Calcutta High Court
The Kolkata Municipal ... vs Rajpath Contractors & Engineers ... on 14 July, 2023
IN THE HIGH COURT AT CALCUTTA
(Ordinary Original Civil Jurisdiction)
ORIGINAL SIDE
Present:
The Hon'ble Justice Krishna Rao
AP 1985 of 2014
The Kolkata Municipal Corporation
Versus
Rajpath Contractors & Engineers Limited
Mr. Jaydip Kar, Sr. Adv.
Mr. A.N Banerjee
Mr. Rudranil De
.....For the KMC
Mr. Sakya Sen
Mr. Priyankar Saha
Mr. Amritam Mondal
Mr. Hemant Tiwari
Ms. Ananya Chakraborty
Ms. Shipra Nashar
.....For the respondent
Hearing Concluded On : 16.05.2023
Judgment on :14.07.2023
Krishna Rao, J.:
1. This is an application under Section 34 of the Arbitration and
Conciliation, Act, 1996 challenging the Award passed by the Learned
Sole Arbitrator dated 22.09.2014 wherein the Learned Arbitrator has
awarded an amount of Rs. 2,69,05,241/- (Rupees two crores sixty nine
lakhs five thousand two forty one) with the direction upon the
petitioner herein i.e. Kolkata Municipal Corporation Limited (herein
after referred to as "KMP") to pay the said amount to the respondent
within a period of thirty (30)days from the date of Award. In default of
payment of the same within the aforesaid time period, the awarded
amount shall be paid by the KMC to the respondent along with interest
@ 18% per annum for the period from date of the award till the date of
payment.
2. The Kolkata Municipal Corporation invited a tender on 17th October,
1996 for renovation of existing 7 M.G. Semi Underground Reservoir at
Tallah and the value of the said work was fixed at Rs. 3,53,00,288/-.
The respondent had participated in the said tender and the respondent
had accepted the tender of the petitioner for a total value of Rs.
3,77,39,537/- and accordingly the respondent had deposited an
earnest money of Rs. 1,10,751/-. After receipt of the tender of the
petitioner, work order was issued on 24th July, 1997 and as per the
work order the work was to be completed within 12 months from the
date of the work order. An Article of Agreement was entered between
the parties which stipulated all the conditions of the contract as laid
down in the tender document.
3. The respondent has completed the work on 31st July, 1999 and after
completion of the work the respondent has submitted his 3rd Running
Account and Final Bill on 16th September, 1999 which was received by
the petitioner on 20th September, 1999. Even on receipt of the Final
Bill, no amount was paid by the petitioner to the respondent inspite of
several reminders. Accordingly, the respondent had filed writ petition
being W.P No. 1925 of 2002 praying for appropriate direction for release
of payment and during the pendency of the writ application, by a letter
dated 15th May, 2005, the petitioner has blacklisted the respondent.
4. Challenging the order of blacklisting, the respondent had filed another
writ application being WP No. 779 of 2005 and by an order dated April
25, 2005, the order of blacklisting was set aside. Being aggrieved with
the said order, the petitioner has preferred an appeal and the said
appeal was disposed of at the ad interim stage on 17th May, 2007 with
the modification by deleting the word 'set aside' and incorporating the
words 'operation of the impugned notification till the disposal of the
writ petition'. Finally, the writ petition was disposed of on 24th
February, 2015 wherein the Hon'ble Court had set aside the said order
of blacklisting.
5. This Court by an order dated 26th August, 2009 had disposed of the
first writ application filed by the respondent by giving liberty to the
respondent to file a civil suit or arbitration seeking appropriate remedy
as no relief can be granted in the writ petition. While disposing of the
first writ petition, the Hon'ble High Court also observed that the period
during which the first writ petition was pending before the Hon'ble High
Court shall be excluded for the purpose of limitation under Section 14
of the Limitation Act, 1963.
6. After the disposal of the first writ application, the respondent had
initiated a Civil Suit being CS No. 255 of 2009 on 1st September, 2009.
In the said suit, the respondent had also filed an application under
Chapter XIIIA of the Original Side Rules of this Court and during the
pendency of the said application, the parties have decided to enter into
an arbitration agreement resolving to settle all disputes and differences
between the parties with respect of the work awarded to the
respondent.
