Delhi High Court
Thdc Hydro Development ... vs M/S. Bhagirathi Builders ... on 21 March, 2017
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ O.M.P. 20/2008
Reserved on : January 2, 2017
Date of decision: March 21, 2017
THDC HYDRO DEVELOPMENT CORPORATION
LIMITED ..... Petitioner
Through: Mr. Sachin Dutta, Senior Advocate with Ms.
Pritya Sharma, Advocate along with
Mr. Sushhil Kumar, Law Officer.
versus
M/S. BHAGIRATHI BUILDERS ENGINEERS
AND CONTRACTORS ..... Respondent
Through: Mr. Sandeep Sharma with Ms. Devyani
Sharma, Advocates.
CORAM: JUSTICE S. MURALIDHAR
JUDGMENT
% 21.03.2017
1. This is a petition by Tehri Hydro Development Corporation Limited
(THDC) against the Respondent, M/s Bhagirathi Builders Engineers and
Contractors, under Section 34 of the Arbitration & Conciliation Act, 1996
(„the Act‟) challenging an Award dated 22nd September, 2007 passed by the
Sole Arbitrator.
Background facts
2. THDC invited tenders for construction of 100 houses for economically
weaker sections including civil and electrical works. By a letter dated 22nd
June, 1995, the said work was awarded to the Respondent. The work was to
be completed in 9 months i.e., by 25th March, 1996. Later, the period was
extended to 15 months and it was to be completed by 25th September, 1996.
The total value of the work was revised to Rs.1,96,05,639.
3. When disputes arose between the parties during execution of the contract,
the Respondent filed Arbitration Application No. 70 of 1998 in this Court
under Section 11 of the Act. In the said application, inter alia, the
Respondent set out Section 20.1 of the terms and conditions applicable to
the contract between the parties which reads as under:
"20.0 Settlement of disputes and arbitration
20.1 It is specifically agreed so and between the parties that all the
differences or disputes arisen out of the contract or touching the
subject matter of the contract shall be decided by process of
settlement and arbitration as per clause 56.0 of General Conditions of
Civil Works and Provisions of Indian Arbitration Act 1940 shall apply
and Delhi/Lucknow Court only shall have jurisdiction over the same.
The arbitration shall give reasoned award."
4. The said application also set out the summary of the claims of the
Respondent. There were 10 claims aggregating to Rs.61,10,537/- together
with interest @ 24% compounded quarterly from 26th September, 1997 till
the date of payment. It was stated in the said application that the Respondent
had invoked arbitration clause by a letter dated 8 th October, 1997 and a
further reminder dated 18th December, 1997 but that THDC had not
responded thereto. The said petition was disposed of vide order dated 24 th
July, 2000 and a former Judge of this Court was appointed as the Sole
Arbitrator.
The First Award
5. The said Sole Arbitrator passed an Award on 24th September, 2003
(hereafter the 'First Award'). The summary of the First Award is as under:
S.No. Claim Details of the Claim Award of Ld.
Number Arbitrator
1. Claim No.1 Rs.11,76,338 on account of Rs.10,04,600/-
the work force and machinery towards Claim Nos.
that remained unutilized for 2 1,2 and 3 and
months due to delay on the Rs.99,000/- for
part of THDC in supplying transport of 330
cement, steel and CC blocks. tankers of water
2. Claim No.2 Rs.5,88,169/- for delay in
supply of drawings and
designs, payment on account
of work force and machinery
remained idle
3. ClaimNo.3 Rs.3,93,084/- - Rs.2,94,084/-
towards delay due to non
supply of water, Rs.99,000/-
towards transport of 330
tankers of water @ Rs.300/-
per tanker
4. Claim No.4 Rs.40,000/- for non-
arrangement of supply of
electricity
5. Claim No.5 Rs.3,96,711/- on account of Rs.2,64,474/-
the escalation
6. Claim No.6 Rs.12,000/- per year from Held premature with
25th September, 1996 for liberty to raise it after
extra insurance finalization of the
account.
