M/S Rawla Construction Co. vs Military Engineers Services
2001 Latest Caselaw 451 Del

ORDER

J.D. Kapoor, J.

1. Through this suit, the award dated 16th October, 1996 is sought to be made rule of the Court. Respondent has challenged its validity by way of filing objections. Relevant facts lie in narrow compass.

2. The respondent entered into an agreement with the petitioner for construction of storage accommodation at Chandipur, a District of Orissa. The contract was made on 20th September, 1985 for Rs. 37,78,909.91. As per terms of the contract the work was to be completed within ten months but the petitioner sought extension from time to time and completed the work on 31st August, 1989. However the petitioner did not prepare the final bill within the prescribed period of three months and as such the respondent prepared the same which was signed by the petitioner on 5th march, 1990 i.e. after a lapse of six months from the time of completion of the work. After assigning the final bill the petitioner sent a letter dated 1st June, 1990 to the respondent claiming the amount towards sales tax paid to the Government of Orissa in connection with the construction work executed. However the sales tax deducted by the respondent was repaid to the petitioner. The petitioner then made a request to the respondent for appointment of an Arbitrator on 28th January, 1991 as to the loss suffered by him on account of escalation, coloring of building No. 41 & 42, earthing at the site and for providing an eye wash fountain. However the respondent did not accede to the request for appointment of Arbitrator. The petitioner approached the Court. Pursuant to the directions of the Court the Arbitrator was appointed to adjudicate upon the dispute raised by the petitioner.

3. The award in question is a non-speaking award. It is contended by the petitioner that the Court cannot sit in Appeal to speculate the mental process of Arbitrator where no reasons are given in the award. The only duty cast upon the Court is to see whether the Arbitrator has acted outside his jurisdiction or not. In support of the above view the learned counsel for the petitioner has relied upon Vaish Brothers & Co. Vs. Union of India & Another 1998 VI AD (Delhi) 152 wherein this Court took the view that in a non-speaking award, it is not open to the Court to speculate where no reasons are given by the Arbitrator as to what impelled him to arrive at his conclusions. As the Arbitrator is the final arbiter of the disputes between the parties the award is not liable to be challenged on the ground that the arbitrator has reached a wrong conclusion or has failed to appreciate the facts.

4. The objections raised by the respondent are that the Arbitrator misconducted itself by allowing the claims as all the claims were overlapping. For instance the claim for escalation charges amounting to Rs. 18,000/- and the claim for loss due to delay amounting to Rs. 38,000/- are inter-dependent and inter-connected and, therefore, the amount on account of escalation charges was the only amount that could have been awarded as both these claims are of the same nature.

5. I have perused the award. The petitioner has been awarded the claims with respect to conditions 3, 4, 5, 11, 12, 13 & 14. The contention of the learned counsel for the respondent is that since the conditions 3, 4, 5 & 6 are claims for losses due to delay of 28 months, these could not have been taken under separate heads. Each claim is overlapping the other. I find no substance as these are independent claims. Escalation in prices may be related to the delay but the delay itself is an independent head for awarding loss of profit. It is pointed out that the delay was on the part of the petitioner as the petitioner vide letter dated 21st march, 1990 had asked for extension of time from time to time. Condition 11 of the agreement provided that no claim in respect of compensation or otherwise howsoever arising as a result of extensions granted shall be admitted, still the Learned Arbitrator awarded the claim despite the fact that the delay was mainly on the part of the petitioner and thus the Arbitrator has acted beyond his jurisdiction and outside the purview of the terms of the agreement.

6. Reliance has been placed on Continental Construction Co. Ltd. Vs. State of Madhya Pradesh wherein the contract could not be completed within the stipulated time because of alleged gross delay on the part of the State in allotment of work and discharge of its obligations under the contract. It was held that the contractor having completed the work was not entitled to claim extra cost due to rise in price and the Arbitrator could be said to have misconducted himself.

7. I am afraid the contention of the respondent holds no water as the award is in respect of delayed payment and not in respect of extensions grated by the Department for completion of the work. There is a distinction between the delay in not providing the site for construction and delay in making the payment for the bill.

8. Since it is not the duty of the Court to scan the findings of fact as an Appellate Court, the claims in respect of loss of profit due to escalation as well as loss on account of the delay of 28 months were neither barred by clause 11 nor by the judgment referred by the counsel.

9. The remaining objections with regard to conditions 4 & 5 are of no significance as these claims have been allowed on the basis of the material and the documents on record and to say that the Arbitrator has acted without jurisdiction by ignoring the conditions 4 & 5 is not correct. Condition 4 provides that the contractor shall be deemed to have satisfied himself as to the nature of the site local facilities of access and all matters affecting the execution and completion of the works and no extra charges consequent on misunderstanding or otherwise will be allowed.