7. On 5th April, 2011, both the parties have entered into an agreement
wherein the parties agreed to resolve their disputes pursuant to such
arbitration agreement and accordingly the Hon'ble High Court referred
the dispute to the arbitration on 5th April, 2011. As the petitioner has
not made the payment till 17th May, 2011, accordingly, the respondent
initiated an arbitration proceeding by filing a statement of claim for a
total sum of Rs. 11,28,29,317/-. Before the Learned Arbitrator, the
petitioner made an overall application under Section 16 of the
Arbitration and Conciliation Act, 1996 challenging the jurisdiction of
the learned Arbitrator to decide upon certain claims on the ground that
the claims mentioned under Category- A & C of the Statement of Claim
are outside the purview of civil suit referred to the arbitration and the
said claims cannot be the subject-matter of the arbitration. The
Learned Sole Arbitrator after hearing of the parties rejected the
objection raised by the petitioner under Section 16 of the Arbitration
and Conciliation Act, 1996 on 26thSeptember, 2012. After considering
the submission of the parties and the evidence laid by the parties, the
learned sole Arbitrator has passed the impugned order on 22nd
September, 2014.
8. Mr. Jaydip Kar, Learned Senior Advocate representing the petitioner
"KMP" submitted that the arbitration agreement contemplates that only
the claim and counter claims, if any, of the parties which are the
subject-matter of CS No. 255 of 2009 are referred to arbitration but the
learned Arbitrator without considering the said clause of the agreement
has rejected the application of the petitioner under Section 16 of the
Arbitration and Conciliation Act, 1996 and taken into consideration of
Schedule-A as well as Schedule-C of the claim of the respondent.
9. Mr. Kar submitted that from the order dated 5th April, 2011 wherein the
matter was referred to arbitration, it was clarified that there is no
further doubt that only the matters which were the subject-matter of
CS No. 255 of 2009 are referred to the arbitration. He submits that the
words used in order dated 5th April, 2011 are "an agreement has been
entered into today between the parties by which they have decided to
refer the matters covered by the suit to arbitration", these means that
the reference is limited to the subject-matter of the suit.
10. Mr. Kar by relying upon the judgment reported in AIR 1985 SC 1156
(Renusagar Power Corporation Limited -vs- General Electric
Company & Anr.) had submitted that the Supreme Court has held
that "whether a given dispute inclusive of arbitrator's jurisdiction
comes within the scope or purview of an arbitration clause or not
primarily depends upon the terms of the clause itself; it is a question of
what the parties intend to provide and what language they employ". He
submits that there is no doubt, the expression "arising out of" or "in
connection with" are the widest amplitude but used in the context of the
present arbitration agreement they are descriptive of and reflect the
amplitude of the suit itself but not the scope of the arbitration
agreement. The scope of the arbitration agreement would be wider than
the scope of the suit.
11. Mr. Kar submitted that the claimant has divided his claims into three
categories i.e. Category-A, Category-B and Category-C. He submits that
Category-B claims have been described as particulars of the dues as
claimed in the suit but there is no heading in respect of Category-A and
Category-C to indicate what their origin is or even to indicate that their
origin is not related to the subject-matter of the suit.
12. Mr. Kar submitted that Claims A and C ought not to have been
entertained as the respondent have raised the said claims for the first
time by a letter dated 4th May, 2011 and the purported claim is false,
frivolous and fatuous.
13. Mr. Kar relying upon the judgment reported in AIR 1999 SC 2102
(Olympus Superstructures Limited vs. Meena Vijay Khetan & Ors.)
submitted that the Hon'ble Supreme Court allowed the plea of
jurisdiction to be raised even at the stage when the application for
setting aside of the award was under consideration under Section 34 of
the Act of 1996.
14. Mr. Kar submitted that the Hon'ble Arbitrator has awarded a sum of
Rs. 46,86,644/- in respect of Claims of Category-A which have surfaced
for the first time in the reference and do not form the subject-matter of
the suit. He submits that the Learned Arbitrator has awarded part of
the Claim of the Category-A on account of off-site and on-site expenses
and costs on account of area, apart from being non-arbitrable and
barred by limitation. He further submits that there can be no dispute
that such claim must have been arisen prior to completion of the work
and no on site and off site expenses could have been incurred by the
respondent after completion of the work.
