Pronounced On: 02.02.2023 vs M/S S. P. Singla Constructions ...
2023 Latest Caselaw 25 j&K/2

        HIGH COURT OF JAMMU & KASHMIR AND LADAKH
                        AT SRINAGAR
                             ...

                              AA no.06/2020

                                                Pronounced on: 02.02.2023
Union Territory of J&K
                                                         ....... Petitioner(s)

                                Through: Mr D.C.Raina, Advocate General
                                with Mr Ilyas Laway, Advocate

                                   Versus

M/s S. P. Singla Constructions Pvt. Ltd.
                                                        ......Respondent(s)

                                Through: Mr Anirudh Wadhwa, Advocate &
                                Mr Aditya Mittal, Advocate


CORAM:
           HON'BLE MR JUSTICE VINOD CHATTERJI KOUL, JUDGE


                              JUDGEMENT

1. This Appeal under Section 37 of J&K Arbitration and Conciliation

Act, 1997 (for short "Act") has been preferred against judgement

dated 1st February 2020, passed by Principal District Judge, Srinagar,

in a petition under Section 34 of the Act, titled as Chief Engineer

Mughal Road Project v. M/s S. P. Singla Constructions Private

Limited in File no.02/2018 Arbitration and for setting aside the same

on the grounds mentioned therein.

2. The case set up by appellant is that an/ NIT no.01/2020 dated 31st

April 2010, was issued by Superintending Engineer, Mughal Road

Project, on behalf of Governor of erstwhile State of J&K, inviting

tenders for construction of seven bridges on Shopian-Bafliaz Section

Page 1 AA no.06/2020 of Mughal Road. Respondent also participated and being successful in

bidding process was awarded the contract on Turnkey Basis for a

contract price of Rs.55.75 Crores vide Agreement no.CE/MRP

Agreement/2 of 2010 dated 14th October 2010. The contract was for

design and construction of Seven number of steel trussed girder

(double lane) bridges of different spans having aggregate length 461

RM (Approx.) on Mughal Road Project from Shopian to Bafliaz in

J&K State, which included planning, detailed survey, soil

investigation, collection of hydraulic data and structural design along

with execution (complete job) on Turnkey Basis as per scope of the

work. The work was to be completed within 24 calendar months as

per the terms and conditions of the contract and the work had to be

completed up to 8th November 2012. However, the work completed

on 18th September 2013, i.e., it took more 387 days. In terms of the

contract between the parties no further compensation was payable as

the contract was a Turnkey Contract and the claims were raised by

contractor after completing construction and after receiving full and

final payment and closure of contract.

3. It is stated that contractor/respondent raised dispute as regards

prolongation of time and entitlement for extension of time on account

of delay allegedly attributable to appellant (employer). Contractor is

stated to have appointed its nominee to Arbitral Tribunal on 19 th June

2015 and on 11th August 2015 appellant/employer appointed its

nominee to act as an arbitrator. Appellant nominated its Arbitrator as

Shri Khalid Muzaffar. Presiding Arbitrator, namely, Justice T. S.

Doabia (Retd.) was appointed by two nominated arbitrators.

Page 2 AA no.06/2020 Preliminary notice was issued and first meeting proposed on

26thAugust 2015. Award dated 20th July 2017 was passed in favour of

respondent. Challenge was thrown to the Award under Section 34 of

Act before the Principal District Judge, Srinagar, who rejected the

challenge. This is how the instant appeal has come before this Court.

