Madras High Court
The Chairman And Managing ... vs M/S.Ganesh Constructions on 25 April, 2022
Arb O.P.(Com. Div.)Nos.191, 196 and 197 of 2022
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated : 25.04.2022
Coram
THE HONOURABLE MR. JUSTICE M.SUNDAR
Arb O.P.(Com. Div.)Nos.191, 196 and 197 of 2022
1. The Chairman and Managing Director,
Bharat Sanchar Nigam Limited, 'Statesman House',
No.148, Barakhamba Road, New Delhi 110001.
2. The Chief General Manager,
Bharat Sanchar Nigam Limited,
No.78, Purasawalkam High Road, Chennai 600 010.
3. The Deputy General Manager (CC),
Bharat Sanchar Nigam Limited, Chennai Telephones,
No.7, Kushkumar Road, Nungambakkam, Chennai 600 034.
... Petitioners in all Arb OPs
vs.
M/s.Ganesh Constructions,
Represented by its Proprietor:- Mr.S.Chandrasekaran,
No.23/2A, Chelliamman Koil Street,
Ayanavaram, Chennai 600 023.
... Respondent in all Arb OPs
Common prayer:
Arbitration Original Petition filed under Section 34(2)(b)(ii) of the
Arbitration and Conciliation Act, 1996, to set aside the Award dated
10.02.2021 passed in O.P.No.874 of 2018, O.P.No.877 of 2018, O.P.No.876
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Arb O.P.(Com. Div.)Nos.191, 196 and 197 of 2022
of 2018 and A.F.No.71 of 2019, A.F.No.74 of 2019, A.F.No.73 of 2019
respectively on the file of the Sole Arbitrator under the Arbitration and
Conciliation Act, 1996 and to direct the respondent to pay the costs.
For petitioners in all Arb OPs: Mr.B.Mohan
For respondent in all Arb OPs: Mr.Amalraj S.Penikilapatti
COMMON ORDER
This common order will govern the captioned three 'Arbitration
Original Petitions' [hereinafter 'Arb OPs' in plural and 'Arb OP' in singular
for the sake of convenience and clarity].
2.'Three separate arbitral awards, bearing reference A.F.No.71 of 2019,
A.F.No.74 of 2019 and A.F.No.73 of 2019, all dated 10.02.2021' [hereinafter
'impugned arbitral awards' collectively in plural and 'first impugned arbitral
award', 'second impugned arbitral award' and 'third impugned arbitral award'
respectively wherever necessary for the sake of convenience and clarity]
have been assailed in the captioned three Arb OPs.
3.Mr.B.Mohan, learned standing counsel for 'Bharat Sanchar Nigam
Limited' ['BSNL'] is before this Court on behalf of the petitioners in the
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Arb O.P.(Com. Div.)Nos.191, 196 and 197 of 2022
captioned Arb OPs. Learned counsel for petitioners has favoured the
respondent in the captioned Arb OPs with one set of papers being prior
notice within the meaning of sub-section (5) of Section 34 of 'The
Arbitration and Conciliation Act, 1996 (Act No.26 of 1996)' [hereinafter 'A
and C Act' for the sake of convenience and clarity] though this sub-section
(5) of Section 34 of A and C Act has been held to be directory (not
mandatory) by Hon'ble Supreme Court in Bhumi Vikas Bank case law [State
of Bihar Vs. Bihar Rajya Bhumi Vikas Bank Samiti reported in (2018) 9
SCC 472]. On receipt of such prior notice, Mr.Amalraj S.Penkilapatti,
learned counsel is before this Court on behalf of the respondent in the
captioned Arb OPs. In this order, from here on and henceforth 'petitioners' in
the captioned Arb OPs shall be referred to as 'BSNL' and the 'respondents' in
the captioned Arb OPs shall be referred to as 'contractors' in plural and
'contractor' in singular, for the sake of convenience and clarity.
4.With the consent of counsel, all three captioned Arb OPs were taken
up together when they were listed in the Admission Board. Learned counsel
for BSNL submitted that the facts are identical, only the figures are different
and therefore, facts in first of the captioned three Arb OPs namely
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Arb O.P.(Com. Div.)Nos.191, 196 and 197 of 2022
Arb.O.P.(Com.Div.)No.191 of 2022 will suffice.