7. Claim No.7 Rs.4,50,000/- towards Held premature with
damages/ losses as security liberty to raise it after
money not released finalization of
account.
8. Claim No.8 Rs.19,05,500/- towards losses Rs.1,92,000/-
suffered on account of
contractor remained idle at
site from 25th September,
9. Claim No.9 Interest @ 24% compounded Simple Interest @
quarterly 12% per annum from
1st January, 1998 till
the date of payment
10. Costs of Rs.50,000/-
arbitration
6. It was further ordered by the learned Arbitrator that if the awarded
amount was not paid within 90 days from the date of the First Award,
interest @ 15% per annum would be payable from the date of the First
Award till date of payment.
7. According to the Respondent, after the 23rd RA bill for extra and
substituted work in respect of which there was no measurement undertaken,
no final bills were signed. This led the Respondent to seek reference of the
disputes to arbitration. The Respondent then filed Arb. Application No.
22/2003 in the High Court of Uttarakhand at Nainital. An order was passed
in the said application on 23rd December, 2003 appointing a former Judge of
the Allahabad High Court as the Sole Arbitrator.
Second round of arbitration proceedings
8. Before the said Sole Arbitrator, the Respondent filed a statement of claim
raising the following claims:
Claim No. Amount claimed Rs. Grounds
Claim No. 1 20,00,000 For left over extra and substituted
works and the amount of
escalation
Claim No. 2 12,50,000 Refund of the security deposited
by the claimant
Claim No. 3 8,04,060 Amount paid by the claimant to
watch and ward during the period
when the work was stopped.
Claim No. 4 5,02,500 Paid by the claimant as salary to
Assistant Engineer, Junior
Engineer and the Store Keeper
during the period the work was
stopped
Claim No. 5 2,60,000 For removal of the loose earth etc
from the site of the work during
the period when the work was
stopped
Claim No. 6 1,99,997 For washing, painting etc.
Claim No. 7 15,14,498 Interest at the rate of 2% per
month on the amount which was
withheld by the Corporation
Claim No. 8 16,50,000 Compensation for loss of profit
Claim No.9 Interest at the rate of 2% per
month on the amount awarded
from 1st July 2002 till the date of
payment.
Claim No. 10 Costs of the arbitration
proceedings
9. THDC filed a statement of defence in which, inter alia, it was stated that
the Respondent had executed the work to the extent of Rs. 2,15,61,000 (vide
the 23rd RA Bill) and payment thereof had been made by THDC. It was
stated that nothing further was due to the Respondent.
10. By an order dated 21st January, 2005, the following issues were framed
by the Arbitrator:
"Preliminary Issues
1. Whether the present reference made to the arbitrator by the Hon‟ble
Uttranchal High Court is contrary to law in view of Section 42 of the
Arbitration and Conciliation Act, 1996?
2. Whether Claim No. 7 for Rs. 15,14,498.00 is barred by Order II
Rule 2 of the Code of Civil Procedure for the reasons set out in
paragraph 2 of the statement of defence?
Issue on Merits
3. Whether the claimant is entitled to get the amount of compensation,
as set out in clause (i) to (xiv) of the statement of claim? If the
answer is in the affirmative then what is the exact amount to be
awarded to him?"
11. The above preliminary issue No.1 was decided against THDC by the
learned Arbitrator on 31st January, 2006. Preliminary Issue No.2 was
directed to be decided along with Claim No.7.
12. During the pendency of the above arbitration, an application was filed by
THDC in 2007 under Section 32 of the Act stating that an agreement
(known in local language as 'Farkhati') had been reached between the
parties whereby the claims of the Respondent had been „fully and finally
settled and payment made to the contractors in pursuance thereof.‟ A copy
of the said Farkhati was enclosed with the said application.
13. Separately, THDC also questioned the locus and status of the
Respondent to initiate arbitration and make the claims as it was an
unregistered partnership. It was pointed out that it was mandatory for all the
partners to be impleaded as „co-claimants‟. In an application filed on 7th
February, 2007 by THDC before the Arbitrator, it was prayed that the
statement of claim be rejected on account of it having been „invalidly
instituted‟. It was prayed that all the partners of the Respondent - M/s
Bhagirathi Builders Engineers and Contractors should be impleaded as the
„co-claimants‟.