4. Impugned Award and judgement passed by court below have been,

inter alia, challenged on the grounds that the award as well as

impugned judgment of court below, upholding the award is patently

illegal being against the policy of the State and the same is in breach

of the terms and conditions of contract; that the court below and

Arbitral Tribunal have not considered the relevant material/

documents, arguments and the law points raised by petitioner and

neither clear findings have been returned on the matter nor the case

law been dealt with, thus, making the entire exercise a nullity; that

arbitrators as well as court below have failed to appreciate Clause 20.1

GCC of the FIDIC Contract mandatorily prescribes that the contractor

is obliged to notify the Engineer within specified time frames; that the

contractor considers itself entitled to additional payments on account

of any event or circumstance giving rise to the said claim; that the said

requirement is in the nature of a condition precedent for the contractor

to be entitled to any additional payments under the contract; that that

this provision is referred in international jurisprudence as a 'Notice of

Claim" provision and compliance with the said prescription has been

universally held to be mandatory in order for the contractor to be

entitled to any additional payment under the contract; that mandatory

nature of the requirement of giving notice of claim within the time

Page 3 AA no.06/2020 period as prescribed is reinforced by the fact that consequences of

non-compliance with the said requirement are expressly stipulated in

Clause 20.1 GCC of the FIDIC Contract itself and that the various

mandatory requirements which the contractor is obligated to comply,

in order to be entitled to claim any additional payments and the

consequences of non-compliance are clearly stated that the contractor

shall not be entitled to additional payment and employer shall be

discharged from all liability in connection with the claim; that all the

claims made by claimant in the present arbitration proceedings are

liable to be rejected and dismissed at the threshold itself as the

claimant has failed in respect of all the claims to comply with the

mandatory condition precedent of giving Notice of Claim, Detailed

Claim, Interim Monthly Claims and Final Claim as prescribed under

Clause 20.1 of the GCC of the Contract; that the Arbitrators as well as

court below have failed to appreciate that all the matters have not to

be essentially referred to arbitration and only those matters are to be

referred where the disputes have crept in; that respondent had never

raised any dispute or claim with appellant/employer even till the final

bills were submitted; that bills were accepted without any protest or

demur till finalization of the bills and never was any claim made to

appellant, thus, question of dispute does not arise; that had respondent

raised any claim in terms of mechanism envisaged under the contract,

then it would have been an occasion for an arbitral dispute; that

respondent has completed the works under Turnkey Contract and has

received the agreed amount under the contract which was readily

accepted by respondent without any protect and demur; that by

Page 4 AA no.06/2020 conduct of respondent, there was no dispute at all as respondent had

received all payments submitted by way of bills; that claims raised by

respondent are totally barred as per terms of the agreement arrived

between parties; that disputes have been created artificially just to

mint money out of the legal process by abuse of the Act in antithesis

to the preamble of the Act which provides that when dispute arise then

arbitrators have to adjudicate and when there was no dispute at all and

no claims were raised in terms of the mechanism provided under the

contract, thus the same is barred under law; that arbitral tribunal as

well as court below have brushed aside the objection raised by

appellant/employer regarding maintainability of claim in absence of

mandatory notice and decision of DAB, simply by saying that DAB

was never constituted and in terms of clause 20.6, dispute could be

directly referred to arbitration, but the Arbitral Tribunal has not

considered the mechanism provided for submitting claims in terms of

clause 20.1 and 20.2 of GCC;

5. I have heard learned counsel for parties and considered the matter.

6. Learned Advocate General, in support of the case set up in the instant

appeal, has stated that the award as well as the impugned judgement

of court below upholding the Award is patently illegal being against

public policy and in breach of the terms and conditions of the

contract. It is averred that arbitrators as well as the court below failed

to appreciate Clause 20.1 GCC of the FIDIC Contract mandatorily

prescribes that the contractor is obliged to notify the Engineer within

specified timeframe that the contractor itself considers itself entitled

to additional payments on account of any event or circumstance

Page 5 AA no.06/2020 giving rise to the said claim and that the said requirement is in the