5.Short facts, shorn of elaboration are that BSNL engaged various
contractors for work that has been set out in Annexure B of an agreement
dated 29.12.2001. Though this Annexure B has not been placed before this
Court, it is submitted without any disputation or disagreement that the work
is for laying of underground cable in Chennai Telephone District inter alia
by excavation and refilling. Adverting to the pleadings before the 'Arbitral
Tribunal' ['AT'], it is submitted that the scope of work includes 'trenching,
laying the cable, filling the trenches partly with sea sand and thereafter with
excavated earth' which shall hereinafter be referred to as 'said work' for the
sake of convenience and clarity. As there is no disputation regarding this i.e.,
the scope of said work, it is not necessary to dilate further on this aspect of
the matter. This Court is also informed that specific work orders were issued
to the contractors. After said work was completed, disputes arose between
BSNL and contractors regarding unpaid bills. It is submitted that the disputes
largely centered around whether sea sand filling was done. There was an
earlier round of arbitration, awards were made and the same were set aside
by this Court. Thereafter, a former Hon'ble Judge of this Court was appointed
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Arb O.P.(Com. Div.)Nos.191, 196 and 197 of 2022
as sole Arbitrator in Section 11 petitions and this former Hon'ble Judge
constituted the 'Arbitral Tribunal' ['AT' for brevity] (sole Arbitrator) and
impugned awards came to be rendered by AT.
6.Though several averments have been made and several grounds have
been set out in the petition in the captioned Arb OPs, learned counsel for
BSNL submitted that the entire matter turns on one point and to be noted this
lone point was urged/projected in the hearing in his campaign against the
impugned awards. This one point is, the contractors have not provided any
bills or supporting documents for sea sand filling i.e., for having procured
and filled the trenches with the required extent of sea sand before closing it
with excavated earth. Learned counsel submitted that this issue was raised
before AT but AT has proceeded to accede to the claims of the contractors
qua unpaid bills, though no bills or supporting documents were produced for
sea sand filling. Learned counsel for BSNL strenuously argued that the issue
is such that said work which cannot be subsequently checked, as said work is
below ground level. Therefore, the sole and lone complaint of the learned
counsel for BSNL in his campaign against the impugned awards is, AT
should have called upon the contractors to produce bills and supporting
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documents for procurement of sea sand and the impugned awards inter alia
qua unpaid bills must not have been made without doing this.
7.This Court carefully perused impugned awards made by AT. Before
the AT there was oral and documentary evidence. There was documentary
evidence on both sides. There were 26 documents i.e., Ex.C.1 to Ex.C.26 on
the side of the contractor and there were four documents namely Ex.R.1 to
Ex.R.4 on the side of BSNL.
8.Eight issues were framed on the basis of rival pleadings and the
same read as follows:
'(1) Whether the claimant executed the work of removal of
excess earth and the work of sea-sand filling as per the contract
and as stipulated in the relevant and applicable 'Specification for
cable laying' ?
(2) Whether the Respondents are entitled to and justified in
not accepting the entries in the relevant M-books, Check-Lists,
Acceptance Test-Reports and the Certified Bills submitted by the
claimant for payment ?
(3) Whether the agreement or the guidelines or procedures
issued by the Respondents relating to submission of bills for
payment provide for enclosing the various documents referred to in
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Para 4 of the Counter Statement of the Respondents in respect of
sea-sand filling and removal of excess earth?
(4) Whether the Respondents called upon the claimant in
writing to produce the various documents referred to in Para 4 of
the Respondents counter statement for settling the bills raised by
the claimant in respect of sea-sand filling and removal of excess
earth?
(5) Whether the claimant is entitled to the claim as made in
the claim statement?
(6) Whether the claimant is entitled for interest and if so on
what amount, for what period and at what rate?
(7) Whether the parties are entitled for costs?
(8) To what other reliefs the parties are entitled to?'
9.A careful perusal of the aforementioned issues will make it clear that
the aforementioned lone point that has been urged by learned counsel for
BSNL in his campaign against impugned awards is covered by issues 1 to 4.