14. On 14th September 2007, an affidavit was filed by the following
partners:
1. Shri Prem Singh Kateth
2. Shri Mor Singh Kateth
Both s/o Late Shri T.S. Kateth
3. Shri Baital Singh s/o Shri Sunder Singh
4. Shri Naresh Kateth s/o Shri G.S. Kateth
5. Shri Ram Singh s/o Shri T.S. Kateth
6. Shri Matwar Singh s/o Shri T.S. Kateth
7. Shri Sher Singh s/o Inder Singh
All partners of M/s. Bhagirathi Builders, add: Kailash Gate Muni Ki
Rethi, Rishikesh, District Dehradun."
15. It was stated therein that each of the above persons was partner in the
firm M/s Bhagirathi Builders and that apart from the said partners there were
no other partners. It was further stated as under:
"2. That the claim petition on behalf of the partnership firm was
presented with the consent of all the partners. Shri P.S. Kateth has
presented the instant reference on behalf of all the partners which is
pending hearing before the Hon‟ble Arbitrator."
16. It was pointed out by THDC that there were differences in the
partnership deed submitted by the Respondent/claimant at the time of
signing the agreement and the one filed subsequently before the Arbitrator.
The number of partners and their names were different. The entity M/s
Bhagirathi Builders had no privity of contract with THDC.
17. This led THDC to file a further application before the learned Arbitrator
on 15th September, 2007 wherein it was stated that some of the alleged
partners had not signed the verification and no particulars about the
deponents of the above affidavit were provided. THDC reiterated its
submissions that "the claimant has no capacity to initiate the present
arbitration. It is quite evident that there has been reconstitution of the firm
and there is no privity of contract between THDC and the alleged
partnership firm. The affidavit is conspicuously silent as to the details of the
partners as on the date of signing of the contract." THDC further prayed that
it was imperative that "all the alleged partners be produced before the
Hon‟ble Arbitrator and an opportunity be given to the Respondent to
establish that the identity of the firm cited in the affidavit is completely
different and a separate juristic entity, distinct from the firm with which the
contract was entered into."
18. The above pleas were elaborated in an affidavit dated 19th September,
2007 filed by THDC before the Arbitrator. Inter alia, it was pointed out that
the affidavit dated 14th September 2007 was verified by only 5 of the 7
alleged deponents. Further, it also appeared from a comparison of the
signatures on the said affidavit, with the signatures on the partnership deed
submitted at the time of signing of the contract, that there was
"forgery/falsification of the record". It was pointed out that the claims were
made by 'Bhagirathi Builders' which was alien to the contract between
Bhagirathi Builders Engineers and Contractors and THDC. It was
accordingly prayed that the arbitration should be terminated forthwith "and
stern action should be taken against the entity describing itself as the
claimant." A copy of the partnership deed dated 1st April 1993 was annexed
to the affidavit. A separate application was filed on 19th September, 2007
before the learned Arbitrator praying that contempt proceedings be initiated
against the Respondent.
19. According to THDC, the Arbitrator did not consider the above affidavit
and application and proceeded to pronounce the impugned Award on 22nd
September, 2007 (hereafter 'the impugned Second Award').
The impugned Second Award
20. In the impugned Award the learned Arbitrator noted that Claim No.1
was for Rs.20 lacs in respect of the work done and on account of escalation.
The Arbitrator noted that in the reply filed by THDC it had been stated that
the final bill for the leftover works done by the Respondent after 23 rd RA
bill had been prepared. Therefore, on 24th April 2006 itself Claim No.1 was
disposed as not pressed.
