Kerala High Court
Lloyed Insulations (India) Ltd vs Foremexx Space Frames on 17 January, 2022
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE P.B.SURESH KUMAR
&
THE HONOURABLE MRS. JUSTICE C.S. SUDHA
MONDAY, THE 17TH DAY OF JANUARY 2022 / 27TH POUSHA, 1943
ARB.A NO. 17 OF 2013
AGAINST THE ORDER DATED 15.11.2012 IN OP(ARB) 632/2010 OF II ADDITIONAL
DISTRICT COURT,ERNAKULAM
APPELLANT/(PETITIONER IN THE LOWER COURT):
LLOYED INSULATIONS (INDIA) LTD.
5, HADDOWS LANE, HADDOWS ROAD, NUNGAMBAKKAM, CHENNAI, HAVING
ITS BRANCH OFFICE AT H.B 29, 4TH CROSS ROAD, OPP UNION BANK OF
INDIA, AMBILY NAGAR, KOCHI 36
BY ADVS.SRI.S.VINOD BHAT
SRI.LEGITH T.KOTTAKKAL
RESPONDENT/(RESPONDENT IN THE LOWER COURT):
FOREMEXX SPACE FRAMES
30/4473-87, ANEEB BUILDING, OPP. KSFE LIMITED, KAVOOR,
CHEVEYOOR P.O, KOZHIKODE 17, RERPESENTED BY ITS PROPRIETOR,
SAJJID PASHA
BY ADVS.SRI.K.L.VARGHESE (SR.)
SRI.RANJITH VARGHESE
SRI.RAHUL VARGHESE
SMT.SANTHA VARGHESE
THIS ARBITRATION APPEAL HAVING COME UP FOR ADMISSION ON 20.12.2021, THE
COURT ON 17.01.2022 DELIVERED THE FOLLOWING:
2
Arb.Appeal No.17 of 2013
"C.R."
P.B.SURESH KUMAR & C.S.SUDHA, JJ.
--------------------------------------------------
Arb.Appeal No.17 of 2013
-------------------------------------------
Dated this the 17 th day of January, 2022
JUDGMENT
C.S.Sudha, J.
Can an Arbitral Tribunal pass more than one award? Does
the Arbitration and Conciliation Act, 1996 (the Act) contemplate a
Majority Award and a Minority Award? Can the Presiding Arbitrator
direct the remaining two Arbitrators to write separate Awards and then
adopt one, without giving separate or independent reasons either for
accepting one and rejecting the other? No, says Sri.S.Vinod Bhat - the
learned counsel for the appellant. According to him, passing multiple
awards and the procedure adopted by the Presiding Arbitrator in
accepting one Award without giving his reasons for the same, are
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violations or breach of the provisions of Sections 29 and 31 of the Act.
We will examine the tenability of this argument advanced by the
learned counsel for the appellant.
2. The appellant herein is the sole respondent and the
respondent herein, the claimant in the arbitration proceedings before
the Arbitral Tribunal consisting of three Arbitrators, namely, Mr. Justice
J.B. Koshy, the Presiding Arbitrator; Mr. Justice K.A. Abdul Gafoor
(Arbitrator no.1) and Mr. Justice K. Sampath (Arbitrator no.2).
Aggrieved by the Award passed by the Arbitral Tribunal, the appellant
herein moved the District Court under Section 34 of the Act. The court
below partly set aside the Award. Not satisfied with the same, the
present appeal has been filed. Parties will be referred to as described
before the Arbitral Tribunal.
3. A brief reference to the facts of the case -
The Greater Cochin Development Corporation (GCDA) which owns
the Jawaharlal Nehru International Stadium (the Stadium), Kaloor,
Kochi decided to construct a roof for the Stadium and hence invited
Arb.Appeal No.17 of 2013
tenders for the same vide tender notice dated 14.03.2006. The claimant
quoted for the work and was qualified in the technical bid. However,
they failed to qualify for the commercial bid as they had no previous
experience of completing a job of the value of ₹5 Crores, which was a
pre-requisite for the bid. As the respondent was the successful bidder,
the work was allotted by the GCDA to them. Pursuant to this, there
were discussions between the claimant and the respondent as the
former had drawings ready with them for the work which the
respondent desired to utilise for the work. The claimant expressed
willingness to execute the work as a sub-contractor under the
respondent. Hence, the respondent entered into a sub-contract with the
claimant relating to designing, submission of drawings, supply of
materials, fabrication and erection of the roof structure, except the
roofing. The total value of the work was fixed at ₹615 lakhs. The
Letter of Intent (LoI) dated 16.07.2007 issued by the respondent was
approved by the GCDA. The period for completion of the work was
fixed as five months from 22.10.2007. Accordingly, the work order was
Arb.Appeal No.17 of 2013
issued. As per the work order, the claimant had to design, fabricate the
frames of the roof and erect the same using scaffoldings. During the
course of execution of the work, disputes arose relating to the demand
made by the claimant for clearing the periodical bills. The request of
the claimant was not acceded to by the respondent. According to the
claimant due to the nonpayment of the bills as well as labour unrest,
the progress of the work was affected. Out of the 28 modules of space
frame, only one could be erected. Due to the slow pace of work,
negotiations and talks took place between the parties. It was then
decided that the claimant would be relieved of the job of erection of the
frames, which would be taken over by the respondent. Accordingly,
M/s. BECPL was engaged for the erection of frames by using a crane.
Thereafter, M/s.BECPL also withdrew from the work and then
M/s.BAVA Engineers Pvt. Ltd. was engaged for executing the work of
erection of the frames. While so, disputes again arose between the
parties relating to the working of M/s.BAVA Engineers Pvt. Ltd. The
claimant wanted the services of the said agency to be terminated, which
Arb.Appeal No.17 of 2013
request was rejected by the respondent. Differences of opinion also
arose relating to the functioning of the Manager of the respondent. The
claimant wanted the Manager to be removed which was again refused
by the respondent. Thereafter, due to several other intervening reasons
and differences of opinion, the claimant citing nonpayment and delay
in clearing the part bills, informed the respondent that they were
closing the site and stopping the work. On 06.09.2008 the respondent
terminated the contract citing lack of progress in the execution of the
work besides prolonged delay by not adhering to the contractual
schedule of completion and also due to the poor quality of work. This
was followed by the parties invoking the arbitration clause in the
agreement.
4. One Arbitrator was appointed by either side. The
Arbitrators could not agree on the Presiding Arbitrator. Hence, on an
application moved by the respondent, this Court by order dated
09.06.2009, appointed Mr. Justice J.B. Koshy as the Presiding
Arbitrator. Several claims were moved by the claimant before the
Arb.Appeal No.17 of 2013
Arbitral Tribunal (the Tribunal). The total sum claimed was
₹2,46,98,065/- with interest @ 18% from 01/09/2008 till realization
and costs of arbitration. An amount of ₹92,26,312/- with interest
@12% from 06.09.2008 till realization and cost of ₹5,00,000/- was
awarded. The respondent moved the District Court under Section 34 of
the Act. The court below confirmed the Award except on the findings
of the Tribunal relating to refund of VAT and payment of costs, both of
which were set aside. Aggrieved, the respondent has come up in
appeal.