nature of a condition precedent for the contractor to be entitled to any

additional payments under the contract and this provision is referred

in international jurisprudence as a 'notice of claim' provision and

compliance with the said prescription has been universally held to be

mandatory in order for the contractor to be entitled to any additional

payment under the Contract. He has made reference to Multiplex

Construction (UK) Limited v. Honeywell Control Systems Limited,

[2007] EWHC 447 (TCC), in which the rationale behind the

prescription of timelines in construction contracts for making claims

has been explained by mentioning that contractual terms requiring a

contractor to give prompt notice of delay serve a valuable purpose as

such notice enables matters to be investigated while they are still

current and such notice sometimes gives employer an opportunity to

withdraw instructions when the financial consequences become

apparent. Learned Advcoate General also states that the mandatory

nature of the requirement of giving notice of claim within time period

as prescribed is reinforced by the fact that consequences of non-

compliance with the said requirement are expressly stipulated in

Clause 20.1 GCC of the FIDIC Contract itself and that various

mandatory requirements which the contractor is obliged to comply in

order to be entitled to claim any additional payments and the

consequences of non-compliance are clearly stated that the contractor

shall not be entitled to additional payment and the employer shall be

discharged from all liabilities in connection with the claim. Learned

Advocate General submits that all the claims made by claimant in the

Page 6 AA no.06/2020 present arbitration proceedings are liable to be rejected as the claimant

has failed in respect of all claims to comply with the mandatory

condition precedent giving notice of claim, detailed claim, interim

monthly claims and final claims as prescribed under Clause 20.1 of

the GCC of the Contract. According to learned Advocate General,

respondent had never raised any dispute or claim with the employer

even till the final bills were submitted and that the bills were accepted

without any protest or demur till finalization of the bills and never was

any claim made to appellant.

7. It is also stated that arbitral tribunal as well as the court below has

brushed aside the objection raised by appellant regarding

maintainability of claim in absence of mandatory notice and decision

of DAB, simply by saying that DAB was never constituted and in

terms of clause 20.6 dispute could be directly referred to arbitration,

but the Arbitral Tribunal has not considered the mechanism provided

for submitting claims in terms of clause 20.1 and 20.2 of GCC. It is

contended that claimant had not even once given a notice for referring

a dispute muchless to DAB for obtaining its decision, therefore, there

was no occasion for constitution of DAB.

8. It is also stated that learned Arbitrators have rendered the decision on

matters not falling within the terms of submission to Arbitration

Tribunal and matters beyond the scope of submission to Arbitrators

and the award is such that there is no scope of segregating the matters

submitted to arbitration tribunal.

9. According to learned counsel for respondent the instant appeal has

been filed on legally and factually misconceived grounds. Counsel

Page 7 AA no.06/2020 has also stated that the Contract is based on internationally accepted

FIDIC conditions, i.e., International Federation of Consulting

Engineering's, commonly known as FIDIC. The FIDIC conditions, as

their essence, contain provisions for compensation to the Contractor to

cater for each and every kind of event that may cause delay or

disruption to the subject project. There are also conditions providing

compensation in the event of change of scope, change of law, inflation

in cost, financing cost on compound interest basis etc. It is averred

that appellant by adopting FIDIC conditions of contract, itself

provided remedies for all forms of contingencies in the course of the

execution of the subject project. According to learned counsel for

respondent, it is settled that Arbitral Tribunal is the Final Judge for

construing and interpreting the provisions of the Contract and even

assuming that there is an error regarding the same, it is taken to be an

error within the jurisdiction of the Arbitral Tribunal and not an error

of jurisdiction and that there is, thus, no scope for interference with

the Arbitral Award and the Arbitral Award having withstood the test

of challenge under Section 34 of the Act, by way of impugned

judgement and as a consequence of which the scope for interference

of this Court under Section 37 of the Act is even more limited. His

further contention is that this Court in view of provisions of Section

37 of the Act cannot sit in appeal against arbitral award inasmuch as

the permissible grounds of challenge are expressly set out in the

statute and are extremely limited and that this Court cannot interfere

with the conclusions of an arbitral tribunal even where another view/

conclusion is possible on the basis of material on record. His next

Page 8 AA no.06/2020 contention is that it is not for a judicial authority while deciding a

challenge to an arbitration award, to interfere with the findings of fact

arrived at by an arbitral tribunal and that it is within the sole purview

of arbitral tribunal to interpret various conditions of contract; besides

an arbitral tribunal is not bound by strict rules of evidence and this

Court cannot reappreciate the quality or the weight of the evidence

considered by an arbitral tribunal in arriving at the arbitral award;

even an erroneous application of law is not sufficient to interfere with

an arbitral award.