21. As regards THDC‟s application under Section 32 of the Act, the learned
Arbitrator discussed the contents of Farkhati (agreement) and concluded
that it neither contained a date nor had the signatures of any witness. The
signature on it was illegible. The learned Arbitrator rejected the application
under Section 32 of the Act for the following reasons:
(a) THDC in its application under Section 32 of the Act did not mention
about the THDC‟s reply dated 10th November, 2005 to the claimant‟s
application dated 10th March, 2005 and the letter dated 7th September, 2005
of the Executive Engineer and the letter requesting that the Respondent‟s
Claim No.1 be deleted.
(b) Further, there was no application seeking recall of the order dated 24 th
April, 2006 which recorded that the Respondent was not pressing Claim
No.1, there was no request of THDC for recall of the said order.
(c) There was no explanation offered by THDC why it refunded the security
of Rs. 11 lakhs qua which was the subject matter of Claim No.2, after
signing the Farkhati. It was held that the Farkhati covered only Claim No.1
and did not deal with the other claims of the Respondent. Accordingly,
THDC‟s application under Section 32 of the Act was rejected.
22. The learned Arbitrator proceeded to discuss the merits of the claims. In
respect of Claim No. 2 for Rs. 12,50,000/- on account of refund of the
security deposit, it was noted that the Respondent was fully satisfied with
refund of Rs. 11 lacs and, therefore, did not press for the above recovery.
Consequently, Claim No.2 was dismissed as having become infructuous.
23. As regards the interest on the refunded security amount, the learned
Arbitrator went by Clauses 5.2.0, 55.6.0 and 55.7.0 of the General
Conditions of the Contract (GCC) and in particular Clause 55.6.0 which
prohibited grant of interest as damages in respect of any money lying with
the Government. Therefore, no interest could have been awarded by the
Arbitrator. Reference was also made to decisions in Steel Authority Of
India Limited v .J.C. Budharaja, Government and Mining Contractor
(1999) 8 SCC 122; Rajasthan State Mines & Minerals v. Eastern
Engineering Enterprises (1999) 9 SCC 283; and Food Corporation of
India, v. Surendra, Devendra & Mahendra Transport Co. (2003) 4 SCC
80, to urge that since the payment of interest on the security was barred by
the Agreement, it cannot be awarded. Accepting the plea of THDC, the
Respondent‟s prayer for interest on the security amount was rejected.
24. As regards Claim No.3 for Rs.8,04,060/- being the amount paid for the
watch and ward during the period when the work had stopped, the learned
Arbitrator set out in a tabular form the details of the expenditure incurred on
that score which was accepted as being fair and reasonable. Rejecting the
prayers made for cross examination of the Respondent‟s witnesses, its two
applications were dismissed. It was held that against Claim No.3, the
Respondent was entitled to Rs.8,04,060/-.
25. Claim No.4 was for Rs.5,02,500/- being the salary paid by the
Respondent to the Junior Engineer (JE), Assistant Engineer (AE) and store
keeper during the period when the work was suspended. While the claim of
salary of the AE was rejected, the claim for the salary of the JE and store
keeper was allowed. Thus, the Respondent was awarded Rs.2,73,700/- under
Claim No.4.
26. Claim No.5 was for Rs.2,60,000/- for removal of loose earth etc. from
housing complex and work site between September, 1997 to October, 2000
when the work was stopped. The learned Arbitrator discussed the clauses of
the contract and allowed the said claims of the Respondent in toto. The
Respondent had filed an affidavit verifying the corrections of the vouchers
and the amount paid to the sub contractor for removing the water and mud.
This claim amount of Rs.2,60,000/- was allowed in its entirety.
27. Claim No.6 was for a sum of Rs.1,99,997/- for white washing and
painting etc. Claim No. 6 was allowed for the same reasons for which Claim
No. 5 was allowed.
28. Claim No. 7 was for Rs. 15, 14, 498 for interest @ 12% p.m. This was
heard with the preliminary objection whether Claim No. 7 was barred by
Order II Rule 2 CPC. The learned Arbitrator after discussing the relevant
clauses and the submissions of the parties rejected the claim. It was held that
interest on the withheld amount was barred under the condition of the
contract. Therefore Claim No.7 was rejected.