5. The first and foremost argument advanced on behalf of
the respondent is the violation/breach of the provisions of Sections 29
and 31 of the Act. According to the learned counsel for the respondent,
there can only be one Award of the Tribunal and never multiple awards.
According to him, in the instant case there are 4 different awards of
different dates which is impermissible. Hence for the said reason
alone, the Award ought to have been set aside by the court below,
which it failed to do. In support of this argument, reference is made to
Arb.Appeal No.17 of 2013
Dakshin Haryana Bijli Vitaran Nigam Ltd. vs. M/s.Navigant
Technologies Pvt. Ltd. [AIR 2021 (SC) 2493].
6. As stated earlier, the Tribunal consisted of two
Arbitrators and one Presiding Arbitrator. Apparently, the Arbitrators
were not able to agree on the claims and hence separate findings were
rendered by Arbitrator No.1 and 2, which are dated 24.02.2010
(Appendix A) and 19.03.2010 (Appendix C) respectively. The
Presiding Arbitrator by Award described as Appendix B dated
05.04.2010, concurred with the reasonings and findings of Arbitrator
No.1 based on which, an Award described as Majority Award dated
05.04.2010 signed by the Presiding Arbitrator and Arbitrator No.1 was
passed. In the last page of the Majority Award, it is stated that the
dissenting Award of Arbitrator No.2 has been appended as Appendix C.
7. It would be apposite to refer to Sections 29 and 31 of the
Act which read -
"29. Decision making by panel of arbitrators. -- (1) Unless
otherwise agreed by the parties, in arbitral proceedings with more than
one arbitrator, any decision of the arbitral tribunal shall be made by a
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majority of all its members.
(2) Notwithstanding sub-section (1), if authorised by the parties or all
the members of the arbitral tribunal, questions of procedure may be
decided by the presiding arbitrator."
xxxxxxxx
"31. Form and contents of arbitral award. -- (1) An arbitral award
shall be made in writing and shall be signed by the members of the
arbitral tribunal.
(2) For the purposes of sub-section (1), in arbitral proceedings with
more than one arbitrator, the signatures of the majority of all the
members of the arbitral tribunal shall be sufficient so long as the reason
for any omitted signature is stated.
(3) The arbitral award shall state the reasons upon which it is based,
unless--
(a) the parties have agreed that no reasons are to be given, or
(b) the award is an arbitral award on agreed terms under section
30.
(4) The arbitral award shall state its date and the place of arbitration as
determined in accordance with section 20 and the award shall be
deemed to have been made at that place.
(5) After the arbitral award is made, a signed copy shall be delivered to
each party.
(6) The arbitral tribunal may, at any time during the arbitral proceedings,
make an interim arbitral award on any matter with respect to which it
may make a final arbitral award.
(7) (a) Unless otherwise agreed by the parties, where and insofar as an
arbitral award is for the payment of money, the arbitral tribunal may
Arb.Appeal No.17 of 2013
include in the sum for which the award is made interest, at such rate as it
deems reasonable, on the whole or any part of the money, for the whole
or any part of the period between the date on which the cause of action
arose and the date on which the award is made.
(b) A sum directed to be paid by an arbitral award shall, unless the
award otherwise directs, carry interest at the rate of two per cent. higher
than the current rate of interest prevalent on the date of award, from the
date of award to the date of payment.
Explanation. --The expression "current rate of interest" shall have the
same meaning as assigned to it under clause (b) of section 2 of the
Interest Act, 1978 (14 of 1978).
(8) The costs of an arbitration shall be fixed by the arbitral tribunal in
accordance with section 31A."
8. Here, we refer to Dakshin Haryana Bijli (supra)
referred to by the learned counsel for the respondent from which we
quote a few paragraphs-
"4. xxx
(i) S.2(1)(c) of the 1996 Act defines "arbitral award" to include
an interim award. The phrase "arbitral award" has been used in
several provisions of the 1996 Act.
The statute recognises only one arbitral award being passed by
an arbitral tribunal, which may either be a unanimous award, or
an award passed by a majority in the case of a panel of members.
An award is a binding decision made by the arbitrator/s on all
the issues referred for adjudication. The award contains the
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reasons assigned by the tribunal on the adjudication of the rights
and obligations of the parties arising from the underlying
commercial contract. The award must be one which decides all
the issues referred for arbitration. The view of a dissenting
arbitrator is not an award, but his opinion. However, a party
aggrieved by the award, may draw support from the reasoning
and findings assigned in the dissenting opinion.
(ii) The phrase 'arbitral tribunal' has been defined by S.2(1)(d) to
mean a sole arbitrator, or a panel of arbitrators.
(iii) Chapter VI of the Arbitration and Conciliation Act provides
the procedure for making of an arbitral award, and termination of
arbitral proceedings.
S.28 to 31 relate to the procedure for making the award. S.28
provides the rules applicable for the determination of a dispute
by arbitration.
(iv) S.29 of the 1996 Act deals with decision making by a panel
of arbitrators. S.29 reads as: xxxxxxxx
An "arbitral award" is the decision made by the majority
members of an arbitral tribunal, which is final and binding on the
parties.
S.35 provides that an arbitral award shall be "final and binding"
on the parties and persons claiming under them. A dissenting
opinion does not determine the rights or liabilities of the parties
which are enforceable under S.36 of the Act.
(v) The reference to the phrase "arbitral award" in S.34 and S.36
refers to the decision of the majority of the members of the arbitral
tribunal. A party cannot file a petition u/S.34 for setting aside, or
u/S.36 for enforcement of a dissenting opinion. What is capable of
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being set aside u/s.34 is the "arbitral award" i.e., the decision
reached by the majority of members of the tribunal. Similarly,
u/s.36 what can be enforced is the "arbitral award" passed by the
majority of the members.
(vi) xxx
(vii) Legal requirement of signing the award.
The legal requirement of signing the arbitral award by a sole
arbitrator, or the members of a tribunal is found in S.31 of the
1996 Act, which provides the form and content of an arbitral
award. S.31 provides that:
"31. Form and contents of arbitral award. -
xxx xxx xxx
xxx xxx xxx"
(viii) S.31(1) is couched in mandatory terms, and provides that an
arbitral award shall be made in writing and signed by all the
members of the arbitral tribunal. If the arbitral tribunal comprises
of more than one arbitrator, the award is made when the arbitrators
acting together finally express their decision in writing, and is
authenticated by their signatures (Malhotra's Commentary on the
Law of Arbitration, Wolters Kluwer, 4th Ed., Vol.1, p.794.). An
award takes legal effect only after it is signed by the arbitrators,
which gives it authentication. There can be no finality of the
award, except after it is signed, since signing of the award gives
legal effect and validity to it. The making and delivery of the
award are different stages of an arbitration proceeding. An award
is made when it is authenticated by the person who makes it.
The statute makes it obligatory for each of the members of the
tribunal to sign the award, to make it a valid award. The usage of
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the term "shall" makes it a mandatory requirement. It is not
merely a ministerial act, or an empty formality which can be
dispensed with.
(ix) xxx
(x) xxx
(xi) xxx
(xii) xxx
(xiii) S.32 provides that the arbitral proceedings shall be
terminated after the final award is passed. With the termination of
the arbitral proceedings, the mandate of the arbitral tribunal
terminates, and the tribunal becomes functus officio.