Issues 1 to 4 have been taken up together and have been answered by the AT
in paragraph Nos.10 to 18 of the first impugned award. Considering that this
is the lone point that has been urged strenuously, this Court deems it
appropriate to extract and reproduce paragraph Nos.10 to 18 of the first
impugned award and the same read as follows:
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'(10) ISSUES No.1 – 4:
[a] Mr.Amalaraj, learned counsel for the Claimant submitted
that the dispute in this matter relates to non-payment of the bills
submitted by the claimant by the respondents in respect of removal
of excess earth and filling of the trenches with sea-sand and non-
refunding of Security Deposit. According to him, Exhibit R1
contains the negotiated rates for removal of excess earth and sea-
sand filling. As per Sl.No.9 of Exhibit R1, the negotiated rate per
cubic meter of excess earth removed is Rs.71.50/- and as per
Sl.No.10, the negotiated rate per cubic meter of sea-sand filling is
Rs.165/-; as per Annexure to Exhibit C1, clause 1(c) provides that
sand will be supplied by the contractor at the site at the rate of
Rs.165/- per cubic meter and as per clause 4, the rate for shifting of
excess earth from the site is specified as Rs.71.50/- per cubic meter.
In clause 4 of Exhibit C1, it is provided as under
“The contractor agrees to follow the guidelines contained in
the “Code of conduct” issued by the Corporation of Chennai. A
copy of the code of conduct will be given by the CTD to the
contractors”
The learned counsel submitted that both the above said
works have been done properly by the claimant as seen from the
check lists which have been signed by both the parties and the same
has been certified by the officials of the respondents. A perusal of
Exhibit C8 series to C16 series show that the claimant has
completed both the works and the quantity of work done are also
mentioned. Acceptance Test Wing is an autonomous body and
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sample pits have been taken by it and after checking they have
certified and it is stated in C6 series that sand has been provided.
Similarly, in all other above mentioned series of documents also,
the same is mentioned.
[b] A perusal of Exhibit R3 shows that Department of
Telecommunication has issued instructions to maintain bound
Measurement Book. Regarding the maintenance of the M-book,
check list, ATW Report etc., CW1 has clearly stated in his evidence
that BSNL has not questioned the filling of the trench by soft earth,
not questioned the mode of completion of the work and there is no
dispute regarding the quantum of sand and the removal of earth.
The learned counsel submitted that an office note was issued by the
Chief General Manager, Chennai Telephones on 24.03.2004
constituting a committee consisting of the following officers viz., (1)
The PGM - O (2) GM - Central and (3) GM South to go into the
details of the issue and formulate guidelines for making payments
for the claims of sea-sand filling and excess earth removal.
[c] The said committee after referring to the code of conduct
issued by the Corporation of Chennai during 1993, the letter issued
by City Engineer, Corporation of Chennai to all service
departments including Chennai telephones on the said subject and
the agreements entered into by Chennai Telephones with PSUs and
Departmental Contractors gave the report and in that report which
is marked as Exhibit C23 in Paragraph 5A has elaborately
considered the various aspects and ultimately recommended that
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the claims of the contractors be allowed as per the agreement
between the contractors and BSNL Chennai Telephones. According
to the learned counsel, in this case, the claim is related to only 11
bills and all other bills have been paid without insisting for bills,
permits etc. for sea-sand, and transportation bill for removal of
excess earth. After paying for 139 bills, BSNL has suddenly started
to deny the payments on the ground that the claimant had not
produced bills, permits etc. for sea-sand and transportation bills for
transporting excess earth. According to the learned counsel, the
agreement does not provide for the production of the above said
documents along with the bills when the same are submitted for
payment. The learned counsel further submitted that the BSNL has
not insisted on Work Orders in respect of the various bills which has
already been paid by the BSNL. The learned counsel submitted that
in respect of 9 other contractors, the disputes were referred for
Arbitration and Arbitral awards were passed in 9 matters in favour
of the Contractors and BSNL has complied with the awards.