15. Mr. Kar submitted that disregarding the date of completion of the work
and taking into account, the date of Final Bill as the starting point of
limitation, then also, the claim towards on-site and off-site expenses
are barred by limitation. He submits that the sum of Rs. 37,73,952/-
was awarded on account of on-site and off-site expenses did not form
part of the suit filed before the Hon'ble High Court and thus period
during which the suit was pending before this Court would not matter
for the purpose of limitation. He submits that as long as the on-site and
off-site expenses are concerned, no evidence has been adduced by the
respondent to support the claim and thus the award of Rs. 37,73,952/-
is vitiated as the same has been awarded without any evidence.
16. Mr. Kar submitted that the Arbitrator has awarded a sum of Rs.
9,12,692/- on account of costs whereas the claim was for Rs.
5,40,692/- though there is no computation by the claimant, nor any
evidence adduced in support of the claim for Rs. 4 lakhs (over and
above Rs. 5,40,692/-) made in the statement of the claim. He submits
that the additional sum of Rs. 4 lakhs is without any basis and without
any evidence.
17. Mr. Kar submitted that as regard Claim of Category-B are concern, the
Arbitrator has awarded a sum of Rs. 1,45,02,288/- towards the balance
of 2nd Running Account Bill and a sum of Rs. 50,41,348/- on account
of 3rdRunning Account and Final Bill. He submits that the said claims
are also barred by limitation as 2ndBill was issued on 31st August, 1998
and part payment was made on 27th May, 1999. He submits that the
respondent claimed for two bills separately on the basis that they did
not represent advance against work done/to be done and to be
adjusted against the final bill but payment on account of the work
actually done in the concern bill. He submits that the cause of action
accrued on the date of receipt of such bill and limitation for recovery of
the amount thereunder expired three years from the date of receipt of
the said bill by the petitioner. He submits that taking into account, the
exemption towards the 2ndRunning Account Bill is barred by limitation.
He also submitted that taking into account the date of receipt of 3rd
Running Account and Final Bill the claim is barred by limitation. He
submits that the Hon'ble Court while referring the parties to arbitration
in terms of the arbitration agreement dated April 5, 2011 did not grant
any exemption under Section 14 of the Limitation Act nor did it hold
that the time taken in processing the suit should be excluded while
computing limitation.
18. Mr. Kar submitted that the amount awarded on account of escalation
aggregating Rs. 18,86,977/- would not have been awarded as the same
being contrary to the express terms of the contract between the parties.
He submits that the contract expressly bars and prohibits the award for
escalation and in face of such prohibition, no award could have been
made by the Learned Arbitrator. He submits that the claim of
escalation is not proved and the Learned Arbitrator has taken various
parameters in the formula for escalation/de-escalation have been
misapplied. He submits that on account of retention money and refund
of earnest money are not payable. Retention money has been claimed
twice over and above the respondent is purporting to make unjust
enrichment out of such award and having been failed to perform his
contractual obligations cannot be entitled to refund of security deposit
and earnest money.
19. Mr. Kar submits that the finding of the Learned Arbitrator are bad in
law and there are errors on the face of the award and the materials of
the record go to show, inter alia, that the Learned Arbitrator had come
to its finding and conclusion without any basis. He submits that the
Learned Arbitrator came to the findings, which are unreasonable,
perverse and against the public policy of India.
20. Mr. Kar submits that the arbitral award is bad by virtue of Section 34
(2) (a) (iv) of Section 34 (2) (b) (i) (ii) of the Act of 1996.
21. Mr. Kar relied upon the following judgments in support his
submissions :
i. (2020) 14 SCC 643 (Geo Miller & Co. Pvt. Ltd. -vs-
Chairman Rajasthan Vidyut Utpadan Nigam).
ii. (2010) 8 SCC 563 (Rashtriya Chemicals & Fertilizers
Limited -vs- Chowgule Brothers &Ors.).
iii. (2012) 12 SCC 581 (State of Goa -vs- Praveen
Enterprises).
iv. (2022) 1 SCC 131 (Delhi Airport Metro Express Pvt.