(xiv) In an arbitral tribunal comprising of a panel of three
members, if one of the members gives a dissenting opinion, it
must be delivered contemporaneously on the same date as the
final award, and not on a subsequent date, as the tribunal becomes
functus officio upon the passing of the final award. The period for
rendering the award and dissenting opinion must be within the
period prescribed by S.29A of the Act.
(xv) In the treatise on 'International Commercial Arbitration'
authored by Fouchard, Gaillard, Goldman, it has been opined that:
"1403. - A dissenting opinion can only be issued when the
majority has already made the decision which constitutes the
award. Until then, any document issued by the minority arbitrator
can only be treated as part of the deliberations. However, once the
majority decision has been reached, it is preferable for the author
of the dissenting opinion to communicate a draft to the other
arbitrators so as to enable them to discuss the arguments put
forward in it. The award made by the majority could then be
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issued after the dissenting opinion, or at least, after the draft of the
dissenting opinion..." (Fouchard, Gaillard, Goldman, International
Commercial Arbitration, Ed. Emmannuel Gaillard, John Savage,
p.786 (Kluwer Law International).)
(xvi) There is only one date recognised by law i.e. the date on
which a signed copy of the final award is received by the parties,
from which the period of limitation for filing objections would
start ticking. There can be no finality in the award, except after it
is signed, because signing of the award gives legal effect and
finality to the award.
(xvii) xxx
(xviii) xxx
(xix) xxx
(xx) Relevance of a dissenting opinion
(a) The dissenting opinion of a minority arbitrator can be relied
upon by the party seeking to set aside the award to buttress its
submissions in the proceedings under S.34.
(b) At the stage of judicial scrutiny by the Court under S.34, the
Court is not precluded from considering the findings and
conclusions of the dissenting opinion of the minority member of
the tribunal.
(c) In the commentary of 'Russel on Arbitration', the relevance of
a dissenting opinion was explained as follows:
"6-058. Dissenting opinions. Any member of the tribunal who
does not assent to an award need not sign it but may set out his
own views of the case, either within the award document or in a
separate "dissenting opinion". The arbitrator should consider
carefully whether there is good reason for expressing his dissent,
Arb.Appeal No.17 of 2013
because a dissenting opinion may encourage a challenge to the
award. This is for the parties' information only and does not form
part of the award, but it may be admissible as evidence in relation
to the procedural matters in the event of a challenge or may add
weight to the arguments of a party wishing to appeal against the
award." (David St. John Sutton, Judith Gill and Matthew Gearing
QC, Russel on Arbitration, 24 ed. (Sweet and Maxwell), p.313.)
(emphasis supplied)
(d) Gary B. Born in his commentary on International Commercial
Arbitration opines that:
"Even absent express authorization in national law or applicable
institutional rules (or otherwise), the right to provide a dissenting
or separate opinion is an appropriate concomitant of the
arbitrator's adjudicative function and the tribunal's related
obligation to make a reasoned award. Although there are legal
systems where dissenting or separate opinions are either not
permitted, or not customary, these domestic rules have little
application in the context of party - nominated co-arbitrators, and
diverse tribunals. Indeed, the right of an arbitrator to deliver a
dissenting opinion is properly considered as an element of his /
her adjudicative mandate, particularly in circumstances where a
reasoned award is required. Only clear an explicit prohibition
should preclude the making and publication to the parties of a
dissenting opinion, which serves an important role in the
deliberative process, and can provide a valuable check on arbitrary
or indefensible decision making." (Gary Born, International
Commercial Arbitration, Wolters Kluwer, Ed. 2009, Volume II, p.
2466.)
Arb.Appeal No.17 of 2013
It is further commented that:
"There is nothing objectionable at all about an arbitrator
"systematically drawing up a dissenting opinion, and insisting that
it be communicated to the parties". If an arbitrator believes that
the tribunal is making a seriously wrong decision, which cannot
fairly be reconciled with the law and the evidentiary record, then
he / she may express that view. There is nothing wrong - and on
the contrary, much that is right - with such a course as part of the
adjudicatory process in which the tribunal's conclusion is
expressed in a reasoned manner. And, if the arbitrator considers
that the award's conclusions require a "systematic" discussion, that
is also entirely appropriate; indeed, it is implied in the
adjudicative process, and the requirement of a reasoned award."
(Gary Born, International Commercial Arbitration, Wolters
Kluwer, Ed. 2009, Volume II, p. 2469.)
It is further observed that:
"...the very concept of a reasoned award by a multi - member
tribunal permits a statement of different reasons - if different
members of the tribunal in fact hold different views. This is an
essential aspect of the process by which the parties have an
opportunity to both, present their case, and hear the reasons for the
tribunal's decision; not hearing the dissent deprives the parties of
an important aspect of this process." (Emphasis supplied)
9. Therefore, as held in the aforesaid case, there can only
be one Award and the same is the decision made by the majority
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members of the Tribunal, which would be binding on the parties. If the
Arbitral Tribunal comprises of more than one Arbitrator, the Award is
made when the Arbitrators acting together, finally express their
decision in writing and is authenticated by their signatures. An Award
is made when it is authenticated by the person(s) who make it. In other
words, an Award takes legal effect only after it is signed by the
Arbitrators, which gives it authentication. There can be no finality of
the Award except after it is signed, since signing of the Award gives
legal effect and validity to it. Further, as held in the aforesaid decision,
though there can only be one Award, there is nothing objectionable at
all about an Arbitrator drawing up a dissenting opinion, unless there is
a clear and explicit prohibition precluding the making and publication
to the parties of a dissenting opinion. It is true that in the Act, there is
only provision for passing an interim award [S.31(7)]. Though there is
no specific provision in the Act providing for passing a dissenting view,
the Act does not prohibit such a opinion being rendered by the minority
member(s). The findings/opinions/views of the Minority Tribunal is not
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an Award, but only the dissenting view and the same does not form part
of the Award. Such dissenting view/opinion cannot be made the basis
of a proceeding under Section 34 or under Section 36 for its
enforcement. But it can be relied upon by the party seeking to set aside
the Award to buttress his submissions in the proceedings under Section
34. Therefore, we certainly agree with the argument advanced by the
learned counsel for the respondent that there can only be one Award of
the Tribunal, signed by the majority members.
10. Now the question to be answered is - are there more than
one Award or multiple Awards in this case, as argued by the learned
counsel for the respondent. In the case on hand, the findings of
Arbitrator No.1 dated 24.02.2010 referred to as Appendix A in the
document described as Majority Award, matured into an Award only on
05.04.2010 when the same was concurred to by the Presiding
Arbitrator and his concurrence recorded in Appendix B. It is true that
Appendix A is signed by Arbitrator No.1 alone and Appendix B by the
Presiding Arbitrator. The Presiding Arbitrator could not have signed
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Appendix A on 24.02.2010 itself, that is, the date on which it was
prepared by Arbitrator No.1, because the former decided to concur with
the findings in the same only after he went through Appendix C dated
19.03.2010, which is the dissenting view of Arbitrator No.2. Though
Appendix C is described as an Award, apparently it is not so, whereas it
is only the dissenting view/opinion of the minority Arbitrator, namely,
Arbitrator No.2. As held by the Apex Court, the dissenting opinion can
only be issued when the majority has already made the decision which
constitutes the Award. Until then, any document issued by the minority
arbitrator can only be treated as part of the deliberations. Therefore,
Appendix C matured into a dissenting view/opinion only on
05.04.2010 when the Majority Award was passed. Till then Appendix C
was only part of the deliberations. The Presiding Arbitrator on
05.04.2010 records in Appendix B that he is concurring with the
findings/views/reasons given in Appendix A by Arbitrator No.1.