[d] According to the learned counsel, the issues involved in
the said 9 Arbitral Awards were similar to the issues that arise for
consideration in this matter. In 2010 and 2012 in 6 disputes,
Hon'ble Mr.Justice A.Ramamoorthy (Retired) was appointed as
Arbitrator and Awards were passed in favour of the contractors and
the respondents filed 6 OPs under Section 34 of the Act challenging
the Awards and all the OPs were dismissed and the Awards were
confirmed and BSNL had complied with the Awards. According to
the learned counsel, the findings in the said Awards and the order
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passed by the Hon'ble Court will have persuasive value.
(11) Countering the above said submissions, Mr.Gopinathan,
learned counsel for the Respondents made the following
submissions:
In the other mattes relating to earlier awards passed by
Hon'ble Mr.Justice A.Ramamoorthy (Retired), the defence taken
was different from the defence taken in this matter and therefore the
Awards cannot be relied upon. As far as Exhibit C23, the report of
the High Level Committee is concerned, according to the learned
counsel for the respondents, it is only prospective and no reliance
can be placed on Exhibit C23 as far as the claims made in this
petition are concerned. The learned counsel submitted that Work
Orders have to be produced along with the bills and CW1 has
admitted that no work order for sea-sand filling and removal of
excess earth was obtained. The learned counsel submitted that as
per Clause 7.1 and 7.3, of Exhibit R1, Work Orders should be
obtained before commencement of work and no work could be
executed without the work order and therefore, the accounts wing of
BSNL insisted for production of work orders and other documents
like permits, bills and way bill to prove procurement of sea-sand
and transportation bills for removal of excess earth. The learned
counsel fairly submitted that the respondents are not questioning
the correctness of the entries in the various M-books, AT reports
and work completion certificates. The learned counsel fairly
submitted that no written demand was issued by the accounts wing
or any other officials of the BSNL directing the claimant to produce
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documents to prove procurement, transport etc. of the sea-sand and
transportation of excess earth. According to the learned counsel, in
this case, in Para 6 of the counter statement, details of refund of
security deposit have been mentioned and as far as 3 bills were
concerned, the same was not refunded as there was no claim.
Subsequently Bill No.76 was also paid.
(12) I have carefully considered the contentions put forth on
both sides and the documents produced on either side. In this case,
the claim made by the claimant in Annexure A of the claim
statement relates to non-payment of the bills relating to sand filling
and removal of excess earth and non-refund of Security Deposit
furnished by the claimant. According to the counsel for the
respondents, as per clause 3.7(a) of Specifications for cable laying,
filling of trenches with sea-sand is to be carried out only with
specific work order. But in this case, the claimant has not produced
the work order and CW1 in his cross examination has admitted that
no work order for sea-sand filling and removal of excess earth were
issued. Therefore, the accounts wing of the respondents insisted for
production of documents like permits, government sanctions,
transportation bills etc., to prove procurement of sea-sand by the
claimant and transportation of the excess earth from the site. As
the Claimant failed to produced the same, the payments were not
made. CW1 in his cross examination has clearly stated that the
respondents did not issue work orders in respect of each component
of cable laying. But they issued General Work Orders only. Along
with the bills, the duty certified completion certificates, the General
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Work Orders, Route Diagram, the Acceptance Certificates of the AT
wing, Measurement book, sand calculation sheets, consolidated
project-wise check lists signed by BSNL officers, the bills certified
by the BSNL officers as stated in paragraph 6 of his proof affidavit
were submitted and on that basis, the bills were settled.
(13) The learned counsel for the respondents fairly admitted
that except the 11 bills mentioned in Annexure - A of SOC, all the
rest of the 150 bills raised by the claimant had been settled without
the documents that are now being sought for by the accounts wing.
When this Tribunal specifically asked the learned counsel under
which clause of the agreement Exhibit C1, the contractor is liable
to submit along with the bills the documents now sought for by the
accounts wing to prove the procurement of sea-sand, transport of
the same etc., the learned counsel admitted that there is no such
clause in the agreement. Therefore, in the absence of any condition
in the agreement stipulating the production of the above said
documents by the contractor along with these bills, it is not open to
the respondents to insist for the same and refuse payment on the
ground of non-production of such documents.