Ltd. -vs- Delhi Metro Rail Corporation Ltd.).
22. Mr. Sakya Sen, Learned Advocate representing the respondent submits
that the main point which was argued by the petitioner before the
Learned Arbitrator was the claims under Category-A and Category-C of
the Statement of the Claim were not the subject-matter of the suit and
therefore, not arbitrable. He submits that the Hon'ble High Court by its
order dated 5th April, 2011, gave effect to the arbitration agreement and
was executed between the parties herein on the same date. The
arbitration agreement envisages settlement of all disputes between the
parties: "arising out of and in connection with the work order dated 24th
July, 1997" and also "the disputes and differences in respect of and/or
in relation to and/or arising out of the said agreement dated 27th
August, 1997 being claims of the plaintiff and the counter claims, if any
of the defendant in CS No. 255 of 2009 referred to above through
arbitration........".
23. Mr. Sen submits that the word "also" must be taken as "including" in
the facts and circumstances of the case. In other words that all
disputes arising between the parties in connection with the subject
contract/work order including the disputes which were covered by the
suit were agreed to refer to arbitration. He submits that the arbitration
agreement did not cover only the disputes referred to the suit.
24. Mr. Sen submitted that after receipt of the statement of claim, the
petitioner has filed statement of defence but the petitioner has not
raised any issues to the effect that the claims which were not in the
suit are not arbitable before the Arbitral Tribunal.
25. Mr. Sen submitted that final bill was submitted on 16th September,
1999 and the writ petition was filed on 6th September, 1999. He
submits that within three years from submitting the final bill, the
respondent has filed writ petition. The writ petition was disposed of on
26th August, 2009 and the suit was filed on 1st September, 2009. He
submits that the respondent has filed the suit within the stipulated
period of time and thus it cannot be said that the claim made by the
respondent is barred by limitation.
26. Mr. Sen submitted that by way of letter dated 4th May, 2011, additional
claim was raised which was duly incorporated in the statement of claim
and the same was duly decided by the Learned Arbitrator by taking into
consideration of the order of reference, agreement and the suit filed by
the respondent.
27. Mr. Sen relied upon Clause 1 (b) (ii), Clause 1 (c), Clause 7, Clause 8
and additional condition Clause 21 and submits that the said clauses
of the agreement are relevant for the purpose of deciding as to how
limitation could have been applied.
28. Mr. Sen submitted that Final Bill is prepared and the same is certified
for payment, the question of limitation does not arise in the work's
contract. He relied upon unreported judgment passed by the Division
Bench of this Hon'ble Court in FMA No. 1093 of 2013 (M/s. Biptrade
vs. Union of India &Ors.) and submitted that if there was any
question of right to go to arbitration being barred by limitation, such
issue ought to have been decided at such stage as it was incumbent on
the Chief Justice or his designated exercising authority under Section
11(6) of the Act to adjudicate on such aspect before referring the
disputes to the arbitration. The second aspect of limitation could not
have been re-opened by the employer after the arbitral reference
commenced in terms of the order under Section 11 of the Act.
29. Mr. Sen submitted that admittedly final bill was accepted on 20th
September, 1999 thereby three years period would lapse on 19th
September, 2002 but the writ petition was filed on 6th September, 2002
i.e. before 15 days, the limitation could expire and after disposal of the
writ petition on 26th August, 2009 i.e. within 5 days the suit was filed
on 1st September, 2009 and hence, there is no limitation as alleged by
the petitioner.
30. Mr. Sen submitted that additional claims being Category-A and
Category-C of the Statement of the Claim are incidental claims arising
out of the claims made in the suit. Such claims are consequential to
the claims made in the suit and would arise with the claim in the suit
and would die down if the claim made in the suit does not succeed. He
submitted that the claim do not have any independent existence.
31. Mr. Sen submitted that in the agreement itself the escalation Clause is
existing and accordingly by virtue of the said formula, the Learned
Arbitrator has granted escalation.