29. As regards Claim No. 8 for loss of profit in the sum of Rs.16,50,000/- it
was held that if THDC had rescinded the contract, the Respondent could
have calculated the loss of profit @ 10% per annum on the said sum of
Rs.35 lakhs. However, THDC had not done so. At the highest the
Respondent could claim loss of profit when no work was executed and the
labourers and the machinery were lying idle. Consequently, this claim was
rejected.
30. Claim No.9 was for interest. After referring to Clause 54.1.0 of the GCC
and the decision in Bhagwati Oxygen Ltd. v Hindustan Copper Ltd. AIR
2005 SC 2071, the learned Arbitrator held that the Respondent was entitled
to interest @ 16% per annum from 1st January, 2003 till the date of payment.
Claim No.10 was for costs of arbitral proceedings. A sum of Rs.50,000 was
awarded as costs in favour of the Respondent.
31. The learned Arbitrator thereafter dealt with the issue of maintainability
of the claims of the Respondent. It was noted that the claim of the
Respondent that it was a registered partnership had not been disputed by
THDC in its statement of defence. The objection in that regard was raised
long thereafter. The learned Arbitrator rejected the plea regarding the lack of
jurisdictional status of the Respondent to maintain the claim. It was held that
THDC ought to have raised such an objection at the threshold and not after
the entire work had been executed. If THDC‟s request was accepted it would
have "serious consequences adversely affecting the parties" and that "such a
situation cannot be allowed." Further, "merely because there is some change
in the names the partnership deed, it cannot be necessarily assumed that the
claimant is entity altogether different".
32. As a result, by the impugned Second Award Claim Nos.3, 5 and 6 were
wholly allowed and Claim No.4 was allowed in part. Interest @ 16% per
annum was awarded from 1st January, 2003 till the date of payment.
Preliminary objection as to jurisdiction
33. A preliminary objection is raised in the reply filed by the Respondent
that since both the parties are located within the jurisdiction of the High
Court of Uttarakhand (earlier Uttaranchal) and the arbitral proceedings in
the second round were initiated by the order dated 23 rd December 2003
passed by that High Court, the Award in question was pronounced in
Allahabad, thus this Court has no territorial jurisdiction to entertain the
present petition. It is stated that THDC indulged in forum shopping by
approaching the High Court of Uttarakhand or this Court at its own will. It is
pointed out that no objection to the jurisdiction of the Uttarakhand High
Court was taken by THDC when suddenly a reference was made by that
Court.
34. In its reply, THDC pointed out that the Respondent had conveniently
chosen to not advert to the fact that the Respondent did not make any
reference to the earlier Arbitration Application No. 70 of 1998 in this Court
under Section 11 of the Act where it was averred that the contract agreement
was executed after discussions between the parties at the head office of the
Petitioner in Delhi. It is clear that the genesis of the grievance against the
Award arises out of the order dated 24th July 2000 passed by this Court in
the aforementioned petition filed by the Respondent.
35. The Court has perused the Arbitration Application No. 70 of 2008 filed
in this Court by the Respondent seeking reference of the disputes to the
arbitration. The Respondent has itself sought relief under Section 11 of the
Act before this Court for reference of the disputes between the parties to
arbitration. The Court therefore, finds no merit in this contention and it is
rejected.
Merits of the award
36. As far as merits of the impugned award are concerned, Mr. Sachin Dutta
learned Senior counsel first submitted that the learned Arbitrator erred in
interpreting the plea of THDC regarding lack of privity of contract between
the Petitioner and the Complainant i.e., M/s. Bhagirathi Builders.
37. As already noticed, although the contract between the parties was
entered into by THDC with the Respondent, M/s. Bhagirathi Builders
Engineers and Contractors, the claimant before the learned Arbitrator was
described as „M/s. Bhagirathi Builders‟. This is even more strange
considering that Arbitration Application No. 22 of 2003 before the High
Court of Uttaranchal, was by M/s. Bhagirathi Builders Engineers and
Contractors (registered partnership) through its partner Mr. P.S. Kathait at
New Tehri, District Tehri Garhwal.
