Delhi High Court
National Thermal Power ... vs M/S V. U. Seemon & Anr on 7 August, 2009
Author: Badar Durrez Ahmed
THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 07.08.2009
+ CS(OS) 1393-A/1999
NATIONAL THERMAL
POWER CORPORATION LTD. ... Petitioner
- versus -
M/S V. U. SEEMON & ANR ... Respondents
Advocates who appeared in this case:
For the Petitioner : Mr R. P. Bhatt, Sr Advocate with Mr Yakesh Anand and
Ms Kajal Chandra
For the Respondent : Mr N. M. Dastane with Mr S. K. Gandhi and
Mrs Manjula Gandhi
AND
CS(OS) 1444-A/1999 & IA 9932/1999
M/S V. U. SEEMON ... Petitioner
- versus -
NATIONAL THERMAL
POWER CORPORATION LTD. ... Respondent
Advocates who appeared in this case:
For the Petitioner : Mr N. M. Dastane with Mr S. K. Gandhi and
Mrs Manjula Gandhi
For the Respondent : Mr R. P. Bhatt, Sr Advocate with Mr Yakesh Anand and
Ms Kajal Chandra
CORAM:-
HON'BLE MR JUSTICE BADAR DURREZ AHMED
1. Whether Reporters of local papers may be allowed to
see the judgment? YES
2. To be referred to the Reporter or not? YES
3. Whether the judgment should be reported in Digest? YES
CS(OS) 1393-A/99, CS(OS)1444-A/99 & IA9932/99 Page No.1 of 23
BADAR DURREZ AHMED, J
1. Suit No. 1393-A/1999 has been filed on behalf of the
National Thermal Power Corporation ( hereinafter referred to as the
„NTPC‟) under Section 14 of the Arbitration Act, 1940 (hereinafter
referred to as the „said Act‟) praying that directions be issued for the
filing of the original Award made on 30.05.1999 by Mr P.C. Nag, the
sole Arbitrator. In the meanwhile, the learned Arbitrator had filed the
Award in original along with the connected documents with the request
that the same be taken on record so that the Award could be made a
rule of the Court. On receipt of the original Award and documents, the
same was registered as suit No. 1444-A/1999. After notices had been
issued to the parties, NTPC sought the setting aside of the Award under
Section 30 and 33 of the said Act through its application being
IA 9932/1999. NTPC, apart from praying for the setting aside of the
Award, made a prayer that its counter-claims be allowed and costs be
awarded. This judgment shall dispose of the said suits and the said IA.
2. By a Letter of Award (LOA) dated 25.05.1987 NTPC
confirmed having accepted the proposal of M/s V. U. Seemon
(hereinafter referred to as „the claimant‟) dated 20.12.1986, by their
Telex of Award dated 07.05.1987, whereby the claimant was awarded
the contract for the construction of boundary wall and fencing package
for Kawas Gas Power Project on a works contract basis. In the said
CS(OS) 1393-A/99, CS(OS)1444-A/99 & IA9932/99 Page No.2 of 23
LOA it was indicated that the claimant was to perform the said work as
per the specifications and the terms and conditions contained in the
documents issued to the claimant, all of which were said to form an
integral part of the contract except for the specific agreed modifications
that are brought out in the various clauses of the LOA. The documents,
inter alia, included the general conditions of contract for civil works
(GCC) and the claimant‟s letter dated 07.05.1987, regarding
confirmation/ agreements.
3. As per paragraph 5.0 of the LOA, the total contract value
based on the rates and quantities indicated in the schedule of items was
Rs 1,07,31,580/-. It may be pointed out that the length of the fencing
was 4960 meters and the length of the boundary wall was 3600 meters.
4. Paragraph 7.0 of the LOA indicated the time schedule. It
was provided therein that the parties clearly understood that the time
would be of the essence of the contract and that it should be strictly
adhered to as the work under the contract was very important and
critical. Paragraph 7.0 further provided that all the works covered
under the contract were to be completed in all respects within 12
months from the date of the Telex of Award dated 07.05.1987 and that
the contract became effective from the date of issue of the said Telex of
Award, that is, on 07.05.1987. Paragraph 15.1 of the LOA indicated
that the claimant had agreed in its letter dated 07.05.1987 that in the
CS(OS) 1393-A/99, CS(OS)1444-A/99 & IA9932/99 Page No.3 of 23
event of delay in handing over of the site by NTPC to the claimant
beyond the contractual period of 12 months, NTPC may consider
claimant‟s request for grant of extension of time for an additional six
months. It was indicated that in no case, the claimant would have any
extra claim on account of "this delay".