10. However perusal of the award in this regard shows that the claim was awarded on account of losses due to proof and trial firing. Trial firing does not come within the nature of site local facilities of access, nor does this come within the local facilities for the supply of labour and material and of access to the site.

11. The last objection is with regard to the condition 65 which is in respect of final bill. It is contended that since the contractor had accepted the final bill without prejudice it is not open to him to raise any dispute subsequently in terms of condition 65 of the contract. Condition 65 provides that no further claim shall be submitted by the contractor after submission of the final bill and these shall be deemed to have been waived and extinguished. I am afraid this contention also has no substance as firstly the contractor had informed the respondent about the deduction of the sales tax by the respondent and secondly it was on the basis the final bill dated 5th March, 1991, the disputes were referred by the Court to the Arbitrator for adjudication. The findings of the Arbitrator in this regard cannot be challenged.

12. Reliance placed upon Union of India Vs. M/s Popular Builders, Calcutta 2000 VIII AD SC 260 is misplaced as the facts are distinguishable. In the above referred case final bill was accepted by the contractor without any objection but in the instant case the disputes were referred to the Arbitrator not only by the Court itself but also objections were raised by the petitioner as to the final bill with regard to imposition of Sales Tax vide letter dated 1.6.1990. Rather the respondent itself in para 4 of the rejoinder agreed that it was not an unequivocal acceptance as it was not accepted in toto. And, therefore, to say that the Arbitrator acted without jurisdiction in this regard is not correct and is not sustainable.

13. Moreover these very objections were raised by the respondent before the Court when the Arbitrator was appointed and the Court after taking into consideration these objections referred the matter to the Arbitrator.

14. Next, the learned counsel for the defendant has contended that the plaintiff's objection was only with regard to the sales-tax and since the sales-tax was immediately reimbursed, the plaintiff was debarred form raising any other disputes arising from the final bills.

15. In support, the learned counsel has referred to Union of India Vs. M/s. Popular Builders, Calcutta 2000 VIII (SC) 260 wherein after the completion of work, the final bill was drawn and was sent to the contractor who agreed to accept the final bill and in fact received the money under the final bill without any objection and thereafter he wrote a letter to the concerned Chief Engineer indicating several items of claim and additional works which the respondents had executed pursuant to the directions of the appropriate authority and the said work had not been included in the final bill. In the said petition, the defendant/Union of India had only raised objection as to the entertainment by the Arbitrator/claim against item no. 2, it was held that existence of a dispute being the condition precedent for exercise of power for appointment of an Arbitrator under clause 25 and since the final bill that was prepared by the appropriate authority was accepted by the respondent without any protest and dispute had been raised before the Arbitrator only in respect of claim no. 2 by the Union of India and so far as claim against item no. 2 was concerned, the same could not have been a matter of reference of an arbitrable dispute as such the award of the arbitrator to that extent must be set aside. It was further observed that so far as the other claim items are concerned, the Union of India not having taken any objection to the same on the aforesaid score and that even the objection filed under Section 30 and 33 of the Arbitrator Act not being specific on that issue, it is not appropriate to allow the Union of India raise objection so far as the other items of claim are concerned.

16. As is apparent, in the instant case, not only objection was raised by way of letter dated 1st June, 1990 but also the objection raised by the Union of India when the matter came up before the Court for referring the disputes to the Arbitrator was taken into consideration. It is no more open to the respondent to raise any such plea or objection as to the award. Award is not a subject matter of appeal.

17. In Arosan Enterprises Ltd. Vs. Union of India & Anr. the Supreme Court considered almost every possible eventually and every kind of objection which is being raised by the Government Authorities day in and day out. The observations are terse and as under :-

"Reappraisal of evidence by the Court is not permissible and as a matter of fact exercise of power by the Court to reappraise the evidence is unknown to proceedings under Section 30 of the Arbitration Act. In the event of there being no reasons in the award, question of interference of the Court would not arise at all. in the event, however, there are reasons, the interference would still be not available within the jurisdiction of the Court unless of course, there exists a total perversity in the award or the judgment is based on a wrong proposition of law. In the even, however two views are possible on a question of law as well, the Court would not be justified in interfering with the award. The common phraseology "error apparent on the fact of the record" does not itself, however, mean and imply closer scrutiny of the merits of documents and materials on record. The Court as a matter of fact, cannot substitute its evaluation and come to the conclusion that the arbitrator had acted contrary to the bargain between the parties. If the view of the arbitrator is a possible view the award or the reasoning contained therein cannot be examined."

18. Remaining objections raised by the Union of India are of the nature that pertain to findings of the fact sand, therefore, the reappraisal or reassessment or revaluation is impermissible. Objections have no merits and are hereby dismissed. Award is made rule of the court. Suit is decreed in terms of the award with pendente lite and future interest @ 12% till the realization. Decree sheet be prepared accordingly.