Thereafter the gist of the claims allowed and rejected, the details of
which are contained in Appendix A, are reproduced and engrossed in
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stamp papers, which document described as the Majority Award
contains the signature of the majority members of the Tribunal, that is
of Arbitrator no.1 and the Presiding Arbitrator. Appendix A, Appendix
B and the document described as the Majority Award together
constitute the final Award and the date of the Award is 05.04.2010. It is
true that all the aforesaid three documents are described as 'Award'.
Merely because they are described so, it does not make them separate
awards. In our opinion they are only parts of one final Award.
Therefore, the arguments to the contrary are liable to be negatived.
11. Further the argument that the majority award is not
supported by any reason(s) is incorrect because detailed reasons have
been given in Appendix A, which reasons have been wholly adopted by
the Presiding Arbitrator and made part of the Majority Award. It is true
that the Presiding Arbitrator has not given reasons of his own in
Appendix B. But that is unnecessary because he states in Appendix B
thus-
"I had the opportunity to go through separate awards written by
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Sr.Justice K.A.Abdul Gafoor and Sri.Justice K.Sampath. I have
considered the pleadings, documentary evidence adduced by both
sides, oral evidence in this case and arguments of both sides. On a
careful consideration of the above and after studying the awards
written by my co-arbitrators, I fully agree with the award of
Sri.Justice K.A.Abdul Gafoor. Since I fully concur with the
reasoning and findings in the award and relief granted by Sri.Justice
K.A.Abdul Gafoor, I am not reiterating the same. But, I am
enclosing herewith the list of documents arranged chronologically."
12. As per sub-section (1) of Section 29 of the Act, any
decision of the Arbitral Tribunal consisting of more than one Arbitrator
has to be made by majority of all its members, unless otherwise agreed
to by the parties. Sub-section (2) empowers the Presiding Arbitrator to
decide on the question of procedure if authorised by the parties or by
all the members of the Tribunal. Here nobody has a case that any
particular procedure had been agreed to or that the parties had
authorised the Tribunal to follow any particular procedure. Therefore,
the Presiding Arbitrator was well within his powers to decide on the
procedure to be adopted in passing the Award. That being the position,
the argument that the aforesaid provisions of the Act have been
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infringed, is liable to be negatived.
13. It is true that the Majority Award is not signed by
Arbitrator No.2, but only by Arbitrator No.1 and the Presiding
Arbitrator. However, that is not necessary which is clear from Section
31. Section 31(1) says that an Award shall be in writing and signed by
the members of the Tribunal. Section 31(2) says that where there is
more than one Arbitrator, the signatures of the majority of the members
of the tribunal shall be sufficient so long as the reason for any omitted
signature is stated. This can apply only in the case of a unanimous
Award and it can have no application when there is a dissenting view
rendered by one of the Arbitrators. As held by the Apex Court in the
aforesaid decision, any member of the Tribunal who does not assent to
an Award need not sign it but may set out his own views of the case,
either within the Award document or in a separate dissenting opinion.
The dissenting view is not part of the Award. Here, in the Majority
Award, Arbitrator No.1 and the Presiding Arbitrator have authenticated
it by affixing their respective signatures in it. Therefore, the argument
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that the provisions of Section 31 have also not been complied with is
rejected.
14. It is further pointed out that when Appendix A Award
was passed on 24.02.2010 by Arbitrator No.1, the Arbitral Tribunal had
become functus officio and hence Arbitrator No.2 or the Presiding
Arbitrator could not have passed Appendix C or Appendix B Awards.
This argument again will have to fail as we have already found that
neither Appendix A, B nor C, independently/separately are Awards.
Appendix A as on 24/02/2010 signed by Arbitrator No.1 only, is his
findings/views/opinions and Appendix C, the dissenting
notes/views/opinions of Arbitrator No.2. Appendix A matured into an
Award only when the Presiding Arbitrator accepted the same by
recording his concurrence in Appendix B. Thereafter the majority
members of the Tribunal proceeded to get the Majority Award
engrossed in the requisite stamp paper by incorporating the gist of the
Award and authenticating the same by affixing their respective
signatures in the same. Hence, only after the Majority Award was
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signed on 05.04.2010, the Arbitral Tribunal became functus officio.
Arguments to the contrary are therefore liable to be negatived and so
the court below was right in declining to interfere with the Award on
this score.
15. Having answered the preliminary point raised, we now
proceed to deal with the challenge mounted on the findings arrived at
by the Tribunal. We are quite conscious of the fact that the scope of
interference by this court is very limited. In the light of the serious
challenge raised against the findings of the Tribunal, we are examining
in detail the said findings and the reasons for the same to see whether
they are justified. According to the learned counsel for the respondent,
the findings of the Tribunal regarding delay in the execution of the
work; holding the respondent liable for the failure to procure materials
at the site on time; mulcting the respondent with the liability of
payment of charges towards the engagement of crane at the site and the
finding that there has been a novation of Ext.C13(R11) agreement
executed between the parties and that Ext.C13 (R11) had been replaced
Arb.Appeal No.17 of 2013
by Ext.C22A and that the claimant had been discharged of his
obligations under Ext.C13 (R11), are patent errors going against the
very terms of the contract and the evidence on record, which constitute
a clear perversity as defined in the judgments of the Apex Court and
this Court. According to the respondent, the court below should not
have brushed aside the patent errors committed by the Tribunal in
misapplying the statutory provisions by merely saying that the errors in
the award are relatable to interpretation of the contract and within the
jurisdiction of the Tribunal. This is apparently contrary to the decisions
of the Apex Court and this Court, which have consistently held that in
case of errors such as those committed by the Tribunal in this case,
would constitute perversity warranting interference under Section 34.
Therefore, the argument advanced is that the impugned award is liable
to be set aside on the ground of patent illegality as contemplated under
sub-section 2-A of Section 34 of the Act. However, the court below
failed in exercising its jurisdiction.
16. We shall first deal with the finding of the Tribunal that
Arb.Appeal No.17 of 2013
there has been a novation of the contract between the parties; that
Ext.C13 (R11) had been replaced by Ext.C22 A and that the claimant
had been completely discharged of his liabilities under Ext.C13(R11).
The District Court in the proceedings under Section 34, disagreed with
the findings of the Tribunal that there has been a novation of the
agreement. According to the respondent, after having found that
novation under Section 62 of the Contract Act had not taken place and
that the claimant was bound to carry out the work in accordance with
the original agreement as modified by Ext.C22A, the court below
ought to have found that the finding of the Tribunal to the contrary in
the impugned award is perverse.
17. Admittedly, the respondent was the successful bidder in
the tender quoted by the GCDA for providing roof to the Stadium.