10.Further submission of learned counsel for respondent is that there was

a delay of about seven months in appointment of Proof Consultant by

the employer as it was Proof Consultant to check all drawings and

designs submitted by the Contractor and without which there could be

no meaningful progress of the work. The employer caused delay in

approval of designs and drawings, which adversely affected progress

of the work.

11.Facts need not be reiterated. Plea before this Court is with reference to

setting-aside of judgement dated 1st February 2020 passed by court

below in an application under Section 34 of the Act, titled as Chief

Engineer, Mughal Road Project v. M/s S.P. Singla Construction

Private Limited; as also setting-aside the Award dated 20th July 2017.

12.The abstract statement of claims raised by respondent/contractor

before the Arbitrators was:

1. Claim no.1: Work done payment out of C.V.: Rs.2,19,54,361/-

2. Claim No.2: Refund of Service Tax/Sales Tax: Rs.5,77,54,970/-

Page 9 AA no.06/2020

3. Clam no.3: Variations and extra works: Rs.5,23,00,000/-

4. Claim no.4: increase in rates of wages under Minimum Rs.2,32,00,000/- Wages Act:

5. Claim no.5: Prolongation of the contract period of time Rs.13.38 Crores and the cost thereof: with 18% interest

6. Claim no.6: Interest on delayed payments: Rs.1,62,49,134/-

plus 18% interest

7. Claim no.7: The cost of acceleration: Rs.1,11,50,000/-

8. Claim no.8: Increase in taxes: to be evaluated

9. Claim no.9: Escalation in cost of construction work Rs.3,00,00,000/- done during extended period:

10. Claim no.10: Cost of arbitration: Details to be submitted during arbitration

13.Appellant also submitted its counter claims before the Arbitrators, which are:

"The work "Design & Construction of Seven No.steel trussed girder (Double Lane) bridges" of different spans of Mughal Road J&K State including Planning, Detailed Survey, Soil Investigation, Collection of Hydraulic Data and Structural Design along with execution was allotted in favour of M/s S.P. Singla Constructions Pvt. Ltd vide agreement NO.CE.MRP/agreement/ 2 of 201 dtd: 14th October 2010. The contractor was supposed to complete the work on all the seven bridge sites within 24 calendar months after the signing of agreement. However, as per the reports received from the respective field divisions the contractor namely M/s S. P. Singla Constructions Prvt. Ltd. has failed to complete the Seven No. bridges on Mughal Road within the stipulated time. The contractor substantially completed the allotted work on 30.11.2013, thereby delaying the stipulated time of completion, thus giving rise to implementation of liquidated damages and other penalties as per the Appendix to Technical proposal.

1. Liquidity damage The liquidated damages are calculated as below:

          Total Contract Value                        = RS.5575.00 Lacs
          Date of Start of work                       = 09-11-2010
          Date of Completion of as per agreement      = 8-11-2012
          Date of Substantial completion of work      = 30-11-2013
          Total delay in Days                         = 387 days

Liquidated damages @ 0.02% of Contract Value/day = 0.02/100 x5574 = Rs 111500/day

Total Liquidated damages for delay 387 days = 837x111500 = 431.505 Lacs OR 10% of Contract value =10/100x5575 = 557.50 lacs Therefore, Admissible Liquidated damages = 431.505 Lacs

2. Loss of Zaznar Bridge: -

Page 10 AA no.06/2020 The contractor has also failed to meet all the milestones as per the bar chart/ revised bar chat submitted by him to the employer time to time. This erratic attitude of the contractor has caused an unnecessary delay in completion of the different bridges at different locations of the Mughal Road Al Zazhar RD 501 800 (Span 36 Mtrs) the bridge was washed away by a snow avalanche in February 2016 within the Defect liability period from the date of substantial completion of work, the effect of which was not envisaged by the contractor before designing the bridge.