38. The claim before the learned Arbitrator was filed in the name of M/s.
Bhagirathi Builders Engineers and Contractors. The application filed by
THDC on 7th February 2007 before the learned Arbitrator contained the
following prayers:
"(a) reject the statement of claim on the ground of its having been
invalidly instituted;
Alternatively
direct that all the partners of the alleged partnership firm - M/s.
Bhagirathi Builders Engineers & Contractors be impleaded as co-
claimants in the present arbitration; and/or
(b) pass such other or further orders as may be deemed fit and proper
in the interest of justice."
39. It is contended by THDC that the arbitration proceedings have not been
properly instituted inasmuch as all the partners of the registered firm have
not been impleaded as claimants. It was further pointed out that there was a
variance in the partnership deed filed by the claimant before the learned
arbitrator on 15th September 2007. The learned Arbitrator pointed out that
during the pendency of the arbitration, the Petitioner prepared a final bill of
the remaining work and paid to the claimant i.e., M/s. Bhagirathi Builders a
sum of Rs. 5,73,216. The entire amount upto 2006 was paid to the said firm
as was the refund of the security amount of Rs. 11 lakhs. In all, THDC had
paid more than Rs.2.30 crores to M/s. Bhagirathi Builders without raising
any objection. A reference has also been made to the agreement dated 28 th
June 2005 which was entered into between THDC and M/s. Bhagirathi
Builders.
40. THDC contends that the fact that an application was filed by it raising
the above objection belied the observance of the learned Arbitrator that the
Petitioner had not chosen to raise a challenge to the proper institution of the
claim. A reference has also been made to the affidavit dated 19 th September
1995 of THDC to the same effect.
41. Mr. Sandeep Sharma, learned counsel for the Respondent refers to the
decision of the Punjab and Haryana High Court in Lakshmi Energy and
Foods Limited v. Punjab State Civil Supplies Corporation Limited & Ors
[decision dated 26th March 2015 in FAO No. 891 of 2010 (O&M)] to urge
that the partnership firm is the successor-in-interest of the previous
partnership firm, M/s. Lakshmi Rice Mills, and under Section 37 of the Act
an appeal is maintainable on behalf of the reconstituted partnership firm. In
Birla VXL Limited v. DLF Universal (2003) 43 SCL 153 (Del) it was held
when a partnership firm is reconstituted and a new firm succeeds to the
assets of the old firm with the intent of being entitled to all its rights and
liabilities, the new firm is entitled to take all steps for the purpose for
enforcement of the contract and the arbitration agreement will bind the
parties. In the present case, since some of the former partners continued as
members of the reconstituted firm, M/s. Bhagirathi Builders, the contract
with THDC continued.
42. It is seen that THDC had no answer to the submission of the Respondent
that the payments were made to M/s. Bhagirathi Builders. Even the
statement of claim was filed only by M/s. Bhagirathi Builders. THDC also
has no answer to the fact that the agreement dated 28th June 2005 was
entered into with THDC.
43. As pointed out in the impugned Award by the learned Arbitrator, the
entire payment appears to be made by THDC pursuant to the bills raised by
M/s. Bhagirathi Builders. It cannot be claimed that the firm filing the claim
was entirely different from the firm executing the contract. The decision in
Birla VXL Limited v. DLF Universal (supra) does appear to support the
Respondent in this regard. Consequently, the Court negatives the plea of
THDC that because of a change in the name of the firm, the entire claim
must fail. THDC itself never raised an objection to making payment to M/s.
Bhagirath Builders
44. It was next submitted by Mr. Datta that the learned Arbitrator erred in
holding that the Farkhati entered into between the parties had nothing to do
with the rest of the claims that were filed in the second round of litigation.
The learned Arbitrator found that there is no mention of the pending
arbitration proceedings in the Farkhati dated 5th August 2006 or anything to
the effect that the claims raised by the Respondent in those proceedings
would stand settled at the time of signing of the Farkhati. Mr. Sharma refers
to the decision in Delhi Development Authority v. Bhardwaj Builders 213
(2014) DLT 675 to urge that the Court should not sit as a court of appeal and
substitute its own views that may be contrary to the findings of the AT.