5. At this juncture, it would be appropriate to refer to
paragraph 1 of the claimant‟s letter dated 07.05.1987. The same reads
as under:-
"1. We shall adhere to the construction programme submitted by
us along with the tender. However, detailed discussion and
finalization of the construction schedule shall be done within
fifteen days is consultation with NTPC Officers. The chain link
fencing work shall be taken up immediately and completed
within 3 months from the date of award of the work. M/s NTPC
informed that site for boundary wall construction may be handed
over in phases as per the progress of the site leveling work. In
the event of delay in handing over the site beyond the contractual
period of 12 months, we shall be granted extension of time but
we shall not have any extra claim on account of this delay.
However, the overall contract period shall not exceed 18 months
from the date of award of the work."
6. The LOA contained an arbitration clause as set out in
paragraph 19.0 and 19.1 thereof.
7. From the LOA and the other contract documents, it is
apparent that the work of fencing and putting the boundary wall was to
be completed within 12 months. The starting date of the contract was
07.05.1987, which meant that the 12-month period would expire on
06.05.1988. It is further obvious that in case of delay as mentioned in
CS(OS) 1393-A/99, CS(OS)1444-A/99 & IA9932/99 Page No.4 of 23
the letter dated 07.05.1987 and paragraph 15.1 of the LOA, if there was
delay on the part of NTPC in handing over the site beyond the period
of 12 months, the contract could be extended by an additional six
months. The letter dated 07.05.1987 made it clear that the overall
contract period shall not exceed 18 months from the date of award of
the work. In other words, as per the said documents, the work was to
be started on 07.05.1987 and was to be completed by 06.05.1988. If an
extension was granted, it was to be completed latest within 18 months,
that is, by 06.11.1988.
8. The site, however, was not handed over in time by NTPC
and the claimant continued to do the work beyond the 12-month period
and in fact, even beyond the initially stipulated 18-month period. By
12.11.1988, that is, after 18 months was over, the claimant completed
the fencing work. Insofar as the boundary wall was concerned, the
claimant had done 98% of the piling work, 16% of the super structure
and 6.35% of the plastering work. On 21.04.1989 NTPC issued a
notice to the claimant to complete the work by 15.05.1989 and
indicated that if the work was not finished by that date, then some other
agency would be appointed to complete the work at the risk and cost of
the claimant. According to NTPC, the balance work was not completed
and, therefore, NTPC terminated the contract on 19.06.1989. At that
point of time, the value of the work done by the claimant was to the
CS(OS) 1393-A/99, CS(OS)1444-A/99 & IA9932/99 Page No.5 of 23
extent of Rs 77,39,538/- and it had already been paid a sum of
Rs 75,95,918/- by NTPC. Insofar as the balance work was concerned,
the same was awarded to a third party by NTPC on 22.01.1990.
According to NTPC, the balance work was concluded by the third party
for a sum of Rs 42,62,705/-. According to NTPC, since the balance
work was done by the third party at the claimant‟s risk and cost, NTPC
was entitled to recover the same from the claimant. Consequently,
NTPC called upon the claimant to pay this amount of Rs 42,62,705/-
plus other actual recoverables. At this stage, the claimant filed an
application under Section 20 of the said Act for making a reference to
arbitration. However, in the meanwhile, NTPC had appointed Mr P.C.
Nag as the sole Arbitrator on 16.10.1990. The said application was,
therefore, disposed of because of the appointment of Mr Nag. There
was some discord with regard to appointment of Mr Nag as the sole
Arbitrator, but I need not go into this aspect of the matter as that is not
material for the present petition.
9. Before the learned Arbitrator, the claimant filed a claim of
Rs 2,15,15,264/- which was subsequently revised to Rs 1,86,15,197/-.
NTPC also filed its counter-claim which was revised to
Rs 38,18,095.10. By virtue of the impugned Award, the learned
Arbitrator has awarded to the claimant, a sum of Rs 72,92,449/- plus
pendente lite interest at the rate of 18% per annum (simple) with effect
CS(OS) 1393-A/99, CS(OS)1444-A/99 & IA9932/99 Page No.6 of 23
from 16.10.1990 till the date of payment or the date of decree,
whichever is earlier. He also awarded costs of the arbitration to the
extent of Rs 2,000/- in favour of the claimant. NTPC‟s counter-claim
was rejected in toto.