32. Mr. Sen submitted that the factual finding as held by the Learned
Arbitrator it was not open to challenge and the findings are not
contrary to the fundamental policy of Indian Law. He relied upon the
Judgment reported in (2015) 3 SCC 49 (Associate Builders vs. Delhi
Development Authority) and submitted that when a Court is applying
the "public policy" test to an arbitral award, it does not act as a Court
of appeal and consequently errors of facts cannot be corrected. A
possible view by the arbitrator on factsis necessarily to pass muster as
the arbitrator is the ultimate master of quantity and quality of evidence
to be relied upon when he delivers his arbitral award.
33. Mr. Sen submitted that relying upon the judgment reported in 2017 (5)
CHN 221 (DB) (State of West Bengal vs. Pam Developments Private
Limited) and submitted that in the said case also by which the claim of
escalation was allowed in the face of no damage clause was not
interfered with by the Hon'ble Supreme Court.
34. Mr. Sen further relied upon the judgment reported in (2007) 13 SCC
43 (K.N. Sathyapalan (Dead) by Lrs. vs. State of Kerala & Anr.)
and the judgment reported in (2008) 16 SCC 128 (Associated
Construction vs. Pawanhans Helicopters Limited).
35. Clause 1 (b) (ii) :
For the value of work above Rs. 10.00 lakhs -
Ernest money deposited shall be converted into security deposit at the
time of execution of agreement in case of successful tenderer and a
further amount is to be deposited at the time of execution of agreement
to total S.D. @ 2%.
The security deposit will be refunded to the party immediately after
payment of Final Bill.
Clause 1 (c) :
Another 8 % will be deducted as Retention Money progressively from R.A.
Bills at the time of passing of the bills contractors. The Retention Money
is not to be released before one year from the date of completion of the
work and subject to issuing of satisfactory reports by the concerned
department.
Clause 7 :
No payment shall be made for works estimated to cost less than ten
thousand rupees, till after the whole of the works shall have been
completed and certificate of completion given. But in the case of works
estimated to cost more than ten thousand rupees, the Contractor shall
on submitting the bill therefor, be entitled to receive monthly payment
proportionate to the part thereof, then approved and passed by the
Engineer-in-Charge whose certificate passing of the sum so payable shall
be finaland conclusive against the Contractor. But all such intermediate
payments shall regarded as payments by way of advance against the final
payment only and not as payment for work actually done and completed,
and shall not preclude the requiring of bad, unsound and imperfect or
unskillful work to be removed and taken away and reconstructed or re-
erected, or be considered as an admission of the due performance of the
contract, or any part thereof. In any respect of and reconstructed, or re-
erected or be considered as an admission of the due performance of the
contract, or any part thereof. In any respect of the accruing of any claim,
nor shall it calculated, determine or affect in any way the powers of the
Engineer-in-Charge under these conditions or any of them as to the final
settlement or adjustment of the accounts otherwise or in any other way
vary or affect the contract. The final bill shall be submitted by the
Contractor within one month of the date fixed for completion of the work,
otherwise the Engineer-in-charge's certificate of the measurement and of
the total amount payable for the work accordingly shall be final and
binding on all parties.
Clause 8 :
A bill regarding works executed in the previous month shall be submitted
by the Contractor in each month on or before the date fixed by the
Engineer-in-Charge, and the Engineer-in-Charge shall take or cause to
be taken the requisite measurement for the purpose of having the same
verified and the claim as far as admissible adjusted, if possible, before
the expiry of ten days from the presentation of the bill. If the Contractor
does not submit the bill within the time fixed as aforesaid, the Engineer-
in-Charge may depute a subordinate to measure up the said work in the
presence of the Contractor whose counter-signature to the measurement
list will be sufficient warrant ; and the Engineer-in-charge may prepare a
bill from such list which shall be binding on the Contractor in all
respects.
Bills to be on printed forms.
Clause 21 :
Work Programme :
The contractor shall have to submit within three days from the written
order to commence work a detailed time schedule for completion of the
works in all respect to the Engineer-in-Charge. The time schedule
approved by the Engineer-in-charge will form the work programme for
the work and shall be binding on the contractor. The work programme
shall no violate the provision of clause-2 of the printed tender form in any
way and prepared in conformity with the condition laid down in clause-2
of the printed tender form and the contractor must maintain the progress
of work in accordance with the work programme. Failure to maintain the
progress of work and completion thereof in accordance with the work
programme will tender the contractor liable to action as laid down to
contract agreement.