45. On the issue of Farkhati, the learned Arbitrator has examined the matter
in a great detail and referred to the deposition of Farkhati in „Hindi‟ which
has been reproduced in the impugned Award by him. The fact that it did not
bear the date nor contain any signature of the witness has not been denied by
THDC. There was a dispute between a photocopy of the Farkhati produced
by THDC which contains the illegible signatures of some witnesses and the
photocopy of the Farkhati that was filed along with the stay application
under Section 32 of the Act. This document also did not bear any date or
signature of the witnesses.
46. On the interpretation of the two documents it was concluded that if the
intention was that by the Farkhati, all the claims raised before the learned
Arbitrator should be taken to have been settled, it should have been clearly
mentioned in the Farkhati itself. On the other hand, Claim No. 1 was
dismissed as not pressed on 24th April 2006 passed by the learned Arbitrator.
At the time of Farkhati was signed, i.e., on 5th August 2006 the arbitration
proceedings were still pending and yet all the claims raised by the claimant
in the arbitration proceedings had been settled finally. The affidavit of Mr.
S.K. Gupta working as Assistant Engineer in the Tehri Dam Division -22,
Irrigation Department also stated that the final bill was finalised on 5th
August 2006.
47. However, it was not explained why it was not mentioned in the Farkhati
that all the claims raised by the Claimant in the arbitration proceedings were
fully and finally settled. The learned Arbitrator held that the Farkhati
covered claim No. 1 only and it did not deal with other claims raised by the
claimant in its statement of claim. The learned Arbitrator proceeded to reject
the application under Section 32 of the Act filed by the Petitioner.
48. In the considered view of the Court, the opinion of the learned Arbitrator
that the Farkhati covers Claim No. 1 only and not others is a plausible view
to take and does not call for any interference by this Court.
49. It is next urged by Mr Datta that the arbitral Award deals with the
disputes which are beyond the scope of submission to arbitration inasmuch
as certain claims raised by the claimant were barred in terms of the principle
embodied in Order II Rule 2 of the CPC. In other words it is sought to be
pointed out that the Award dated 24th September 2003 covered some of the
claims of the Respondent which had matured on the date of filing of
statement of claim before the earlier Arbitrator. Yet, they were sought to be
belatedly and illegally raised in the second round of arbitration proceedings.
50. As far this plea is concerned, it is pointed out by Mr Sharma that Claim
No. 7 had been rejected on merits. Claim No. 7 specifically dealt with the
contention of the claim being barred under Order II Rule 2 CPC. The view
of the Arbitrator appears to be a plausible one.
51. It was then pointed out by Mr Datta that a request was made to the
Arbitrator to direct the Claimant to file original documents in respect of the
claims and to adduce evidence in support thereof. However, without any
original documents on record and without any evidence being led, the
learned Arbitrator proceeded to decide the claims. He submitted that if the
learned Arbitrator had permitted THDC to cross-examine the representative
of the claimant it would have become clear that each and every one of the
claims was bogus and fabricated. He submitted that as regards the amounts
allegedly paid to the watchmen employed by the claimant during the period
September 1997 to October 2000, no proof or original documents of
payment having ever been made to any watchmen was ever filed by the
claimant.
52. Mr Sharma in reply pointed out that the stand of the Respondent on this
aspect was that the first arbitration Award dated 24th September 2003 also
dealt with the Respondent‟s claim for provision of salary of staff employed
at the site after 25th September 1996. However, the learned Arbitrator had
rejected the claim of the Respondent for staff employed at the site beyond
25th September 1997. Reference is made to an affidavit filed by the
Respondent in support of Claim No. 3 ,which also verified the correctness of
the vouchers.
53. The Court notes that in the impugned Award a reference has been made
to Claim No. 2 where it was noted that the claimant was fully satisfied with
the refund of Rs. 11 lakhs only and he, therefore, did not press for recovery
of Rs. 12.50 lakhs. As regards Claim No. 3 for the amounts paid by the
Claimant to watch and ward during the period when the work was stopped,
the learned Arbitrator noted that THDC had not denied the employment of
watch and ward for protection of the buildings constructed by the claimant
during the period the work was stopped.
