, the Commercial Arbitration Petition is
dismissed. There shall be no order as to costs.
[ R.I. CHAGLA J. ]