Special condition for price contingency of materials and labour
Price escalation or de-escalation will be applicable on tendered
amount for the quantum of the work actually executed on the basis of
the quoted rate as per formula below separately for materials and labour.
The formula is based on consumer price index number of the Reserve
Bank of India Bulletin published periodically. No other formula or
method or calculation will be acceptable.
The escalation or de-escalation will be applicable from the
commencement of the work and will remain valid for the entire period
work in including extended period if any, which extension has been
granted for valid reasons like force majure and or any delay on the part of
the Calcutta Municipal Corporation. Escalation will not however be
allowed if the work is delayed for the fault of the Contractor, even though
extension might have been granted. De-escalation during the period if
any, will however be applicable.
The total escalation cost permissible, calculated on the basis of
formula, will be subject to a maximum limitation of 5 p.c. of the tendered
amount for the quantum of the work actually executed.
Formula for Escalation/De-escalation
(a) Materials :
vm = (0.60W-Md) x Im- Imo
Imo
Where = Escalation/de-escalation on account of
variation of price of materials.
W = Total gross value of the work done at
tendered rate.
Md = Value of the materials issued by the
Deptt. At fixed price.
Or
Value or materials prevailing at the time
of submission of tender.
Im = Wholesale price index number for all
commodities as ruling during the period
under consideration as published in the
Reserve Bank of India Bulletin.
Imo = Wholesale price index number for all
commodities ruling in the month of
submitting Tender as published in the
Reserve Bank of India Bulletin.
(b) Labour
VL 0.25w x IL - Ilo
IL
Where =
VL Escalation de-escalation on account of
variation of price of Labour.
W = Total gross value of the work done at
tendered rate.
IL = Consumer price index No. for industrial
workers applicable for Calcutta Region
as ruling during the period under
consideration as published in the
Reserve Bank of India Bulletin.
IL = Consumer price index number. for
industrial workers applicable for
Calcutta Region as ruling in the month
of submitting Tender as published in the
Reserve Bank of India Bulletin.
(C) Provided that, recovery of materials used
less or in excess as indicated in
paragraphs (a) and (b) of the sub-clause
shall be subject to the decision of the
Dy. Chief Engineer (P&D) who may allow
variation according to Statement III.
ESCALLATION OF RATE BEYOND STIPULATED TIME PERIOD
If for no fault of the Contractor work is required to be executed beyond
stipulated time period for a period of two years, contractor will execute
the work in the extended period at escalated rate as per Reserve Bank
of India Formula given in this schedule.
Statement-III
Consumption of different materials of construction in the corresponding
contract item of Tender shall be computed on the basis of the
quantities shown in the Calcutta Municipal Corporation schedule of
rates, subject to a variation of plus/minus five percent except in case
of steel materials in respect of which the variation shall be 10%. Where,
however, the circumstances of work so require, the Dy. Chief Engineer,
(P&D) shall be competent to allow (for recorded reasons) for a greater
variation.
36. According to Mr. Kar, Learned Senior Advocate the claims made in the
suit are also barred by limitation on the date of Learned Arbitrator
entered into arbitration. As per the submission, the suit is governed by
Article 18 of the Limitation Act which provides a limitation of three
years from the date when the work was completed. He submits that the
work was completed on 31st July, 1999 and thus the dates of filing of
writ petition as well as the civil suit were barred by limitation. As per
record, the work was completed on 31st July, 1999 and the respondent
submitted his 3rd Running Account and Final Bill dated 16th
September, 1999 which was accepted by the petitioner on 20th
September, 1999 and thus the period of three years would lapse on 19th
September, 2002 but the respondent had filed writ petition claiming the
said amount on 6th September, 2002 i.e. 15 days before the limitation
could expire and after disposal of the writ petition on 26th August, 2009
immediately within 5 days, the respondent has filed the suit on
1stSeptember, 2009 and thus this Court does not find any delay of the
claim raised by the respondent.