Ext.R4 dated 21.07.2007 is the Government order accepting the tender
of the respondent and Ext.R27 dated 30.07.2007 is the formal order by
the GCDA to the respondent confirming the tender for the roofing of
the Stadium in favour of the respondent. The estimated cost of the
Arb.Appeal No.17 of 2013
work as per Ext.R4 is ₹10,04,83,261/-. As per Ext.R2 tender notice the
work was to be completed within a period of ten months. Pursuant to
the same, the claimant and the respondent entered into a sub contract
by which the claimant took up the job of designing, drawing, supply of
materials, fabrication and erection of the roof structure. The roofing
was excluded and the same was to be done by the respondent on
completion of the sub-contract by the claimant. Accordingly, Ext.C3
LoI dated 04.09.2007 was issued by the respondent to the claimant. As
per Ext.C3, the total value of the contract is ₹615 Lakhs. Pursuant to
Ext.C3, the parties entered into Ext.C13(R11) agreement dated
19.10.2007 as per which work order for a total value of ₹615 Lakhs
was issued to the claimant. In Ext.C13(R11) it is stated that the total
value of ₹615 Lakhs is the Firm Price Contract and that the claimant is
not eligible to any escalation due to increase in the price of raw
materials and that the price indicated is inclusive of labour, loading,
unloading, scaffolding and all relevant activities related to the work.
Payment of the bills of the claimant as per Ext.C13(R11) was to be on a
Arb.Appeal No.17 of 2013
back-to-back basis as per the terms of payment of the GCDA.
Ext.C13(R11) further states that time is the essence of the contract and
that the claimant has to complete the entire work within five months
from 22.10.2007, i.e., by 22.03.2008. Work commenced at the site.
However, disputes arose between the parties relating to the payment of
periodical bills. Out of the 28 modules of space frames, only one could
be erected by the claimant. Therefore, talks and negotiations took place
between the parties and as per Ext.C22A dated 03.03.2008, which is
the minutes of the meeting that took place in the office of the
respondent, an agreement was arrived at between the parties relating to
the erection of the remaining 27 modules. The main points that were
agreed to as per Ext.C22A are - (i) that 27 modules would be
fabricated and assembled by the claimant and handed over to
M/s.Builders Engineering Constructions Pvt. Ltd. (M/s.BECPL) for
erection in a phased manner; (ii) that the required quantity of balance
materials would be arranged by the respondent on behalf of the
claimant and the actual cost debited to the latter; (iii) that the claimant
Arb.Appeal No.17 of 2013
would make arrangements to give the exact quantity of the materials
required for the work and that it would be their sole responsibility to
follow up with the supplier and to procure the materials on time; (iv)
that the fabrication of the rear portion would be done by the claimant
and the erection of the rear portion by M/s.BECPL as per mutually
agreed rates; (v) that erection of all the modules would be the scope of
work of M/s.BECPL for which the rate was fixed at ₹13,500/- per ton.
The tools and equipment of the claimant available at the site would be
supplied free of cost to M/s.BECPL. The claimant would also provide
power if necessary to M/s.BECPL; (vi) that the work was to be
completed by 30.06.2008 and the sheeting of the roof by the
respondent would be started after the erection of the space frame; (vii)
that M/s.BECPL was to start the erection from 10.03.2008; (viii) that
the claimant was to arrange for the third module fabrication
immediately and also the balance modules according to the schedule
required by M/s.BECPL so that there would not be any delay in
erection.
Arb.Appeal No.17 of 2013
18. Now the question is, does Ext.C22A completely replace
Ext.C13(R11) ? The court below relying on Lata Construction vs.
Dr.Ramesh Chandra Ramaniklal Shah (AIR 2000 SC 380) found
that novation takes place only when the existing contract is fully
modified or altered by a subsequent contract; that in this case no
substitution of Ext.C13 (R11) contract had taken place and what had
happened by way of Ext.C22A was only alteration or modification of
certain terms of Ext.C13(R11) original contract. Hence the court below
found Section 63 of the Contract Act to be applicable and that no
novation of the original agreement had taken place as contemplated
under Section 62 of the Contract Act. It was found that the parties were
bound to perform the contract as per the terms contained in Ext.C13
(R11) modified by Ext.C22A. The court below concluded that the
Tribunal had committed an error in the interpretation of the contract.
The court below further held that though the Tribunal entered into a
finding that due to novation, the claimant had been discharged from all
the obligations contained in Ext.C13, they did not proceed on that
Arb.Appeal No.17 of 2013
premise. On the other hand, the Tribunal placed reliance on Ext.C13
(R11) agreement in matters relating to the price of the contract, in
fixing the proportionate erection charges and such other matters, which
according to the court below was evidence of the fact that the Tribunal
had proceeded on the premise that it was only Section 63 of the
Contract Act that was applicable. The court below also held that, had it
not been so and had novation actually taken place, then even the
arbitration proceedings would not have been possible as the arbitration
clause is available only in Ext.C13. Relying on the dictum in Steel
Authority of India Ltd. vs. Gupta Brother Steel Tubes Ltd.
[(2009)10 SCC 63], in which the Hon'ble Supreme Court held that an
error relatable to the interpretation of the contract by an Arbitrator is an
error within his jurisdiction; that such error is not amenable to
correction by the court and that such error is not an error on the face of
the award, refused to set aside the award.
19. As held in Lata Construction supra, one of the
essential requirements of novation as contemplated under Section 62 of
Arb.Appeal No.17 of 2013
the Contract Act, is that there should be a complete substitution of the
new contract in place of the old. It is in that situation that the original
contract does not require to be performed. Substitution of a new
contract in place of the old contract which would have the effect of
rescinding or completely altering the terms of the original contract, has
to be by agreement between the parties. A substituted contract should
rescind or alter or extinguish the previous contract. But if the terms of
the two contracts are inconsistent and they cannot stand together, the
subsequent contract cannot be said to be in substitution of the previous
contract.
20. We have already referred to the relevant terms of the
contract contained in Ext.C13 (R11) original agreement and the
subsequent agreement in Ext.C22A. Ext.C13(R11) has not been
completely substituted by Ext.C22A. As per Ext.C13 (R11) the
claimant was responsible for designing, submission of drawings,
supply of materials, fabrication and erection of the roof structure. Due
to the inability of the claimant in supplying materials and in erection of
Arb.Appeal No.17 of 2013
the roof structure, the said part of the contract alone was taken over by
the respondent by way of Ext.C22A. The remaining terms of the
contract as agreed to by the claimant as per Ext.C13, continued to be
their responsibility. Therefore, the finding of the Tribunal that there had
been a novation of the original agreement as contemplated under
Section 62 of the Contract Act is incorrect and so the finding of the
court below on this point is therefore justified.
21. According to the respondent, the finding of the
Tribunal on novation is a perverse finding and so the court below ought
to have exercised its jurisdiction under section 34 and set aside the
award. It is true that the Tribunal went wrong in concluding that
Section 62 of the Contract Act applies in this case. However, as rightly
pointed out by the court below, the Tribunal did not completely ignore
Ext.C13 (R11) original agreement. On the other hand, the terms of the
original agreement were taken into account in arriving at its various
conclusions. Therefore, no infirmity has been committed by the court
below in refusing to set aside the award on the aforesaid ground.
