Jason Links(I) Pvt. Limited vs Mtnl & Anr.
2001 Latest Caselaw 877 Del

ORDER

J.D. Kapoor, J.

1. Pursuant to this application the award dated 30th March, 1995 passed by Mr. S.K. Aggarwal, Sole Arbitrator and Chief engineer Civil Department of Telecom was filed for making the award rule of the Court. Responding to the notice the respondent filed objections under Sections 15, 16, 30 & 33 of the Arbitration Act, 1940.

2. Respondent no. 1 had awarded the work of construction of cable duct system is Shakti Nagar Local Net Works (ii) for Mahanager Telephone Nigam Limited, New Delhi to the petitioner/claimant. since certain disputes and differences arose between the parties during the execution of the said work the matter was referred for adjudication to Sole Arbitrator- respondent no.2 by the CGM, MTNL to decide and make the award regarding claims/disputes raised by the contractor (Annexure-!) and the counter claims of MTNL if any.

3. The validity of the award has been challenged mainly on the ground that the award suffers from legal error apparent on the face of it inasmuch as the Arbitrator had only decided the claims of the petitioner and refused to discuss and decide the counter claims of respondent no. 1 and has further incorrectly presumed and observed that the counter claims were not referred to the Arbitrator by the appointing authority. Another legal misconduct alleged on the part of the Arbitrator by the appointing authority. Another legal misconduct alleged on the part of the Arbitrator refused to hear the further arguments and closed the proceedings. Thus in nutshell the award has been challenge on the ground that the Arbitrator was not competent to decide the claims of the petitioner without deciding the counter claims of the respondent and such the award is liable to be set aside being bad in law.

4. So far as the challenge of the award as to the claims of the petitioner is concerned it is confined to the admissibility of the claims No. 10 & 11. Let us take the second objection first as it pertains to the finding of fact based on the material and evidence produced before the arbitrator.

5. Claim No. 10: This claim pertains to the extra payment for continuous dewatering alleged to have been done from manholes for giving final A.T. This claim arises out of clause 49 of the General terms and conditions of the contract which provides that any such work shall be carried out by the contractor at his own expenses if it is due to -

i) Use of materials/workmanship not in accordance with contract;

ii) Neglect or failure on the part of the contractor.

6. The Arbitrator has given the finding that the extra item of pumping of water from manholes is clearly due to fault of DDA and hence the cost of pumping is to be paid to contractor.

7. Similarly claim No. 11 which was also in respect of extra payment for repairing of duct alleged to have been damaged by DDA and other agencies on Road to have been damaged by DDA and other Agencies on Road No. 41 between Mh 214 to Mh 216A was allowed on the proof that the damage to the duct route between Mh 214 to 216-A was due to entire fault of DDA and Rajasthan Society and since contractor has relaid the whole length he is entitled for full payment as per agreement and market rates for extra work.

8. According to the learned counsel for the respondent the finding of the Arbitrator that the petitioner had to undertake dewatering as well as relaying the whole lane due to the fault of the DDA was beyond his jurisdiction as he could not fasten the liability upon the respondent for the wrongs of the DDA.

9. Learned Counsel further contended that by no stretch of imagination clause 49 can be widened to accuse the respondent for not providing the use of material or workmanship in accordance with the contract due to the fault of DDA who was not a party to the agreement and as such the contractor was responsible for the work of continuous dewatering as well relaying the whole lane. Learned counsel's interpretation of clause 49 is that as far as respondent is concerned neither dewatering was extra work as the Petitioner was supposed to keep the trenches free of water nor relaying the cable duct at the aforesaid place was extra work, as it was the duty of the petitioner to do the work in proper manner and hand over the site to the respondent with duly laid cable duct and if during the work some damage was cause due to the fault of DDA the respondent MTNL was not liable for the damages or the extra work done by the petitioner.

10. On the contrary it is contended by the learned counsel for the petitioner that it the electricity department, traffic department or DDA, MCD, NDMC, or any other agency interferes in the work and damages the site, it is the responsibility of the respondent to proved the clear site and the contractor is not supposed to complete the work without the clear site. the contention of the learned counsel appears to be sound as it was for such reasons or causes that the extension of completing the work was granted by the respondent.

11. The object of the contract is not to put the contractor in such a situation that he would incur much higher expenses than the amount of the work itself. it is the duty of the authority to provide the clear site for the work to the contractor and if during the work any third agency interferes or causes such obstacles or obstructions that may result in either extension of time or incurring extra expenses in making the site clear for the job it is the authority that is liable for such expense and not the contractor. Clause 49 Confines the liability of the contractor only when the use of material of workmanship is not in accordance with the contract and if there is a neglect or failure on the part of the contractor. Any other eventuality except the above two that may intervene or interfere in the work would saddle the respondent for the liability.

12. To say that once the site is handed over to the contractor the respondent's liability ceases forever in respect of the conditions of site is not correct as the responsibility and liability of the authority continues till the work is completed. It was for the respondent to sue the DDA or any other such agency which had created hindrance in its work. There was no clause in the contract that if due to the fault of the DDA or any other agency's interference or obstruction is caused in the execution of the work the contractor shall be liable. As per the contract i.e. clause 49 Such a liability was only confined to the aforesaid two eventualities.

13. Since it is well settled that the Court should be reluctant to interfere in the findings of fact the objections of the respondent are without any substance and groundless. So much so, if interpretation of any clause provided by the Arbitrator is a possible or plausible interpretation, the court should always avoid in upsetting it or rejecting it. Brief reference may be made to the following cases on the aforesaid proposition of Law:-

(i) Food corporation of India Vs. Joginderpal Mahinder pal & Anr. wheerein it was held:-

"So far as the material of the present purpose is concerned, an award of the arbitrator can only be interfered with or set aside or modified within the four corners of the procedure provided by the Act. It necessary to find whether the arbitrator has misconducted himself or the proceedings legally in the sense whether the arbitrator has gone contrary to the terms of reference between the parties or whether the arbitrator has committed any award."