10. Being aggrieved by the impugned Award, NTPC has filed
objections and has sought the setting aside of the Award both on the
ground that the learned Arbitrator has wrongly awarded the amount of
Rs 72,92,449/- to the claimant and has wrongly rejected NTPC‟s
counter-claim. According to Mr R. P. Bhatt, the learned senior counsel
who appeared on behalf of NTPC, the Award is liable to be set aside
because it is manifestly perverse; it has been arrived at on the basis of
wrong application of law, in fact, it is contrary to law; the Arbitrator
has misconducted the proceedings both as regards his personal conduct
as also in law; the Award is absurd and the view taken by the learned
Arbitrator is not plausible in terms of the contract between the parties;
the damages, even if construed to be awardable, have yet to be proved
and cannot be fixed on the basis of assumptions made of usage in the
industry; the Award is contrary to public policy; the view taken by the
Arbitrator tends to nullify the provisions of the contract; and there was
no question of Award of interest and costs.
11. Mr Bhatt, the learned senior counsel, took me through the
entire Award and challenged the same on virtually every aspect thereof.
CS(OS) 1393-A/99, CS(OS)1444-A/99 & IA9932/99 Page No.7 of 23
He referred to the preliminary objections which had been raised by
NTPC before the learned Arbitrator and submitted that the same were
summarily rejected by the learned Arbitrator without assigning any
reasons for the same. He also referred to all the points on merits which
were decided by the learned Arbitrator and submitted that the findings
were contrary to the terms of the contract as also to the law. He
submitted that the findings were not based on the records and were thus
perverse and for this reason the Award ought to be set aside. Even the
quantum of the Award under each of the heads was made the subject
matter of challenge.
12. Mr N. M. Dastane, the learned counsel who appeared on
behalf of the claimant, fully supported the Award. He submitted that
the learned Arbitrator had meticulously taken note of each of the claims
and counter-claims of the parties. He submitted that the learned
Arbitrator has examined each and every submission made by the parties
and has thereafter come to conclusions of fact and based upon his
interpretation of the provisions of the contract, the learned Arbitrator
has made the Award in favour of the claimant. He submitted that it is
not as if all the claims of the claimant had been allowed by the learned
Arbitrator. This is apparent from the fact that the initial claim of the
claimant was to the extent of Rs 2,15,15,264/- which was subsequently
revised to Rs 1,86,15,197/- and, out of this, only an amount of
CS(OS) 1393-A/99, CS(OS)1444-A/99 & IA9932/99 Page No.8 of 23
Rs 72,92,449/- has been awarded in favour of the claimant. He also
submitted that although, initially, time may have been the essence of
the contract, the same stood abandoned inasmuch as NTPC permitted
the claimant to continue working even after the earlier stipulated 18-
month period. NTPC had also cleared the RA bills after the said
period. Thus, according to Mr Dastane, the plea of time being of the
essence of the contract cannot be raised by NTPC any longer. He
submitted that, in any event, the delays that were caused in the
performance of the contract were all attributable to NTPC. Apart from
the factor of delays, he submitted that there was the question of
wrongful termination of the contract and the damages which flowed
therefrom. Even apart from the question of delay and wrongful
termination, there was also the question of claims which, in any event,
arose out of the working of the contract such as the claim for head
carriage of materials, dewatering, sludge / mud removal, sand filling
and backfilling in collapsed trenches; provision of PVC coated chain
link instead of galvanized iron chain link as per item 24 of the BOQ;
provision of heavier barbed wire; work done under item 27 of the
BOQ; loss suffered for work done but not paid due to wrongful
alignment of fencing and extra items. Mr Dastane also submitted that
the Award of interest and costs was fully justified in the facts and
circumstances of the case.
CS(OS) 1393-A/99, CS(OS)1444-A/99 & IA9932/99 Page No.9 of 23
13. The learned Arbitrator has classified the claims raised by the
claimant as under:-
Broad & rough classification of claim According to the According to the
claimant respondent
Claim Nos. Claim Nos.