Arb.Appeal No.17 of 2013
22. As per the claim statement of the claimant, an amount
of ₹1,84,60,564.24/- was due to them. However, according to the
respondent, who had put in a counter claim, only an amount of
₹87,78,121.44/- was due to the claimant. The value of finished and
unfinished work and the cost of materials at the site, according to the
claimant, was ₹366 Lakhs, whereas according to the respondent, it was
only ₹346 Lakhs. The difference is ₹20 Lakhs. The bone of contention
before the Tribunal was mainly relating to the amount stated to have
been received/paid to the claimant. This, according to the claimant, was
only ₹2,46,92,582/-. However, according to the respondent, it was
₹4,34,59,836/-. The difference is ₹1,87,67,254/-, out of which, an
amount of about ₹117 Lakhs is towards the crane charges. Paragraph
14 of Appendix A refers to the other items of claims of the claimant
relating to which there does not appear to have been any serious
dispute. After considering the evidence let in by either side and hearing
both sides, the Tribunal allowed the following claims. Paragraphs 77
and 78 of Appendix A reads-
Arb.Appeal No.17 of 2013
"77. Thus from out of the payments said to be made by the
Respondent directly or indirectly to the Claimant as shown in
Annexure 2 the following alone are admissible.
a) Direct payment to the Claimant-
(as found in para 53 above ) - Rs.1,10,39,060.00
b) Indirect payment towards Materials - Rs.1,21,98,695.00 *
c) Indirect Payment to Erection Agencies
(as found in para 60 above) - Rs.24,62,809.00
d) Indirect Payment to Erection Equipment
(as found in para 74 above) - Rs.32,88,418.00
e) Insurance Premium
(as found in para 75 above) - Rs.2,41,110.00
f) Electricity Charges paid
(as found in para 76 above) - Rs.60,455.00
-----------------
TOTAL Rs.2,92,90,547.00
*Rs.13119677 (total in Annexure 2A to -Rs.9,20,982 (total of
the Written Statement) amounts found
in paras 58 above)
78. It has been found in paragraph 51 above that the value of
the work done by the Claimant including the materials returned
and the electricity deposit is Rs.3,54,40,260/-. Total payments
to be accounted against the Claimant is Rs.2,92,90,549/-. Thus
balance amount payable to the Claimant, towards the cost of
the work done, is Rs.61,49,711/-, as against the claim of
Arb.Appeal No.17 of 2013
Rs.1,84,60,564/- urged in Annexure I to the Claim Statement."
23. As pointed out by the Tribunal, the bone of contention
between the parties is the payment towards charges for the engagement
of a crane for erecting/lifting the space frame. It was argued by the
learned counsel for the respondent that as per Ext.C13(R11), the
claimant had in addition to the task of designing, submission of
drawings and supply of materials, agreed to the erection of space
frames or the roof structure. As is evident from Exts.C13 and C22A,
time was the essence of the contract. In Ext.C13(R11) original
agreement, the work was agreed to be completed within five months
from 22.10.2007, which means that the claimant ought to have
completed the work by 22.03.2008. However, the claimant miserably
failed in this task as their engineering skills failed. The claimant
realising that lifting the space frame with the aid of scaffolding was a
time-consuming process, went in for the Derrick method. However,
both methods turned out to be unsuccessful. As on 03.03.2008, the
Arb.Appeal No.17 of 2013
claimant was able to erect only one module out of the total 28 modules
to be erected. Therefore, with hardly three weeks to spare, the claimant
realising that he would not be able to comply with the terms of
Ext.C13(R11), expressed their inability to do the work which was
conveyed to the respondent by Ext.C18 letter dated 17.03.2008. The
respondent was also bound by the agreement they had entered into with
the GCDA, the principal employer, as per which they had to complete
the work within a specified time limit. If not, they would have to pay a
heavy penalty and therefore when help and assistance was sought and
requested by the claimant, the respondent stepped in and helped the
former in engaging the services of a crane for erection of the space
frame. It was only due to the inability of the claimant to carry out the
work which they had agreed to do as per Ext.C13 (R11) and on the
invitation of the claimant, the respondent had stepped in and engaged
the services of a crane on behalf of the claimant. That being the
position, Sri.Vinod Bhatt, the learned counsel for the respondent
stressed that the Tribunal ought not to have mulcted the respondent
Arb.Appeal No.17 of 2013
with any liability to pay the charges of the crane. This finding of the
Tribunal is against facts, evidence and therefore is totally perverse
which warranted an interference by the court below. It is also pointed
out that the Tribunal had contradicted itself on this aspect. In answer to
claim no.1, the Tribunal in the document described as the Majority
Award (which is at page 58 of the paper book) says - " We hereby
decline that in view of the reasons stated in the majority award re-
arrangement by the respondent of the left over work pursuant to the
termination of the contract shall not be at the claimant's risk as to cost
and consequences." But in paragraph 71, the Tribunal says - "That
does not mean that the entire liability of the crane charges shall be
shouldered by the Respondent and that the Claimant can escape totally
away from that liability." This according to the learned counsel, is a
totally inconsistent and contradictory view/finding/conclusion arrived
at by the Tribunal. These aspects, according to him, are sufficient to
substantiate the argument that the Award suffers from patent illegalities
which warranted an interference by the court below.
Arb.Appeal No.17 of 2013
24. The payment made to the crane companies, the major
disputed item, comes to ₹1,18,84,227/-. The vouchers relied on by the
respondent to establish this are Exts.R63 series, R65 series and R65
series. The claimant contended that the engagement of the services of a
crane and the fixation of charges to be paid for the same were done
without their involvement, which is evident from Ext.C25 work order
issued by the respondent to the Company from which the crane was
hired and that as per Ext.C25, the respondent themselves had taken up
the said responsibility. It was their further case that as per Ext.C13
(R11), the agreement was to use scaffolding for lifting the space frame.
The claimant had at no point of time agreed to the use of a crane. Even
in Ext.C22A, the claimant never agreed for hiring the services of a
crane. Further relying on Ext.C29 also, in which the respondent voiced
their apprehension relating to payment of additional charges for the
crane in case of delay in the completion of the work by the claimant,
the latter contended that the responsibility to pay the charges was
squarely on the former.
Arb.Appeal No.17 of 2013
25. The Tribunal took note of Exts.C13 (R11), C22A and
C29 to conclude that the responsibility was on the respondent to pay
the charges of the crane. It was further noticed that the crane charges
paid as per Ext.R63 series, which alone came to ₹1,06,83,809/-, was
the payment from 13.05.2008 onwards which was apparently after
Ext.C22A dated 03.03.2008. After Ext.C22A, the claimant had no duty
to do erection work and it was the sole responsibility of the respondent.