It seems that the designer of the bridge has not taken into consideration the steep slopes of mountains having large catchment area. Also no avalanche protection measures were put in place by the contractor after construction of Zaznar Bridge. The contractor was supposed to follow the guidelines as contained in IRC-5 which was agreemental binding on designed.

For reconstruction of Zaznar bridge at least an amount as worked out below should be imposed on M/s S.P.Singla constructions Pvt. Ltd as penalty.

Cost of 1 Mtr. Bridge length          = Rs. 12.10 Lacs
Cost of 36 Mtr. Bridge length         = Rs. 435.60 Lacs
Add 60% as cost of escalation         = Rs. 261.36 Lacs
Total re-constructional cost          = Rs. 696.96 lacs
of Zaznar Bridge

Due to the loss of Zaznar bridge he employer was forced to give a fair weather connectivity to the commuters by way of construction of pipe culvert and bailey bridge at the damaged site.

Cost of launching and delaunching                    = 2 x 16
of Bailey bridge (two seasons)
                                                     = Rs.32.00 Lacs

Cost of pipe culvert                                 = Rs.30.00 Lacs

Total constructional cost of pipe culvert and Bailey bridge = Rs.62.00 Lacs

3. Revenue Losses:-

As the contractor has failed to complete the seven No. bridges within the stipulated time it has caused a great loss to the State exchequer in general by means of revenue realization at Padpawan Shopian on the Mughal Road if the bridges had been completed well in time. As per the field information received from the commercial and Sales Tax Department minimum tax realization (Revenue) for the month of October 2015 has been to the tune of Rs.13,67,870/- which means Rs.44,124/- per day.

The month of October has been taken into consideration during this month the traffic volume on the Mughal is reduced considerably due to frequent rains and snowfall on the Pir Ki Gali.

Calculation of Revenue Losses: -

Total No. of delay in days from 09.11.2012 to 30.11.2013 = 387 days

Total Loss = Rs.44124x387 = Rs.17075988 =Rs.170.76 Lacs

Page 11 AA no.06/2020

4. In addition to above, office establishment charges and overhead charges which were run for the supervision of the work of the contractor for the delay period of 387 days i.e. from 09.11.2012 to 30.11.2013 is being worked out and shall be furnished before the next date. It may be reiterated, as stated in the statement of defense and the documents relied therein, it is the contractor which was responsible for causing the delay and as consequences thereof, he is liable to compensate the answering respondent.

Total amount of the counter claims

Grand total = A+B+C+D = 431.505+696.96+62.00+170.76 = Rs. 1361.23 Lacs"

14.Appellant maintained before the Arbitrators that there was no balance

due under the contract since all the payments due to contractor were

paid to it and only retention money was lying with it which would be

released as per the conditions of the contract.

15.Now come to the impugned Award, the Arbitrators while deciding

Claim No.1, held appellant cannot adjust Rs.79,26,742/- against the

liquidated damages as the said amount is due to claimant and that it

would be fair and reasonable to award the said amount in favour of

claimant/ respondent.

The impugned Award as also order of Principal District Judge,

Srinagar, to this extent is upheld.

16.While deciding Claim no.2 with respect to refund of Service

Tax/Sales Tax paid by respondent, the Arbitrators have rightly said

that claimant/respondent is liable to pay the service tax and held the

claim no.2 not sustainable.

Impugned award and order to this extent is also upheld.

17.In deciding Claim no.3, the Arbitrators has sub-categorized the same

in five Claims.