A. Claims arising out of breaches of
contract
A.1 Claims in the nature of delay 1,3,6,8,9,13 1,3,6,8,9,13
damages & claims arising from delay
& termination
A.2 Claims arising out of illegal 12,15 12,15
termination of contract
B. Claims arising out of contract 2,4,5,7,10,11,14 2,4,5,7,10,11,14
provisions interpretation
Claims for interest & cost of arbitration 16,17 16,17
The claims under each of the said headings and sub-headings as
awarded by the learned Arbitrator are as under:-
S. No. Brief Description Amount Amount
as per claimed Awarded
S.O.C (Rs) (Rs)
(1) (2) (3) (4)
(A) CLAIMS ARISING OUT OF
BREACHES OF CONTRACT
(A-1) DELAY DAMAGES
3 For the increase in the cost of 13,54,000
materials and labour for
completion of Fencing Work due
to breaches committed by NTPC.
(REVISED 1154000 + 200000 i.e.
13,54,000)
6 For rise in the cost of labour & 36,89,906.00 14,91,127.00
materials for Boundary Wall.
(REVISED 755989 + 134280 i.e
8,80,269)
CS(OS) 1393-A/99, CS(OS)1444-A/99 & IA9932/99 Page No.10 of 23
8 Reimbursement of expenses on 62,900.00
account of extension of bank
guarantee
13 Loss on account of Delays in issue 75,034.00 NIL
of Cement- Idling of Labour. (Rejected &
withdrawn by
the claimant).
(A-2) DAMAGES DUE TO DELAY &
WRONGFUL TERMINATION
OF CONTRACT
9 Loss of profit due to breaches by 12,66,326.00 1,45,489.00
NTPC.
(REVISED 1073158 + 193168 i.e.
12,66,326)
(A-3) DAMAGES DUE TO
WRONGFUL TERMINATION
OF CONTRACT
1 For recovery of Bank Guarantee 10,87,700.00 8,27,000.00
amount which was illegally
enchased by the Respondent
alongwith interest.
(REVISED 8,29,000+ 2,58,700
i.e. 10,87,700)
12 Termination of contract - loss of 10,00,000.00 6,00,000.00
machines and materials taken over
by NTPC
15 Losses suffered due to termination 5,00,000.00 NIL
of contract over terminal benefits (REJECTED)
and advances, offices and quarters
(B) OTHER CLAIMS ARISING OUT
OF CONTRACT
2 For head carriage of materials 18,13,118.00 3,16,306.00
dewatering, sludge/mud removal,
sand filling and backfilling in
collapsed tranches
4 Provision of PVC coated chain 3,40,902.00 2,88,900.00
link instead of G.I. chain link as
per item 24 of Bill of Quantities.
(REVISED 2,88,900+52,002 i.e.
3,40,902)
CS(OS) 1393-A/99, CS(OS)1444-A/99 & IA9932/99 Page No.11 of 23
5 Provision for heavier barbed wire 46,949.00 20,057.00
than that is given in the contract as
per instructions of NTPC
(REVISED 26,743+4,813 i.e.
31,556)
7 Work done under item 27 of Bill 42,52,004.00 35,72,148.80
of Quantities
(REVISED 35,83,600+6,68,404
i.e. 42,52,004)
10 Loss suffered for work done but 29,123.00 22,931.00
not paid due to wrongful
alignment of fencing
(REVISED 22,932+6,191 i.e.
29,123)
11 Extra items done but not paid 5,94,150.00 8,490.00
(REVISED 4,67,833+1,26,315 i.e.
5,94,148)
14 For delaying payment of RA Bills 2,50,000.00 NIL
(REJECTED)
(C)
16(a) Interest at 18% per annum from 51,53,152.00 NIL
end of September 1989 till (REJECTED)
commencement of arbitration -
Past interest
TOTAL : (A+B+C) 2,15,15,264.00 72,92,448.80
SAY
(REVISED) (1,86,15,197.00) 72,92,449.00
16(b) Pendente lite Interest from 2,15,15,264.00 At 18% per
commencement of arbitration to At 18% tax per annum simple
the date of award and from date of annum from 6.10.90
award to date of payment / decree to the date of
whichever is earlier payment or
date of decree
whichever is
earlier
17 Cost of Arbitration 2,00,000.00
14. From the above, it is apparent that on account of delay,
referable to claim Nos. 3, 6 and 8 of the claims raised by the claimant, a
sum of Rs 14,91,127/- has been awarded to the claimant. This is on
CS(OS) 1393-A/99, CS(OS)1444-A/99 & IA9932/99 Page No.12 of 23
account of increase in cost of materials and labour for the fencing work
and boundary wall. It also includes the reimbursement of expenses on
account of extension of bank guarantee. The amounts awarded on
account of wrongful termination are covered under the heads loss of
profit due to breach on the part of NTPC; recovery of bank guarantee
amount which was illegally encashed by the respondent; and loss of
machines and materials which were taken over by NTPC upon
termination of the contract. The amounts awarded under these sub-
heads were Rs 1,45,489/-, Rs 8,27,000/- and Rs 6,00,000/- respectively.