(14) As far as the contention that no work orders have been
obtained by the claimant for sea-sand filling and removal of excess
earth is concerned, it is relevant to point out that the Acceptance
Test Report has been duly signed by the officials of BSNL and these
documents are also filed. Apart from that, M-book had also been
signed by the officials and the signature of the officials of BSNL in
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various documents is not being disputed. Moreover, nowhere in the
documents, the officials have disputed the work carried out by the
claimant. The claimant relied on the report of the committee
constituted by the Chief General Manager of the BSNL which is
marked in this case as Exhibit C23. Perusal of the same discloses
that a code of conduct was issued by Corporation of Chennai
during 1993 which had been made applicable to all service
Departments including Chennai Telephones. According to the code
of conduct, all service Departments to dig trenches for various
purposes shall backfill them with sea-sand/Karanaroi sand and
remove the excess earth within a time frame to avoid fines. The
agreement between Chennai Telephones and the cable laying
Contractors specify that the code of conduct issued by Chennai
Corporation should be followed. No exemptions were listed for this
Clause of the agreement. After careful examination of all the
relevant documents available with the BSNL, the committee decides
as follows:
"Backfilling the trenches by sea-sand/karanaroi sand is a
must within the geographical limits of the Chennai Corporation and
is in accordance with the agreement entered for cable laying and
allied works by Chennai Telephones with PSU/Departmental
Contractors. Unless and otherwise mentioned in any work order,
not to backfill the trenches with sea-sand / karanaroi sand, it is
implicit and mandatory that all cable laying trenches dug up within
the corporation limits shall be back filled with sand and the excess
earth shall be removed within the specified time frame. Hence the
claims of the Contractors pertaining to these 2 items shall be settled
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in accordance with the approved rates mentioned in the
agreement."
The committee constituted by BSNL has come to the
conclusion based on the documents that the claim of the
Contractors pertaining to these items shall be settled in accordance
with the approved rates mentioned in the Agreement. It is contended
by the learned counsel for respondents that the recommendation of
the committee is only prospective and as such the claimant cannot
rely on the report. But there is no indication in the report that it is
prospective. Hence, this contention is rejected. While this being the
state of affairs, the contention of the respondents that the documents
called for were not produced by the claimant and as such they were
disallowed cannot be accepted. Further, it has to be pointed out that
admittedly no written instructions were issued to the Contractors to
produce the said documents. It was contended that oral instructions
were issued. But to substantiate the said contention, no documents
or oral evidence has been produced by the respondents. Therefore,
such contention cannot be accepted. The Acceptance Test Report as
well as entries in the M-book clearly proves that the work has been
completed by the contractor and as such even in the absence of any
work order, these works were to be carried out to comply with the
statutory requirement namely the code of conduct issued by the
Corporation of Chennai. It is not in dispute that the code of conduct
is applicable to all service departments including Chennai
Telephones. Hence, in the considered view of this tribunal, the
disallowance of the claim is not proper and correct. But the actual
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amount payable by the respondents to the claimant has to be
separately considered due to certain calculation mistakes in
Annexure - A. Further, it has to be pointed out that as rightly
contended by the learned counsel for the claimant if the work has
not been carried out and if the officials have certified improperly,
the department would have definitely taken action against the
officials. Admittedly, no such action was taken by the Department.
The Acceptance Test Report and the entries in M-book contain
quantitative and qualitative measurement which have been certified
by the responsible officers of BSNL regarding the various items of
works completed by the contractor. No specific reasons was
assigned by the Department for not taking any departmental action
against the officials who have signed in these documents. Absence
of any such departmental action would only lead to the irresistible
conclusion that the work has been completed by the contractor and
there is no reason to disallow the same.
(15) As per clause 3.2 of the "Specification of Cable Laying"
the bottom of the trench shall be levelled, all rough surface
smoothened and all stones etc. to be removed. If necessary soft
earth shall be placed as directed by the representative of the
Divisional Engineer. During the cross examination of CW1, this
tribunal brought the above clause to the notice of CW1 and he was
asked whether during the execution of the subject work the
representative of the Divisional Engineer directed him to place soft
earth at the bottom of the trench and his answer is 'yes'. For the
next question by this tribunal, as to whether he carried out such
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directions his answer was 'Yes' but qualified it by saying that sea-
sand was placed and not soft earth. Thus CW1 has admitted that no
soft earth was placed and according to him only sea-sand was
placed. This tribunal brought to the notice of CW1 clause 3.6(a) of
the specifications for cable laying and he was asked whether
soft/sieved earth free of all stones or rough materials were placed
over the cable to a heigh of 15 cms. His answer was 'No' and
qualified it by saying that he and all other contractors placed only
sea-sand.