37. As regard additional claims being Category-A and Category-C of the
Statement of Claim, the Hon'ble High Court by an order dated 5th April,
2011 had appointed a Sole Arbitrator to decide the disputes and
differences between the parties in relation to and/or arising out of one
contract dated 27th August, 1997 entered between the parties. The
relevant portion of the order dated 5th April, 2011 reads as follows :
"An agreement has been entered into today
between the parties by which they have decided to refer
the matters covered by the suit to arbitration in
accordance with the provisions of the Arbitration and
Conciliation Act, 1996. The agreement records the name
of the Arbitrator ... Accordingly, C.S. No. 255 of 2009
and all interlocutory applications therein, including G.A.
No. 3173 of 2009, has been disposed of by referring the
disputes covered thereby to arbitration in accordance
with the agreement filed in Court today."
The High Court has appointed Arbitrator on the basis of the agreement
entered between the parties on 5th April, 2011 and the relevant portion
of the agreement reads as follows :
"The parties abovenamed do hereby resolve and
agree to settle the disputes between them arising out of
and in connection with the said work order dated July
24, 1997 for the work of renovation of the said existing
7 mg. Semi underground reservoir at Tallah and also
the disputes and differences in respect of and/or in
relation to and/or arising out of the said agreement
dated August 27, 1997 being claims of the plaintiff and
Counter-Claims, if any, of the defendant in the said C.S.
No. 255 of 2009 referred to above through arbitration in
accordance with the provisions of the Arbitration and
Conciliation Act, 1996. By consent of parties, Mr. Arijit
Banerjee, Barrister-at-Law of premises No. 1/1B,
Deodar Street, Kolkata - 700 019."
The respondent being the claimant before the Arbitrator has set up
three claims in three categories as Categories - A, B & C which reads as
follows :
"PARTICULARS
1. Loss of profit as per Schedule-I of the letter dated May 4, 2011
.............. Rs. 37,73,952.00
2. Offsite and onsite expenses as per
Schedule-II of the letter dated May 4, 2011
.............. Rs. 37,73,952.00
3. Costs as per Schedule-III of the letter
dated May 4, 2011...........Rs, 5,40,692.00
Sub Total Rs. 80,88,596.00
4. Interest @18% per annum on the due amount
of Rs. 80,88,596.00 from August 01, 1999 to
April 05, 2011 as per Schedule-IV of the letter
dated 5th April, 2011
...... Rs. 1,70,16,633.00
5. Interest @18% per annum on the due amount
of Rs. 80,88,596.00 from April 6, 2011 to May 17, 2011
(Rs. 80,88,596/- X 0.18 X 42 days/365 days)
..... Rs. 1,67,534.00
6. Loss of reputation on the ground of illegal black-listing
Rs. 1,00,00,000.00
Sub Total (A): Rs. 3,52,72,763.00
Particulars of the dues as claimed in the suit
1. Principal amount of second running account bill
...................... Rs. 1,95,02,287.00
Less paid vide cheque No. 988502 dt. 7.5.1999
Rs. 50,00,000.00
Rs. 1,45,02,287.00
2. Principal amount of third running account & final bill
............................................... Rs,
40,51,347.81
3. Escalation Bill .......... Rs. 31,81,630.15
4. Retention Money........Rs. 16,67,233.00
5. Refund of security deposit and earnest money
Deposit Rs. 2,34,478.00
Rs. 91,34,689.00
Sub Total: Rs. 2,36,36,976.00
6. Interest for delayed payment against first running
Account bill @18% from 01.03.1998 to 16.07.1998
= 138 days on Rs. 1,36,00,000.00
(Rs. 1,36,00,000.00 X 0.18 X 138 days/365 days)
Rs. 9,25,545.00
7. Interest for delayed payment against second
Running account bill @18% from 01.09.1998
to 07.05.1999 = 249 days on Rs. 1,95,02,287.00
..... Rs. 23,94, 774.00
8. Interest for delayed payment against second
running account bill @18% from 08.05.1999 to
19.09.1999 = 135 days on Rs. 1,45,02,287.00
(Rs. 1,45,02,287 x 0.18 x 135 days/365 days)
Rs. 9,65,495.00
9. Interest for delayed payment against second
and third running account and final bill
@18% from 20.09.1999 to 31.08.2009 = 3634 days
on Rs. 2,36,36,976.00
(Rs. 2,36,36,976 X 0.18 X 3634 days/365 days)
Rs. 4,23,60,051.00
Sub Total (B) Rs. 7,02,82,841.00
10. Interest for delayed payment against second and third running account
and final bill @18% from 01.09.2009 to 17.05.2011 = 624 days on Rs.