Ext.R45 dated 14.05.2008 relied on by the respondent to contend that
the claimant had been informed before the engagement of the crane
that the expenses for the same would have to be borne by the claimant
since erection was within their scope of work, was disputed by the
claimant. They contended that they had never received the same and
that Ext.R45 is a cooked-up document created to suit the case of the
respondent. The claimant in support of the said contention referred to
an anomaly contained in Ext.R45. It was pointed out that in all the
communications sent by the respondent before and after Ext.R45, the
name is spelled as 'Sajid Pasha' (the representative of the claimant),
Arb.Appeal No.17 of 2013
whereas in Ext.R45 the name is spelled as 'Sajjid Pasha'. This mistake
occurred for the first time in the court proceedings initiated after the
termination of the contract by the respondent on 06.09.2008, i.e., in
Ext.C56 interim order dated 13.09.2008 and thereafter in subsequent
court documents. This anomaly pointed out to suspect/doubt Ext.R45
found favour with the Tribunal. The Tribunal further referred to
Ext.R47 dated 26.05.2008 sent by the respondent to the claimant in
which it is stated that if the latter does not make the necessary frames
for erection ready, the former would have to pay ₹1 Lakh per day for
the 250-ton crane that had been assembled at the site. According to the
Tribunal, Exts.R45 and R47 cannot go together, because, if by Ext.R45
the respondent had already intimated the claimant that the
responsibility for charges of the crane is on the claimant, then there
was no necessity for Ext.R47 letter to be issued just 12 days after
Ext.R45. The Tribunal further took note of Ext.C29 also to disbelieve
Ext.R45. As per Ext.C29 dated 07.07.2008, the respondent urges the
claimant to make arrangements for unhindered and smooth flow of the
Arb.Appeal No.17 of 2013
work as they have to pay ₹6 Lakhs towards crane charges. The
Tribunal held that if Ext.R45 had actually been sent to the claimant,
then there was no necessity to send Ext.C29 dated 07.07.2008. Ext.R26
dated 19.03.2008 relied on by the respondent was also disputed by the
claimant for the same reasons as raised by them against Ext.R45.
26. The respondent produced their dispatch register to
establish that Exts.R26 and R45 had in fact been sent to the claimant.
However, the Tribunal disbelieved the dispatch book because of the
interpolations seen to have been made in the entries with different ink
relating to the dispatch of the aforesaid letters. The Tribunal found that
by Ext.C22A, the claimant had been relieved of their duties of erection
of space frame and therefore the erection work could not have been
within the scope of the work of the claimant as stated in Ext.R45. The
Tribunal further found that the respondent had engaged M/s.Bava
Engineers for carrying out the erection work and had issued Ext.C26
work order. The rate fixed as per Ext.C26 dated 27.05.2008 was
without the junction of the claimant. Therefore, the Tribunal concluded
Arb.Appeal No.17 of 2013
that the responsibility for procuring the crane was that of the
respondent. However, it further held that the claimant cannot
completely escape from this liability. So, saying the Tribunal fixed the
liability thus -
"73. For the purpose of arriving at the rates for partially finished
work, the Respondent has worked out a computation in Annexure
4B. I have already found while considering the rate so calculated
for partly finished work, that it was on lower level so far as the real
material cost is concerned. Necessarily going by the total cost
calculation in Annexure 4D, the cost for the work to be performed
including erection will be on correspondingly higher level. Giving
this advantage to the Respondent, when the cost of erection is
calculated based on Annexure 4B, the rate for erection shall be
Rs.23,000/- MT (See 1st two lines under heading Item No:4
Assembled frames kept on floor in Annexure 4B). The rate for
erection agreed by M/s.Bava Engineers in Ext.C26 is Rs.8000/-
MT. Only this rate was paid to them, by the Respondent as
revealed by Ext.R64 series. When erection Charges are reckoned
at Rs.23,000/- MT as mentioned above based on the Respondent's
own calculation in Annexur 4B and 4D. Rs.15,000/- MT can be
allocated towards charges for erection equipments. This will be on
Arb.Appeal No.17 of 2013
any court very reasonable, which we notice the rate paid to
M/s.BECPL at Rs.13,500/- MT all inclusive, even if there was
escalation subsequently."
"74. The quantity erected after Ext.C22A is 139.20 MT, as per
Respondent's own showing in the first sheet of Ext.R64 series.
AT the rate of Rs.15,000/- MT, the total charges for erection
equipments would be Rs.20,88,000/-. Along with this the charges
for small cranes for removing the frame from the ground as met by
the Respondent as per Exts.65 and 66 series, amounting to
Rs.12,00,418/- as found in para 62 shall also be added. Thus total
charges for erection equipment, therefore shall be Rs.32,88,418/-"
27. This finding of the tribunal has been upheld by the
court below. The court held that the Tribunal had taken into account all
the relevant documentary evidence and attending circumstances for
arriving at its conclusion. This is a finding based on evidence adduced
before the Tribunal. No perversity was found in the findings warranting
an interference. The finding of the Tribunal on the above aspect and the
refusal of the court below to interfere with the same is seriously
challenged by the respondent. It is true that the claimant as per Ext.C13
Arb.Appeal No.17 of 2013
(R11) had agreed to do the work of erection of the space frame also.
However, pursuant to Ext.C22A, the responsibility was taken over by
the respondent. The fact that the claimant cannot be completely
absolved of the liability was also taken note of by the Tribunal. It was
after considering all the documentary evidence adduced by the parties,
the Tribunal had arrived at the conclusion referred to above. The
reasonings given by the Tribunal cannot be said to be per se perverse or
one that shocks the conscience of the court to term it as a patent
illegality as contemplated under sub-section 2-A of Section 34. A
perverse finding is one which is based on no evidence or one that no
reasonable person would have arrived at. Unless it is found that some
relevant evidence has not been considered or that certain inadmissible
material has been taken into consideration, the finding cannot be said
to be perverse. A broad distinction has, therefore, to be maintained
between the decisions which are perverse and those which are not. If a
decision is arrived at on no evidence or evidence which is thoroughly
unreliable and no reasonable person would act upon it, the order would
Arb.Appeal No.17 of 2013
be perverse. But, if there is some evidence on record which is
acceptable and which could be relied upon, howsoever concise it may
be, the conclusions would not be treated as perverse and the findings
would not be interfered with. [See Laxmi Pat Surana v. Voltas Ltd.
(2019 KHC 4553)].
28. The Court while exercising jurisdiction under S.34 of
the Act does not sit as the Court of appeal. It is settled law that the
Arbitral Tribunal is the final adjudicator of facts and evidence adduced
before it. The Court is not permitted to re-appreciate the evidence
placed before the Arbitrator as the Arbitrator is the best judge of the
quality as well as quantity of evidence and it will not be for the Court
to take upon itself the task of being a judge of the evidence before the
Arbitrator. It is not permissible for the Court to interfere with the
Arbitrator's view merely because another view of the matter is possible.
The aforesaid principles have been repeatedly reiterated by different
Courts in India including the Hon'ble Supreme Court. Some of the
authorities are McDermott International Inc. Vs. Burn Standard
Arb.Appeal No.17 of 2013
Co. Ltd. [(2006) 11 SCC 181], Steel Authority of India Limited
Vs. Gupta Brother Steel Tubes Limited [(2009) 10 SCC 63] ,
M/s.Sumitomo Heavy Industries Ltd Vs. Oil and Natural Gas
Company (AIR 2010 SC 3400), Navodaya Mass Entertainment
Limited Vs. J.M. Combines [2015 (5) SCC 698] , MMTC Ltd.