15. It is also pertinent to note that apart from the Award on
account of delay and wrongful termination of the contract, as already
pointed out above, the learned Arbitrator has also allowed the claims
which otherwise arose out of the contract. The substantial claim under
this category was in respect of the work done under item No. 27 of the
bill of quantities. The amount awarded was Rs 35,72,148.80. The
other two major sub-heads under this category of claims was for head
carriage of materials, dewatering, sludge/mud removal, sand filling and
backfilling in collapsed trenches (Rs 3,16,306/-) and provision of PVC
coated chain link instead of galvanized iron chain link as per item 24 of
the bill of quantities (Rs 2,88,900/-).
CS(OS) 1393-A/99, CS(OS)1444-A/99 & IA9932/99 Page No.13 of 23
16. It is apparent that for determining these claims raised by the
claimant, various questions needed to be answered. The questions
being:-
(i) Who caused the delay?
(ii) If the delay was caused by NTPC, was the claimant
entitled to be compensated for the same?
(iii) Was time of the essence of the contract?
(iv) If so, was this condition not waived or done away with
by the conduct of the parties?
(v) Whether the termination of the contract on 19.06.1989
by NTPC was illegal?
(vi) Was the claimant entitled for the extra work and other
claims arising out of the contract resulting from the
tidal effects, black cotton soil, dewatering etc. and
work done under item No. 27 of the BOQ?
17. I find that in the impugned Award these aspects have been
considered in paragraph 5.0.0 and further sub-paragraphs. As an
instance, the claimant had submitted that the work site was susceptible
to tidal flooding and that the position was further aggravated due to the
black cotton soil strata. According to the claimant, the same synopsis
of the project, which formed part of special conditions of contract, had
not revealed these facts. As per the claimant, during visits to the site,
the claimant was informed that the entire project site was being raised
by site filling and would be graded and leveled. It was contended that
the site for the boundary wall was handed over to the claimant in a
CS(OS) 1393-A/99, CS(OS)1444-A/99 & IA9932/99 Page No.14 of 23
piecemeal fashion and continued to be handed over in bits and pieces
right up to 26.05.1988 whereas the entire work was to be completed
within 12 months by 06.05.1988 or latest within 18 months, that is, by
06.11.1988. It was the case of the claimant that due to the black cotton
soil and tidal effects and rains in the monsoon, the area used to become
inaccessible by vehicles and manual trans-shipments and trudging on
foot etc. had to be resorted to. The trenches used to get flooded and
collapsed and this necessitated extensive dewatering and slush removal.
The claimant executed the work as and when areas were released to
them.
18. On the other hand, NTPC contended that although the site
consisted of black cotton soil and was susceptible to tidal effects,
Clauses 6 and 7 of the GCC required the claimant to obtain all
necessary information as to risk, contingencies and other circumstances
and it was for this reason that the claimant had also visited the site
before tendering in December, 1986. NTPC denied that any promise
was made to the claimant that the work site would be earth filled and
leveled, so as to remain unaffected by tidal overflow of river Tapti and
remained accessible for motorized transport.
19. On the basis of the submissions and the material on record,
the learned Arbitrator came to the conclusion that the synopsis of the
project did not show and caution the claimant as regards the tidal
CS(OS) 1393-A/99, CS(OS)1444-A/99 & IA9932/99 Page No.15 of 23
effects and black cotton soil which were hindrances peculiar to the
Kawas site. He also concluded that Clauses 6 and 7 of the GCC were
in general terms and did not require the claimant to undertake a parallel
and detailed investigation but to only visit and inspect the site so far as
practicable in order to satisfy itself. According to the learned
Arbitrator, this was not an effective disclaimer and it did not inform the
tenderer not to rely on the data furnished through the tender document
and particularly on the synopsis of the tender document.