(16) Thus, as admitted by CW1, the trenches were not filled
with soft earth for a height of 15 cms as contemplated in the
specifications for cable laying. The claimant has claimed the value
of sea-sand for filling for a depth of one meter whereas the claimant
is actually entitled to claim for only 85 cms. When this was brought
to the notice of the learned counsel for the claimant, he readily
accepted to re-calculate and file a revised calculation statement.
And accordingly he has filed the recalculated statement relating to
the claim in respect of sea-sand filling and he has also re-
calculated the interest on the revised amount.
(17) With respect to the details contained in Annexure - A to
the claim statement, the respondents in their counter in paragraph 6
have stated that an amount of Rs.1,73,979/- towards Security
Deposit for Bill Nos.35, 36, 42 of 2001 and Bill Nos.43 of 2001 and
44 and 69 were refunded vide Cheque No.327259 dated 13.02.2003.
It is further stated therein that only 3 cases viz. Bill Nos.32, 76 and
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146 are yet to be paid since there was no request of refund of
Security Deposit from the claimant. It is further stated therein that
these 3 Security Deposit amounts can be refunded if there is a claim
from the claimant duly certified by the respective field units.
Regarding Bill Nos.42 and 43 of 2002, the details of the bills which
are partially paid are shown in the Annexure. The reasons for
dissolving the partial amounts are also shown in the Annexure. But,
no reasons are found in the Annexure. The above averments in the
counter statement are also brought to the notice of CW1 in his cross
examination and CW1 has simply stated that he does not remember.
When this was pointed out to the learned counsel for the claimant,
the learned counsel has filed a Revised Calculation Sheet. In the
revised calculation sheet, it is stated that the total SD amount
refundable under Bill Nos.35, 36, 42 and 43 of 2001 and 44 and 69
comes to Rs.2,01,290/- whereas even according to the respondents
they have paid only a sum of Rs.1,73,979/- vide cheque No.327259
dated 13.02.2003 and as such balance sum of Rs.27,311/- is still
due towards refund of SD. In the counter statement, the respondents
have not denied their liability to refund the security deposit
amounts in respect of Bill No.32, 76 and 146 totalling a sum of
Rs.75,195/-. Therefore, the balance SD amount to be refunded by
the respondents to the claimant is Rs.1,02,506/- (Rs.27,311/- +
Rs.75,195/-). After restricting the claim towards sea-sand filling to
a depth of 85 cms, as per the Revised Calculation Sheet, the
balance sum payable is only Rs.2,26,635.11/- and not
Rs.2,36,855.39/- as claimed in Annexure a. Thus, the total princpal
sum payable to the claimant comes to Rs.3,29,141.11/-
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(Rs.1,02,506/- + Rs.2,26,635.11/-).
(18) Thus, issue Nos.1-4 are answered in favour of the
claimant and against the respondents.'
10.Before proceeding further, this Section 34 Court deems it
appropriate to notice that AT has not given the list of exhibits and those who
deposed by giving oral evidence at the tail end of the impugned awards but it
is clear that Ex.R.4 has been marked subject to objection and proof. This is
captured in paragraph No.6 of the first impugned award and the relevant
portion of paragraph No.6 of the first impugned award reads as follows:
'(6) .............................. Exhibits R1 to R3 were marked and
Exhibit R4 was marked subject to objection and proof'
11.As the list of exhibits have not been set out in the tail end of the
impugned awards for better appreciation of this order, this Court deems it
appropriate to cull out the same from the proof affidavit and give the same
infra. Ex.C.1 to Ex.C.24 are as follows:
'Ex.C1 is the Cable laying Contract executed during
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December 1999 between the parties with Schedule of works and their
rates
The said document is enclosed in pages 1 to 11 of the
claimant's book-1.
Ex.C-2 is the Respondents' order dated 10.01.2001 extending
the instant contract up to 03.04.2001.