Vs. M/s.Vedanta Ltd. [AIR 2019 SC 1168], SSangyong
Engineering and Construction Co. Ltd. Vs. National Highways
Authority of India (NHAI) [2019 SCC (Online) SC 677] ,
Associate Builders Vs. Delhi Development Authority [(2015)3
SCC 49], Mahanagar Telephone Nigam Ltd. Vs. Fujitshu India
Private Limited [2015 SCC (Online) Del. 7437] and Mahanagar
Telephone Nigam Ltd. Vs. Finolex Cables Limited reported at
[2017 SCC (Online) Del. 10497].
29. Now coming to the finding of the Tribunal relating to
the question of delay and the party liable for the breach of the contract.
As per Ext.C13 (R11), the claimant had the duty to supply materials
also. However, after Ext.C22A, the said responsibility was taken over
Arb.Appeal No.17 of 2013
by the respondent. After examining the various communications that
took place between the parties, the Tribunal found that there was no
evidence on record to conclude that there was any delay in the supply
of materials till 03.03.2008. On the other hand, Ext.C30 dated
08.08.2008, a letter from the GCDA to the respondent showed the
former reminding the latter that no material had reached the site since
23.06.2008. The Tribunal hence concluded that after Ext.C22A dated
03.03.2008 came into being, any delay if at all had occurred, was due
to the fault of the respondent alone as they had taken over the task of
supply of required materials at the work site.
30. The court below on the other hand found that there
was delay on the part of the claimant because admittedly, only one
space module out of the 28 modules had been erected before
03.03.2008. The period of contract as per Ext.C13 original agreement
was 22.03.2008. Therefore, the court below found that delay till
03.03.2008 was caused by the claimant. However, it noted that the
claimant had all along been complaining that the reason for the delay
Arb.Appeal No.17 of 2013
was due to the nonpayment of part bills by the respondent. The court
below found that in spite of the slow pace of work, the respondent had
not terminated the contract. On the other hand, they entered into
Ext.C22A by which certain modifications were made to the terms of
Ext.C13. Therefore, after entering into Ext.C22A, the respondent could
no longer complain about delay by the claimant, said the court below.
Here also, we find that the reasons given by the Tribunal are plausible
and cogent. We find no perversity in the same, warranting an
interference. Therefore, the court below was justified in refusing
interference.
31. Further, the Tribunal found that breach of the contract
had been committed by the respondent. As per Ext.C18 dated
17.03.2008, the claimant had sought for termination of the contract.
However, the respondent did not immediately terminate the contract.
Differences of opinion between the parties mounted, as a result of
which the claimant sent Ext.C33 (R25) dated 26.08.2008 informing the
respondent that the site was being closed and that they were stopping
Arb.Appeal No.17 of 2013
the work as payments assured by the respondent were not
forthcoming. The respondent did not act on this. But as per Ext.R53
dated 27.08.2008, the respondent demanded the claimant to remove
their site Manager from the site as he was supposed to have threatened
the workers of the respondent. The respondent in Ext.R53 letter also
threatened cancellation of the contract if their demand was not acceded
to by the claimant. This reason cited by the respondent for termination
of the contract, according to the Tribunal, was a flimsy one. The
respondent followed up Ext.R53 letter by sending an e-mail dated
27.08.2008, i.e., Ext.C34, stating that matters relating to payment
would be discussed only after the claimant removed their Manager. The
claimant did not accede to this demand. The respondent then by
Ext.C35 letter dated 06.09.2008 terminated the contract alleging total
lack of progress in the work by the claimant.
32. The Tribunal noted that the work that has been
referred to in Ext.C35 is - " Execution of work of Design, Supply and
Erection of Space Frame, Structure'" of the Stadium. However, after
Arb.Appeal No.17 of 2013
the execution of Ext.C22A, the supply and erection were within the
scope of the work of the respondent. Ext.C35 did not mention lack of
progress in the fabrication work. No complaint by the erection agency
about the non-availability of fabricated frames was produced before the
Tribunal. The Tribunal found from Ext.C37 commission report that
partially and fully fabricated and painted frames were available in
sufficient quantity at the site. The quantity of materials available on the
site was not disputed by the respondent. Ext.C20 bill dated 20.05.2008
and Ext.C21 letter dated 22.08.2008 showed the amount of work that
had been completed till 18.08.2008. The Tribunal also noticed that
there had been considerable increase in the erection of space frame
which was evident from Exts.C20 and C21. This could be attained only
due to sufficient fabrication work being done by the claimant, which
alone was their responsibility at that point of time. Therefore, the
Tribunal concluded that as on the date of Ext.C35, it could not be found
that there was 'total lack of progress in work' by the claimant as
contended by the respondent. The termination of the contract by the
Arb.Appeal No.17 of 2013
respondent for flimsy reasons was held to be unjustified and that it
amounted to breach of contract on the part of the respondent.
According to the Tribunal, total lack of progress of work alleged in
Ext.C35 was only a ruse for the termination of the contract.
33. The Tribunal further held that even if there was lack
of progress in the fabrication work, the claimant could not be held
responsible because the said work could be done only if there was
sufficient supply of materials, which was the responsibility of the
respondent at that time in terms of Ext.C22A. The Tribunal referred to
Ext.C30 (R50) dated 08.08.2008 in which the GCDA had blamed the
respondent for the shortage of materials and the consequent inadequate
labour output. The claimant had by letter dated 20.08.2008 (described
in the Award as part of Ext.C21 letter) informed the respondent that
"the materials position is very feeble at the site now and due to this the
work progress is slow." In Ext.R52 letter dated 14.08.2008 also, the
claimant had informed the respondent about the urgent requirement of
the balance materials. Therefore, taking into account all these aspects,
Arb.Appeal No.17 of 2013
the Tribunal held that if at all anybody was responsible for the lack of
progress in work, the liability squarely fell on the shoulders of the
respondent because it was their duty to ensure adequate supply of
materials at the site. That being the position, the Tribunal held that the
claimant could not be found liable for the breach.
34. The court below refused to interfere with the Award on
this score also. It found that the Tribunal had considered all the relevant
materials and evidence before it arrived at the conclusion. Therefore,
relying on McDermott International Inc. vs. Burn Standard
Co.Ltd [(2006)11 SCC 181], the court held that appreciation of
evidence is the realm of the Tribunal and that the court under Section
34 cannot re-appreciate the evidence as is done in civil appeals and that
it is only when the Tribunal bases its conclusion on irrelevant and
extraneous matters, an interference would be called for. In the instant
case, the Tribunal has not considered any irrelevant evidence or
extraneous matters and therefore the court below refused to interfere
with the matter. The conclusions arrived at by the Tribunal as rightly
Arb.Appeal No.17 of 2013
held by the court below are conclusions arrived at by the Tribunal after
appreciating the evidence on record. The court below under Section 34
or this Court under Section 37, cannot re-appreciate the evidence and
substitute its own views or findings even assuming that a different view
is possible. In these circumstances, we find no infirmity or perversity
as contemplated under sub-section 2-A of Section 34 in the findings of
the Tribunal and therefore the court below was right in refusing
interference.
In the result, the appeal is dismissed. There is no order as to
costs.
All pending interlocutory applications, pending if any, shall
stand closed.
Sd/-
P.B.SURESH KUMAR
JUDGE
Sd/-
C.S.SUDHA
JUDGE
ami/
