Delhi High Court
Union Of India vs M/S. K.K. Gupta Const. Engineers ... on 19 September, 2011
Author: Sanjay Kishan Kaul
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 19.09.2011
+ FAO (OS) No.443 of 2011 & CM No.17108 of 2011 (Stay)
UNION OF INDIA ...APPELLANT
Through: Mr. Jitendra Kumar Singh, Advocate.
Versus
M/s. K.K. GUPTA CONST. ENGINEERS (JV) ...RESPONDENT
Through: Mr. Navin Chawla, Advocate.
CORAM:
HON'BLE MR. JUSTICE SANJAY KISHAN KAUL
HON‟BLE MR. JUSTICE RAJIV SHAKDHER
1. Whether the Reporters of local papers
may be allowed to see the judgment? No
2. To be referred to Reporter or not? No
3. Whether the judgment should be
reported in the Digest? No
SANJAY KISHAN KAUL, J. (Oral)
1. A tender was floated for award of the work of construction of bridge
No.81 over all spans over river UJH to the appellant vide contract
dated 10.6.2005. The contract had to be completed within a period of
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24 months and it is stated that two extensions were granted. It is
during the course of the work itself that disputes arose between the
parties and the respondent invoked arbitration clause No.64. The
designated authority, being the General Manager, Northern Railway,
vide letter dated 3.9.2007 appointed a panel of three arbitrators who
entered upon reference on 10.9.2007 and made & published the award
on 28.5.2008. The petitioner aggrieved by the award filed an
application under Section 34 of the Arbitration & Conciliation Act,
1996 objecting to the award albeit there being some delay in refiling
which was condoned. The objections have been decided vide
impugned order dated 6.7.2011 in OMP No.582/2008. It is this order
which is now sought to be assailed in the present appeal.
2. A perusal of the impugned order shows that each of the claims as
preferred by the respondent and adjudicated by the arbitral tribunal
and the objections thereto have been discussed and dealt with on
merits.
3. The first claim was regarding an amount withheld of `25.00 lakh for
alleged breach of a milestone. This claim was allowed by the arbitral
tribunal on the ground that extensions were granted to the respondent
by the appellant without imposition of penalty and thus the delay
cannot be said to be attributable to the respondent/claimant. The
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learned single Judge has found that it was in the interest of the earlier
completion of work and in view of rising costs that extension was
granted to the respondent while retaining the milestone penalties
imposed. This claim has not been sustained in terms of the impugned
order as it was found that there was non-consideration of the relevant
and material evidence and was sent back to the arbitral tribunal for re-
consideration in the light of the evidence produced by the parties.
4. We may notice that in the appeal filed by the appellant there are
grounds A to G. Grounds A, E & G are general in character without
dealing with any specific adjudication by the learned single Judge.
Grounds B, C & D deal with the aspect of delay and extension of time
granted by the appellant to the respondent. Thus, the award of the
claim, which has been set aside by the learned single Judge is sought
to be assailed by the appellant by referring to these grounds as if the
claims have been upheld. We are constrained to point this out as there
cannot be a greater non-application of mind where a Government
authority in whose favour the learned single Judge has found that a
particular claim which has been awarded by the arbitral tribunal
deserves to be remitted, makes out grounds as if the claims awarded in
favour of the respondent/contractor have been upheld. Clearly the
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deponent of the affidavit in support of the appeal has not even cared to
see as to what is the actual adjudication in the appeal.
5. We are pained to note this aspect as unnecessary appeals are filed in
routine course without any application of mind despite the so called
professed policy of the Government of India that unnecessary
litigation by the Government should not take place. The affidavit in
support of this appeal has been filed by one Mr. R.S. Ranote, who is
the Deputy Chief Engineer and is, thus, fully aware of the dispute.
We are, thus, of the view that the matter needs to be looked into
administratively at the highest level not only because such mindless
exercise must be brought to the notice of the concerned authorities but
because of the utter wastage of court time by such appeals. In fact,
after hearing the matter on 14.9.2011 when we were proceeding to pen
down our order we had noticed this fact but at that time learned
counsel for the appellant sought some time to take instructions
whether the appellant would like to press the appeal. Learned counsel
for the appellant has come back with the instructions that despite the
aforesaid facts, the appellant seeks to press the appeal.
6. We, thus, call upon the General Manager, Northern Railway to hold
an inquiry into this aspect and submit a report to us within a period of
one (1) month.
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7. We now proceed to deal with the remaining claims and the objections
thereto.