20. After considering the submissions made by the parties, the
learned Arbitrator also concluded in paragraph 5.1.2(f) that NTPC had
not specifically advised the tenderers of tidal effects and black cotton
soil strata through the synopsis and tender documents and that the
claimant was not required to conduct a detailed investigation. He also
concluded that the claimant was not required to provide for dewatering
or frequent tidal overflows and work in quagmire conditions. The
delay in submitting the chain link sample was also entirely because
NTPC wanted the non-ISI PVC coated variety but at the same time
conforming to ISI specifications. The learned Arbitrator also
concluded that the delay on account of taking decision on unvisualized
sand filling and in doing it was attributable to NTPC. He was of the
view that NTPC had been investigating the project and the basic
technical requirement of sand filling in black cotton soil strata which
CS(OS) 1393-A/99, CS(OS)1444-A/99 & IA9932/99 Page No.16 of 23
was susceptible to tidal action should have been foreseen and provided
for. NTPC did not do so and, therefore, the loss of time, which could
have been avoided, was definitely attributable to NTPC.
21. After considering the submissions made by the parties on the
alleged breach of contract by causing delays in handing over the work
area in a piecemeal fashion, the learned Arbitrator came to the
conclusion that the areas for fencing/ boundary wall were not released
well in advance by NTPC, as required for the stipulated completion of
work by 06.05.1988 or at least by 06.11.1988. According to the
learned Arbitrator, this was the major cause of delay or time overrun in
the performance the contract. According to the learned Arbitrator, the
award of work just before the monsoon and programming the execution
in heavy monsoon at Kawas with black cotton soil strata and tidal
overflows at work site also demonstrated the bad planning on the part
of NTPC.
22. Furthermore, the learned Arbitrator arrived at the conclusion
that NTPC did not release the piling areas in time and in continuous
stretches so as to provide sustained economic workload for piling. He
was of the view that at least some areas should have been released
earlier so that continuity in substructure over piling could have been
maintained during monsoon.
CS(OS) 1393-A/99, CS(OS)1444-A/99 & IA9932/99 Page No.17 of 23
23. One of the objections raised by NTPC was in connection of
the letter dated 07.05.1987 which had been written by the claimant.
According to NTPC, by virtue of the said letter, the claimant had
agreed that in case of delay in handing over of the site, the claimant
would be granted extension of time but he could not make any extra
claim on account of the delay. Consequently, it was submitted on the
part of NTPC that by virtue of the said letter dated 07.05.1987, the
claims stood demolished. In response, the claimant contended that the
letter dated 07.05.1987 was being read entirely out of context. It was
contended that the claimant had only agreed that in the event of delay
in handing over of the site beyond the contractual period of 12 months,
the claimant would be granted extension of time and that the claimant
would have no extra claim on account of "this delay". The permissible
delay had been further clarified by the fact that overall contract period
would not exceed 18 months from the date of the Award. In other
words, the overall contract period would not go beyond 06.11.1988.
Thus, according to the claimant, the pre-conditions for the "no extra
claim" stipulation to operate were:-
(i) overall contract period not to exceed 18 months; and
(ii) extension be granted.
According to the claimant none of these pre-conditions were satisfied
inasmuch as the areas continued to be released by NTPC to the
claimant even after the stipulated period of completion of 12 months.
CS(OS) 1393-A/99, CS(OS)1444-A/99 & IA9932/99 Page No.18 of 23
Work continued beyond 18 months. On this aspect of the matter, the
learned Arbitrator, after considering the submissions made on behalf of
the parties and considering the letter dated 07.05.1987, came to the
conclusion that there was no bar to the claims made by the claimant.
The learned Arbitrator felt that the said letter only restricted
compensation in respect of delay up to six months and that too only on
account of delay in the release of work areas. It was unrelated to other
delays. Furthermore, according to the learned Arbitrator, this limited
bar was subject to pre-conditions referred to by the claimant which, in
this case, had not been fulfilled. Thus, the learned Arbitrator
concluded that there was no bar to the claimant raising the claims.
24. The learned Arbitrator had arrived at the conclusion that the
work was delayed for the reasons attributable to NTPC. In the context
of time being of the essence, he was of the view that in any case it was
for NTPC to communicate its decision with regard to extension of time.