54. The bare denial of the expenditure without anything more cannot
dislodge the claim of the Claimant. Secondly, the claim was not based on the
extension of time but for protection of the buildings. The learned Arbitrator
set out the details of expenditure given by the claimant in Annexure A. The
affidavits were filed by the partner of the claimant and its Assistant and
Junior Engineers. It is pointed out by the learned Arbitrator that despite the
time granted to it, THDC failed to file a reply/counter-affidavit.
55. As regards cross-examination, the learned Arbitrator referred to an order
passed on 5th April 2004 "the dispute shall be decided on the basis of the
pleadings, documentary evidence or such other materials, as may be
produced by them, written and oral arguments and the oral evidence will be
taken only if found necessary." It is on this basis that the request for cross-
examination was not allowed.
56. It is not possible to accept the plea of THDC that there was absolutely no
documentary evidence or oral evidence in support of the claims. Two
affidavits were in fact filed which were not replied to by the Petitioner
despite an opportunity being granted by the learned Arbitrator. The mere
denial of an opportunity to cross examine the Respondent would not be a
good ground to disallow the said claim. The Court is, therefore, not satisfied
that the Award in respect of Claim No. 3 suffers from any legal infirmity.
57. As regards allowing Claim No. 4 in part on account of salary to staff it is
submitted that this was an item rate contract and payment had to be done
under Clause 51 of the GCC. It is submitted that not a single witness to
whom the so-called salary was paid was produced in evidence.
58. A perusal of the impugned Award in respect of Claim No. 4 shows that
the learned Arbitrator had rejected the claim as far as salary of the Assistant
Engineer (AE) was concerned. It was found that the services of the JE were
necessary to keep watch on the constructions and save them from
deterioration. Here again affidavit of the partner of the Respondent placed
details on record and no counter-reply was filed to the said affidavit. Details
of the salary paid to the JE and the store keeper were enclosed as annexure
to the affidavit. It is on this basis that the said payment was partly allowed.
The Court is of the view that the Award in respect of Claim No. 4 to the
extent that it has allowed partly does not suffers from legal infirmity.
59. As regards Claim No. 5 for removal of the loose earth etc., the criticism
of THDC is that this scheme pertains to the same period as Claim Nos. 3 and
4 in the first arbitration and is unacceptable since the work in this regard was
continuing even beyond the date of first arbitration. The work had been
stopped by THDC under instructions to restart the work only in October
2000. In fact the learned Arbitrator has dealt with this objection in great
detail. It is also pointed out by the learned Arbitrator that Clause 20.0.0 of
the GCC does not apply in a situation where the work has been stopped for
non-default. Moreover, the Respondent filed an affidavit in support of this
claim which was not responded to by THDC. The said affidavit verified the
correctness of the vouchers and the amount paid for the purpose of removing
the water. In the circumstances, the Court finds no error was committed by
the learned Arbitrator in allowing this claim.
60. Claim No. 6 was for white washing, painting etc. Details in this regard
had been given by the learned Arbitrator in the impugned Award. For the
same reasons, the Court finds no infirmity in that regard.
61. As far as interest is concerned, the learned Arbitrator has rightly rejected
Claim No. 7 since it was barred by the specific clause in the contract.
However what has been awarded is the claim for interest under Claim No. 9
and only from 1st January 2003, i.e., after the work was completed, rational
for awarding interest has also been explained by the learned Arbitrator by
referring to the decision in Bhagwati Oxygen Limited v. Hindustan Cooper
Limited (supra).
Conclusion
62. For all the aforementioned reasons, the Court is of the view that no
ground under Section 34 of the Act has been made out for interference with
the impugned Award. The petition is accordingly dismissed with costs of Rs.
20,000 which will be paid by THDC to the Respondent within four weeks
from today.
S. MURALIDHAR, J.
MARCH 21, 2017
rd/Rm