8. Claim No.2 arises on account of extra amount for classification and
well sinking paid to the appellant while sinking the wells which was
contrary to the nature and condition of soil stated in para 51.311 of the
contract. The clause stated that the strata through which the well
foundation is to be sunk consists of weak sandstone/soil stone/silt
stone/clay beds below the top layers of boulders and gravel in sand
matrix. It is only at the time of sinking of 22 wells that the
respondent/contractor encountered heavy boulders of the size of 0.50
metre to 1.0 metre and heavy boulders of sand mix with clay of the
size 0.50 and 1.0 metre against strata of sand with gravel, sand and
clay with fine gravel and clay. Two members of the arbitral tribunal
visited the work site accompanied by the parties while the sinking was
in progress. Large boulders were, in fact, found at the site and thus
the tribunal found that this was quite different and difficult from the
operation normally done under BOQ item No.NS-7. The arbitral
tribunal, however, discounted for the fact that no blasting was
involved and thus considered a rate of `600.00 per cubic metre in
place of NS-6 rate of `328.24 per cubic metre. An award of
`27,17,600.00 was made in favour of the respondent.
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9. The learned single Judge considered the submissions of the appellant
that there was assumption by the tribunal that the strata was the same
in respect of all piers as found by them at the time of inspection of pier
No.22. A specific query was posed to the learned counsel as to
whether at the time of inspection or soon thereafter the petitioner had
required the tribunal to inspect the soil strata in respect of other piers
as well and whether such a stand was taken before the tribunal. It was
found that the answer to the same was in the negative. Not only that,
the measurement books maintained by the respondent in respect of the
piers showed the same position in respect of all the piers. Thus, the
learned single Judge naturally came to the conclusion that there was
no illegality in the award.
10. We find that the reasoning of the arbitral tribunal and the learned
single Judge is unexceptionable and it is a pure question of finding of
fact where the technical experts on visiting the site found that the soil
condition was different from the contract and awarded the amount for
the same.
11. Claim No.3 made by the respondent was qua price variation clause. It
was the stand of the appellant that such price variation could be
claimed only if the price index varies by + 10 per cent. Thus, if the
variation in the price index was 12 per cent which was on the higher
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side it was the plea that the claim variation could only be to the extent
of 2 per cent, i.e., the differential of 2 per cent and not the 12 per cent.
This plea was rejected by the arbitral tribunal in view of the relevant
clause, which reads as under:
"No price Variation/Recovery shall be paid/deducted till the
price index of steel & cement items as mentioned above
changes by + 10% from the price index for the month of term
opening/negotiation. However, when price index varies by
more than + 10% fall payment of PVC for that period will be
made as per above formula."
12. The tribunal also found that the word „fall‟ should read as „full‟ as
otherwise it would not make any sense and took cue from clause
13.2.3 where also in an identical clause for price variation the word
„full‟ has been used. The learned single Judge rightly found that it
was a pure interpretation of a contractual clause which falls within the
domain of the arbitral tribunal and the price variation clause would not
make any sense if the word „fall‟ was read as „fall‟ instead of „full‟.
13. We find that there can hardly be any dispute in this regard in view of
the clarification issued in this behalf in terms of letter dated 7.3.2007
by the petitioner to the respondent clarifying that "fall payment of
PVC" may be read as "full payment of PVC".
14. The last claim No.4 relates to NS item Nos.37 & 39 requiring the
respondent to excavate the earth for purposes of filling. This is, once
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again, directly connected with the issue of big boulders since the
excavated material was found to be partly unsuitable for carrying out
the work of filling in view of the presence of large bounders.
15. The plea sought to be advanced before the learned single Judge that
the respondent had not used the excavated earth for the purposes of
filling up during floods was not even found as an averment in the
counter-statement of fact. The balance amount payable was, thus,
upheld.
16. If we see the grounds of appeal, as noticed above, the only mention is
in ground F regarding claim No.4 stating that this amount had already
been paid in the item of cutting of earth. There is no specific ground
even dealing with claims 2 & 3. We may, however, note that in the
body of the appeal, a reference has been made to claim 2, once again,
stating that the geo-technical investigation was not part of the tender
document, therefore could not have been referred to before quoting the
rate of the tender. The terms of the tender required the person to visit
the site and verify the position at the ground level. These
submissions, however, do not take away the fact that the nature of soil
to be found at the particular place itself had been specified which was
found to be contrary to the actual position. It has also been stated that
some of the boulders were of smaller size than one metre and that
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should have been taken into account. All that we are required to say is
that these are all matters of fact finding of the arbitral tribunal which
are not required to be gone into by this Court.
17. We find that a reasoned judgement has been passed to which not even
a proper appeal has been filed and the appellant seems to be carrying
out a ritual of filing an appeal rather than any challenge being laid.
18. We dismiss the appeal and the application with costs of `50,000.00 to
be paid to the respondent within a period of two (2) weeks.
19. List for compliance on 29.11.2011.
20. Dasti.
SANJAY KISHAN KAUL, J.
SEPTEMBER 19, 2011 RAJIV SHAKDHER, J.
b'nesh
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