18.The Claim no.3a relates to increase in quantity of steel used in

superstructure by claimant/respondent and an amount of

Page 12 AA no.06/2020 Rs.3,06,30,000/- had been claimed by respondent/claimant. While

deciding Claim no.3a, the Arbitrators have misdirected themselves

and have given Rs.2.80 Crores on account of increase in quantity of

steel in superstructure.

It appears that the Arbitrators, while misdirecting themselves in

issuing impugned Award, have forget or else disregarded the fact that

what contract was about and what were the contents of the contract.

The contract was Turnkey Contract. When respondent partook in the

bidding process. It was awarded the contract on Turnkey Basis for a

contract price of Rs.55.75 Crores. The contract was for design and

construction of Seven number of steel trussed girder (double lane)

bridges of different spans having aggregate length 461 RM (Approx.)

on Mughal Road Project from Shopian to Bafliaz in erstwhile State of

J&K (now UT of J&K), which included planning, detailed survey, soil

investigation, collection of hydraulic data and structural design along

with execution (complete job) on Turn Key Basis as per scope of the

work. The work was to be completed within 24 calendar months as

per the terms and conditions of the contract and the work had to be

completed up to 8th November 2012. However, the work completed

on 18th September 2013, i.e., it took more 387 days. It cannot be heard

saying from the mouth of respondent/contractor that it was unable to

make plans about seven bridges; that it was unable to conduct survey;

that it was unable to conduct soil investigation; that it was unable to

collect hydraulic data; that it was unable to prepare structural design

or contractor/respondent was having no information about the climatic

weather/situation of these areas where bridges had to be laid/ installed

Page 13 AA no.06/2020 that too during this scientific era/generation. These important aspects

of the matter have been brushed aside by the Arbitrators while

awarding the people's money in the amount of Rs.2.80 Lacs in favour

of respondent/contractor as if it was a largesse. Even in such situation,

law is to be followed.

Further to say here that Arbitrators have forgot that we are

living in the scientific and computer age, where one can have easy

access and information about any area of the globe about its

latitudinal and longitudinal reckoning and measurements. If

respondent / contractor was not having such an expertise in building

the bridges, it should not and ought not participate in subject-matter of

NIT. The Arbitrators while making and issuing impugned Award have

tried to show as if contractor was a naïve company and unable to

know about the situations obtaining on the spots.

The impugned award and order qua Claim no.3a are set-aside.

19.While deciding Claim no.3b, the Arbitrators have again travelled

beyond their territory. The Arbitrators have not taken into account the

importance of project. If there was any cavity detected; whose

responsibility was it to remove the same; obviously it was that of the

contractor and not that of appellant. The contract was with respect to

laying/installing of bridges. If there was any cavity or defect in its

laying or installation, the same was exclusive responsibility of

contractor and for its removal the contractor is not entitled to claim a

penny muchless the amount of Rs.35.00 Lacs as awarded by the

Page 14 AA no.06/2020 Arbitrators.This shows and reflects the powers having been exercised

by Arbitrators without satisfaction of requirements of law.

So, the impugned award and order insofar as it relates to Claim

no.3b are set-aside.

20.While deciding Claim no.3c, again the Arbitrators have done injustice

by awarding Rs.24,18,655/- in favour of contractor/respondent. If

length of a bridge was not upto the mark, which was the sole

responsibility of the contractor because when the contractor went

through the NIT, it was made clear therein that it was a Turnkey based

contract and every aspect of the matter was to be looked into by the

contractor while responding or participating in the tender process,

then how the Arbitrators have awarded the aforesaid amount shows

and reflects non-application of mind on their part.

In short, the Arbitrators did not apply their mind to the fact that

it was the contractor, which had to go on the spot(s) and make all

preparations, plans, designs, surveys, assessment, for laying and

installing the bridges. If there had been a miniature cavity, defect or

shortcoming,the same was the sole responsibility of contractor to

make good.

It is necessary to mention here that it was a "Turnkey" contract,

which in simple language means that a contract in which a company if

given full responsibility to plan and build something that the employer

must be able to use as soon as it is finished without needing to any

further work on it themselves. This important facet of the matter

cannot be ignored, but has been disregarded by the Arbitrators while

passing impugned Award.