"It is not misconduct on the part of an arbitrator to come to an erroneous decision, whether his error is one of fact or law, and whether or not his findings of fact are supported by evidence."

(ii) In Puri Construction Pvt. Limited Vs. Union of India it was held:-

"When a court is called upon to decide the objections raised by a party against an arbitration award, the jurisdiction of the court is limited, as expressly indicated in the Arbitration act, an it has no jurisdiction to sit in appeal and examine the correctness of the award on merits."

"Besides, a court while examining the objection taken to an award filed by an arbitrator is not required to examine the correctness of the claim on merits. The scope it very limited and none of the points which can be entertained has been substantiated by the objector-respondent."

(iii) In Secretary Irrigation Department, Govt. of Orissa & Ors. Vs. Secretary to Govt. of Orissa & Ors. it was held:-

"When the agreement between the parties does not prohibit grant of interest and where a party claims interest and that dispute (along with the claim for principal amount or independently) is referred to the arbitrator, he shall have the power to award interest pendente lite. This is for the reason that in such a case it must be presumed that interest was an implied term of the agreement between the parties and therefore when the parties refer all their disputes or refer the dispute as to interest as such to the arbitrator, he shall have the power to award interest. This does not mean that in every case the arbitrator should necessarily award interest pendente lite. It is a matter within his discretion to circumstances of the case, keeping the ends of justice in view."

14. As regards the objection that the award has to be set aside in entirety because of the non-consideration of the counter claim of the respondent the learned counsel has relied upon K. V. George Vs. The Secretary to Govt. Water and Power Deptt. Trivandrum and another wherein the respondent had also filed the counter claim but the Arbitrator without considering the counter claim made the award. The trail Court set aside the award and remitted the same to the Arbitrator for making fresh award but in review the trial Court set aside the order and passed decree. It was held that such an award made by the Arbitrator is not sustainable in law as the Arbitrator misconducted himself by making such an award . It was further held that it is the duty of the Arbitrator to consider the claim and counter claims together before making the award.

15. Similar view was taken by the Supreme Court in Union of India Vs. Jain Associates and another 1994 (1) ALR 494 and also by this Court in Bharat Heavy Electrical Limited Vs. M/S BST Engineering Services (1995) (2) ALR 403.

16. Indisputably the aforesaid legal position is a settled position but the difference of facts of this case and the aforesaid case is that of mist and mast. In the instant case neither the counter claims of the respondent were referred nor were these claims under the contract were referable to the Arbitrator. Reference made by the CGM MTNL for Arbitration was as under:-

"Whereas M/S Jason Links (India) Pvt. Limited have written to GM (BD) vide there letter No. GL/MTNL/PJ-II 91/004 dated 4.4..91 that certain disputes have arisen between the above noted parties in respect of the above notes work. I Shri N.S. Ramachandran, Chief General Manager, MTNL, New Delhi by powers conferred on the under clause 67 of the agreement hereby appoint Shri S.K. Aggarwal, SSW, Department of Post, Dak Tar Bhavan, New Delhi as Sole Arbitrator to decide and make award regarding claims/disputes by the Contractor as mentioned in Annexure `A' hereto and the counter-claims of MTNL, if any. Subject always however to their admissibility under clause 67 of the aforesaid agreement."

17. Clause 67 provides as under: -

"If any dispute or difference of any kind whatsoever shall arise between the Employers and the contractor or the Engineer and the Contractor in connection with, or arising out of the Contract. or the execution of the Works, whether during the progress or the Works or after their completion and whether before or after the termination, abandonment or breach of the Contract, it shall, in first place, be referred to and settled by the Engineer who shall, within a period of ninety days after being requested by either decision to the Employer and the contractor. Subject to arbitration, as hereinafter provided, such decision in respect of every matter referred shall be final and binding upon the Employer and by the Contractor, who shall proceed with the execution of the works with all due diligence whether he or he Employer and the Contractor and no claim to arbitration has been communicated to him by either the Employer or the Contractor within a period of ninety days from receipt of such notice, the said decision shall remain final and binding upon the Employer and the Contractor....."

18. As is apparent from clause 67 of the contract, at the first instance, the disputes were to be referred and settled by the Engineer who shall within a period of 90 days after being requested by either party to do so, give written notice of his decision to the Employer and the Contractor. Under this clause the decision of the parties referable to the Arbitrator. In other words, the Arbitrator was to act as an appellate body. Since no counter claim was ever filed by the respondent before the Engineer the question of reference of the counter claims of the respondent before the Arbitrator did not arise at all. It was in view of this clause that the CGM while making the reference to the Arbitrator specifically mentioned that the counter claim of the MTNL is any shall always be subject to its admissibility under clause 67 of the aforesaid agreement.

19. Thus the ratio of the aforesaid authorities cited by the learned counsel for the respondent is not applicable in the present case. Had the counter claim been filed by the respondent before the Engineer, the Arbitrator was found to render its decision. However in the instant case the reference to the Arbitrator was only with regard to the decision of the Engineer and as such the counter claim preferred by the respondent was not admissible under clause 67 and as such the Arbitrator was not bound to give its decision thereon and rightly so as the pre-conditions of entertaining such a claim was the admissibility of such a claim under claim under clause 67 of the agreement. The award made by the Arbitrator does not suffer from any vice of illegality or infirmity.

20. The objections are untenable and are hereby dismissed. The award is made rule of the Court. The Suit is decreased in favor of the petitioner with interest from the date of the award and future interest till realization @ 10% per annum.