2,36,36,976.00
(Rs. 2,36,36,976 X 0.18 X 624 days/365 days) Sub Total (C)
Rs. 72,73,713.00
Grand Total (sub total A+B+C): Rs. 11,28,29,317.00"
The Arbitration Agreement envisaged of all disputes between the parties
arising out of and in connection with the said work order dated 24th
July, 1997 and also the dispute and differences in respect of and/or in
relation to and/or arising out of the agreement dated 27th August, 1997
being the claims of the plaintiff and counter claims, if any of the
defendant in CS No. 255 of 2009 referred to the arbitration. Combined
reading of the agreement entered between the parties during the
pendency of the suit includes the claims and counterclaims of the suit,
work order and the agreement entered between the parties with respect
of the said work order. The disputes arose between the parties with
respect of the payment of the work executed by the respondent.
Initially, the respondent has filed writ petition and as per the liberty
given by the Writ Court, the respondent has filed civil suit and during
the pendency of the civil suit, the petitioner agreed for arbitration and
entered into an arbitration agreement. The Learned Arbitrator
considered the whole aspect of the matter when the petitioner has
raised the issue with regard to the maintainability of Claims A & C of
the respondent and the Learned Arbitrator had rejected the objection
raised by the petitioner and proceeded with the Arbitration. In the case
of Associate Builders (supra), the Hon'ble Supreme Court has
categorically held that a Court does not sit in appeal over the award of
an Arbitral Tribunal by reassessing or re-appreciating the evidence. The
award can be challenged only under the grounds mentioned in Section
34 (2) of the Act. In the present case, the Arbitrator after hearing of the
parties and after appreciating the relevant orders and documents held
that the claims made by respondent with respect of Claim A and Claim
C are arbitrable and thus this Court does not find any infirmity to
interfere with the finding of the Arbitrator.
38. As regard the escalation, the same has been provided in the agreement
itself in Clause 21 of the additional condition of the agreement and the
formula has also prescribed. The Learned Sole Arbitrator while deciding
the claim of escalation has adopted the method as prescribed in the
agreement. The said clause specified that the total escalation cost as
permissible or calculated on the basis of the formula mentioned
therein, will be subject to maximum limitation of 5 p.c of the tender
amount for the quantum of work actually executed. The Learned
Arbitrator taking into consideration of the said clause has passed the
award and as such this Court does not find any infirmity with regard to
the award passed by the Arbitrator on account of escalation.
39. As regard refund of security deposit and earnest money admittedly the
respondent has deposited a sum of Rs. 1,10,751/- as earnest money
with the petitioner by way of cheque at the time of submitting the
tender form and admittedly the respondent has completed the work
tothe satisfaction of the petitioner and inspite of completion of the
work, the petitioner has not released the said amount in favour of the
respondent and thus the Learned Arbitrator has rightly awarded the
said amount in favour of the respondent.
40. As regard the cost, the Learned Arbitrator has categorically held that
the petitioner has not released the payment of the respondent inspite of
completion of the work and the petitioner has approached the writ
Court, subsequently, the Civil Court and also in the arbitration
proceeding and thus this Court does not find any illegality for awarding
the said cost.
41. In view of the above, this Court does not find any illegality to interfere
with the award passed by the Learned Arbitrator dated 22nd September,
2014. Accordingly, AP 1985 of 2014 is thus dismissed.
Parties shall be entitled to act on the basis of a server copy of
the Judgment placed on the official website of the Court.
Urgent Xerox certified photocopies of this Judgment, if applied
for, be given to the parties upon compliance of the requisite
formalities.
(Krishna Rao, J.)