Page 15 AA no.06/2020 All this amount given/awarded by the Arbitrators is public

money and cannot be given in such a leisure way to respondent. In

that view of matter, impugned award and order are set-aside to the

extent of Claim no.3c.

21.Under Claim no.3d, respondent had made a claim of Rs.1,18,22,310/-

on account of extra excavation. The Arbitrators awarded Rs.59.00

Lacs.

On one hand, the Arbitrators admit that there is no basis in the

claim of contractor/respondent that sites were not given to them in

time as it was in explicit terms found that contractor was responsible

for correct positioning of all parts of works and was required to rectify

any error in the positions, levels, dimensions or alignments of the

works and on the other hand, the Arbitrators have decided other

claims of the Arbitrators unmindful of contract being Turnkey, which

need not to be defined and discussed again here.

In view of above, impugned Award and order with respect to

claim no.3d are set-aside.

22.Under Claim no.3e, respondent had projected a claim of Rs.11,45,683

on account of additional hand-railing. Such a claim shows that

respondent/contractor tried to over-exaggerate its claims before the

Arbitrators. Such claims appear to have been devised to make

something from nothing. Although claim no.3e has been rightly

rejected by the Arbitrators, yet they have issued and passed impugned

Award oblivious of the abovementioned facts.

23.Under Claim no.4 for increase in rates of wages under the Minimum

Wages Act, Rs.2.43 Crores had been sought for by respondent relying

Page 16 AA no.06/2020 on Clause 13.7 of GCC, which provides that contract prices would be

adjusted to take account of any increase or decrease in cost resulting

from a change in the laws of the country. Insofar as claim under the

head - Claim no.4, is concerned, it has been awarded by the

Arbitrators given the law laid down by the Supreme Court with

respect thereto.

Thus, impugned Award and order to the extent of claim no.4 for

Rs.2.25 Crores need not be interfered with or set-aside.

24.The next claim, being Claim no.5, is with respect to prolongation of

contract period of time and cost thereof. The Arbitrators have awarded

an amount of Rs.10.17 Crores in favour of respondent.

The first and foremost, the Arbitrators have overlooked the fact

that respondent never raised claims before Dispute Adjudication

Board (DAB), more particularly in view of Clause 20.2 and 20.4 of

General Conditions of FIDIC Contract executed between the parties.

The Arbitrators have totally disregarded and ignored the fact

qua mandate of Clause 20.6 of the agreement dated 18th December

2006, which provides that only those disputes are arbitrable which

were raised before DAB and were not settled.

Not only this, respondent/contractor accepted the final bill and

measurements by putting its seal and signatures without any

reservation and protest, and therefore, respondent was precluded to

raise any claim thereafter. This important aspect of the matter has also

been disregarded by the Arbitrators.

Perusal of the file and record thereon reveals that on 18 th

September 2013, the bridges constructed by respondent/contractor

Page 17 AA no.06/2020 were without approaches of 15 metres, which was within the scope of

agreement as per IRC:5-1998 clause 20.1. Besides, River Training

Works/Protection Works were not completedand, as such, respondent/

contractor delayed execution of work and did not complete it within

stipulated time of completion.

The Arbitrators have forgot to go through the communications

made by the Department to respondent/contractor and misdirected

themselves in considering the claim of respondent. Startlingly, when

a communication no.CEMRP/1422 dated 9th November 2013 issued

by Technical Officer to Chief Engineer, Project Organisation/Mughal

Road, to the address of respondent, for Nallah training works, load

testing of bridges and treatment for protection of approaches etc., the

answer of respondent to such communications was to release

payments. Thereafter Chief Engineer, J&K Projects Organisation,

vide letter no.CEMRP/1592-93 dated 4th December 2013, informed

respondent/ contractor with caution to complete balance works viz.

protection works; load testing of bridges; fixing of crash barriers on

approaches; removal of debris accumulated in the waterway under the

bridges, but all in vain.Vide letter dated 26th February 2014,

respondent/ contractor was asked to come up with an action plan for

load testing of all the seven bridges as also with the

proposals/drawings for Nallah Training and other allied works.

