M/S Padmanathan Construction ... vs State Of Jharkhand
2023 Latest Caselaw 1374 Jhar

                 IN THE HIGH COURT OF JHARKHAND AT RANCHI

                         Arbitration Appeal No. 16 of 2007
              M/s Padmanathan Construction Company Private Limited
                                                        ...      ...      Appellant
                                      Versus
              State of Jharkhand                        ...     ... Respondent
                                     With
                         Arbitration Appeal No. 03 of 2008
              The State of Jharkhand                    ...   ...     Appellant
                                      Versus
              M/s Padmanathan Construction Company Private Limited
                                                        ...     ...      Respondent
                                     ---

CORAM: HON'BLE MRS. JUSTICE ANUBHA RAWAT CHOUDHARY

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                 For the Appellant         : Mr. Rajan Raj, Advocate
                 For the State             : Mr. Sachin Kumar, AAG II
                                           : Ms. Surbhi, AC to AAG II
                                     ---
26/28.03.2023
            1.     Learned counsel for the parties are present.

2. Learned counsel for the claimant Mr. Rajan Raj has referred to the award and has submitted that the internal page 2 of the award refers to the fact that the project was financed by the World Bank. He submits that on account of the fact that the finances were not available, the work was lingered at the instance of the State. The learned counsel has further referred to internal page 3 of the award to submit that there was strike of the engineers of the State during the period from 20.08.1991 to 04.11.1991, for which the claimant cannot be responsible. The learned counsel has further referred to the internal page 4 of the award to submit that up to May, 1992, six bills were raised and there was non-payment of the bills, so the question of recovery of any penal amount on account of not refunding the unused materials does not arise. On the point of penal recovery, the learned counsel has referred to clause 17 of the contract to submit that the penal recovery was to be preceded by a notice in terms of the said clause, but in the entire award, there is no reference of any notice and therefore, the condition precedent for penal recovery was not satisfied. He submits that the learned arbitrator has rightly not allowed penal recovery but has allowed recovery of the amount on account of unused materials.

3. The learned counsel submits that the learned Arbitrator has considered the entire gamut of affairs between the parties and recorded

all the documents and materials placed before him, which has been discussed thoroughly particularly in paragraph 10 of the award. The learned counsel has also submitted that the learned Arbitrator was the Engineer-in-chief of the respondent and he was aware of the entire project and was a technical person, so it was not expected that the award will be in the form of a judgment. The learned counsel submits that the basic materials to arrive at a conclusion for which the amount has been awarded, has been duly dealt with by the learned Arbitrator. The learned counsel has also submitted that otherwise also, it is permissible for the arbitrator to make an honest guesswork by awarding the amount. He also submits that there is no legal bar that the arbitrator cannot award any amount over and above what was claimed. The learned counsel submits that in case the arbitrator finds, on the basis of materials on record, that further amount, over and above what was claimed, is required to be awarded, it is permissible for the learned Arbitrator to do so depending upon the materials which are placed before him. The learned counsel submits that the essential work of the learned Arbitrator is to come to a definite conclusion in connection with the claim or counter claim of the respective parties.

4. The learned counsel has submitted that the aforesaid submissions with regard to the claim is without prejudice to the argument of the claimant that in the petition filed under Section 34 of the Arbitration and Conciliation Act,1996 no specific ground was taken with respect to the claim which was awarded by the learned Arbitrator. The learned counsel submits that the requirement to give the foundational materials for challenge in a petition filed under section 34 of the aforesaid Act of 1996 is a mandatory requirement of law, in as much as, such material has the effect of putting the other side on notice to response to the ground. The learned counsel submits that the State had raised general grounds in the petition under Section 34 of the Arbitration and Conciliation Act, 1996 which are no grounds at all in the eyes of law.

5. Arguments concluded.

6. Post these cases on 13th June, 2023 for judgment.

(Anubha Rawat Choudhary, J.) Mukul