The non-communication and acceptance of performance beyond the
initially specified time limits, set the time at large. He also observed
that if extension was to be granted, NTPC could have also reserved its
rights towards liquidated damages and / or compensation for other
losses. NTPC did not formally extend the time for completing the
contract but continued to release areas to the claimant and permitted the
claimant to continue with the work and also accepted such performance
CS(OS) 1393-A/99, CS(OS)1444-A/99 & IA9932/99 Page No.19 of 23
by making regular payments for the same. Clearly, according to the
learned Arbitrator, the question of time being of the essence, in view of
the aforesaid conduct, took a back-seat.
25. With regard to the legality of the termination of the contract,
the learned Arbitrator concluded that the same had not been legally or
validly terminated. He was of the view that it was NTPC which was
responsible for the delays. Since time was no longer of the essence, the
contract could not have been suddenly terminated without first granting
reasonable time, then making it of the essence and asking the claimant
to complete the work by that date. This was not done. Therefore, the
termination of the contract on 19.06.1989 was not legal or valid.
26. In view of the foregoing, it is apparent that the learned
Arbitrator has examined each and every submission by the parties and
has gone through the record meticulously. After doing so, the learned
Arbitrator found that it was NTPC which was responsible for the delay.
There was no bar on the claimant to claim compensation for losses /
damages occasioned by such delay on the part of NTPC. The learned
Arbitrator also concluded that time was not of the essence and the
conduct of the parties clearly indicated otherwise. The termination of
the contract was illegal and that all extra work or other claims arising
out of the contract had to be paid for by NTPC. Based on these
CS(OS) 1393-A/99, CS(OS)1444-A/99 & IA9932/99 Page No.20 of 23
conclusions, the learned Arbitrator quantified the same and made the
Award in favour of the claimant, as indicated above.
27. The learned Arbitrator rejected all the counter-claims of
NTPC. This was the natural corollary of the findings of the learned
Arbitrator in respect of the claims made by the claimant. It had already
been held that the delays were attributable to NTPC and that the
termination was illegal. In fact, after abrupt termination of the contract,
the claimant was not allowed to take away its materials. Therefore, the
counter-claims were rejected inasmuch as the learned Arbitrator was of
the view that nobody could take benefit of the wrongs committed by
him.
28. I have purposely set out the contentions of the parties before
the learned Arbitrator and his conclusions in some detail. This is to
indicate that the learned Arbitrator has examined each and every
submission made by the parties and the material placed on record. He
has meticulously set down the arguments and counter-arguments and
has given his own decision on each point. I have examined the Award
in detail and have also considered the arguments advanced by the
counsel before me. I do not find any perversity in the findings returned
by the learned Arbitrator. The question of interpretation of clauses of a
contract, it is well settled, is within the domain of the Arbitrator.
Unless the Arbitrator takes a view which is so absurd or perverse, the
CS(OS) 1393-A/99, CS(OS)1444-A/99 & IA9932/99 Page No.21 of 23
same is not liable to be interfered with by the Court. I have already
indicated that I find no perversity in the impugned Award. The views
taken by the learned Arbitrator on various aspects are plausible views.
The court may or may not agree with those views but inasmuch they
are plausible and within the four corners of the contractual terms which
bind the parties, the same cannot be disturbed by this Court in exercise
of its powers under the said Act.
29. While considering objections under Section 30 and 33 of the
said Act, it is not the function of this Court to re-appreciate the
evidence or interfere with an Award merely on the basis that this Court
could have come to a different conclusion on the material available
before the Arbitrator. For this proposition, a reference may be made to
Gujarat Water Supply and Sewerage Board v. Unique Erectors
(Gujarat) (P) Ltd. and Anr.: AIR 1989 SC 973; and Food
Corporation of India v. Joginderpal Mohinderpal and Anr. : (1989) 2
SCC 347. I also do not find the Award to be contrary to law. I am
unable to agree with the submission made by the learned counsel for
NTPC that there has been any misconduct on the part of the Arbitrator
either with respect to his personal conduct or his conduct in law.
30. For all these reasons, the objections to the Award raised on
behalf of NTPC are dismissed. The Award dated 03.05.1999 made by
the sole Arbitrator Mr P.C. Nag is made a Rule of the Court. The
CS(OS) 1393-A/99, CS(OS)1444-A/99 & IA9932/99 Page No.22 of 23
decree sheet be drawn up accordingly. The said suits and said
application stand disposed of.
BADAR DURREZ AHMED
(JUDGE)
August 07, 2009
SR
CS(OS) 1393-A/99, CS(OS)1444-A/99 & IA9932/99 Page No.23 of 23