Respondent/contractor was also informed to attend a meeting with

respect thereof on 6th March 2014, but respondent refused to attend

the meeting. Thus, again vide letter dated 10th March 2014,

Page 18 AA no.06/2020 respondent/contractor was asked to discuss the issues with the Chief

Engineer on 24th March 2014.

All these important facets of the matter have been sheerly

disregarded by the Arbitrators.

It is very important to make mention of here that the Arbitrators

were required to think as to what were the claims projected by

respondent - a contractor, before them, and that whether there was

any collusiveness emanating from the proceedings initiated at the

instance of the parties before them, more particularly when the

amount awarded by the Arbitrators in favour of the

contractor/respondent was/is the common man's money of the

country.

It is the money that is to be drawn and disbursed from State

Exchequer and to be given to a contractor - respondent herein. The

State Exchequer is public exchequer. It is public tax that government

collects from public.

It is not so easy to give away the public exchequer for an

individual. That apart, when basics of the instant case are considered.

Respondent/contractor, on its own volition, had entered into contract.

Respondent had claimed that it had capacity and capability to lay and

install such small bridges. Respondent had also claimed to have laid

and installed longest bridges in the country. Thus, respondent should

have the ken on all facets of the contract in question. It cannot be

heard saying from the mouth of respondent that it was incapable to

conduct planning, survey, investigation, collect hydraulic data and

structural design along with execution (complete job) on Turn Key

Page 19 AA no.06/2020 Basis as per scope of the work on the spots where bridges had to be

laid/installed. However, the Arbitrators without application of mind

have entertained the baseless claims of respondent, which were/are

unworthy of consideration.

The impugned award and order concerning Claim no.5, are set-

aside.

25.Claim no.6 has also been for payment of interest on delayed

payments. The respondent was/is not entitled to any interest. The

award and impugned to the extent of claim no.6 for grant of interest

are set-aside.

26.Claim no.7 is with respect to cost of acceleration for an amount of

Rs.4.46 Crores claimed by respondent/contractor.

On one hand the Arbitrators admit that respondent/contractor

has projected claim without details and the same has, thus, become

absolutely hypothetical, and on the other hand the Arbitrators have

awarded Rs.1.00 Crore in favour of respondent/contractor as if the

Arbitrators were giving ex gratia relief to the claimants of any mishap.

In that view of matter, impugned award and order relating to

Claim no.7 are also set-aside.

27.Insofar as impugned Award and order to the extent of Claim no.8 is

concerned, the same need not be interfered with.

28.Claim no.9 is about escalation in cost of construction work done

during extended period. Respondent/contractor claimed Rs.3.00

Crores. The Arbitrators have given Rs.1.50 Crores in favour of

respondent.

Page 20 AA no.06/2020 In view of the elaborate discussion herein above, further

reiteration thereof does not require. So, the impugned award and order

qua claim no.9 are also set-aside.

29.Under claim no.10, cost of arbitration in the amount of Rs.40.00 Lacs

has been given by the Arbitrators in favour of respondent without any

basis. So, the impugned award and order are set-aside to the extent of

claim no.10 as well.

30.The Award to the extent of interest @ 6% payable w.e.f. the date of

award granted by the Arbitrators is also set-aside.

31.It may also be added here that the Principal District Judge, Srinagar,

has in sheer abuse of process of law, passed impugned order and is,

therefore, set-aside on the above lines.

32.The instant appeal is allowed and disposed of in terms of above.

33.Record, if any received, be returned.

(Vinod Chatterji Koul) Judge Srinagar4 02.02.2023 Ajaz Ahmad, PS Whether approved for reporting? No.

Page 21 AA no.06/2020