The said document is enclosed in page 12 of the claimant's
book-1
Ex.C-3 is the respondents' order dated 03.04.2001 extending
the instant contract upto 03.07.2001.
The said document is enclosed in page 13 of the claimant's
book-1.
Ex.C-4 is the respondents' order dated 27.06.2001 extending
the instant contract up to 03.10.2001.
The said document is enclosed in page 14 of the claimant's
book-1
Ex.C-5 is the respondents' order dated 03.10.2001 extending
the instant contract upto 31.12.2001.
The said document is enclosed in page 15 of the claimant's
book-1
Ex.C-6A1 is the respondents' work completion certificate
The said document is enclosed in page 16-17 of the claimant's
book-1
Ex.C.6B is the AT report:SDE/Cables/DIS/2000-2001 dated
26.11.2001
The said document is enclosed in page 18-19 of the claimant's
book-1
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Ex.C.6C is the Bill No.GC/03/32 dated 31.05.2001
The said document is enclosed in page 20 of the claimants'
book-1
Ex.C.7A is the work order No.DE/Porur/Cables/2000-2001
dated 17.03.2001
The said document is enclosed in page 21 of the claimants'
book-1
Ex.C-7A1 is the respondents' work completion certificate
The said document is enclosed in page 22-24 of the claimant's
book-1
Ex.C-7B is the AT report:SDE/AT/Cables/DIS/00/1968 dated
26.11.2001
The said document is enclosed in page 25-30 of the claimant's
book-1
Ex.C-7C is the Bill No.GC/03/35 with its enclosed drawings.
The said document is enclosed in page 31-49 of the claimants'
book-1
Ex.C-8A is the work order No.DE/Porur/Cables/2000-2001/3
dated 02.02.2001
The said document is enclosed in page 50 of the claimants'
book-1
Ex.C-8A1 is the respondents' work completion certificate
The said document is enclosed in page 51-52 of the claimant's
book-1
Ex.C-8B is the AT report:SDE/A/T/Cables/Distbn/2000-1967
AT-28 dated 26.11.2001
The said document is enclosed in page 53-56 of the claimant's
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book-1
Ex.C-8C is the Bill No.GC/03/36 dated
The said document is enclosed in page 57-63 of the claimants'
book-1
Ex.C.9A is the work order No.DE/Porur/EXTL-11/W.O.2001-
2002 dated 12.03.2001
The said document is enclosed in page 64-66 of the claimants'
book-1
Ex.C-9A1 is the respondents' work completion certificate
The said document is enclosed in page 67-68 of the claimant's
book-1
Ex.C-9B is the AT report:SDE/AT/Cables/DIS/00/1962 dated
26.11.2001
The said document is enclosed in page 69-74 of the claimant's
book-1
Ex.C-9C is the Bill No.GC/03/42 dated 22/06/2001
The said document is enclosed in page 75-88 of the claimants'
book-1
Ex.C-10A is the work order No.DE/Por/EXTL-I/W.O./2001-
2002 dated 12.03.2001
The said document is enclosed in page 85-90 of the claimants'
book-1
Ex.C-10A1 is the respondents' work completion certificate
The said document is enclosed in page 91 of the claimant's
book-1
Ex.C.10B is the AT report:SDE/AT/Cables/DIS/00/1957 dated
26.11.2001
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The said document is enclosed in page 92-97 of the claimant's
book-1
Ex.C-10C is the Bill No.GC/03/43 dated 22/06/2001
The said document is enclosed in page 98-105 of the
claimants' book-1
Ex.C-11A is the work order No.DE/Porur/EXTL-I/W.O./2001-
2002 dated 12.03.2001
The said document is enclosed in page 106-108 of the
claimants' book-1
Ex.C-11A1 is the respondents' work completion certificate
The said document is enclosed in page 109-110 of the
claimant's book-1
Ex.C-11B is the AT report:SDE/AT/Cables/DIS/00/1960 dated
26.11.2001
The said document is enclosed in page 111-118 of the
claimant's book-1
Ex.C-11C is the Bill No.GC/03/44 dated 22.06.2001
The said document is enclosed in page 119-129 of the
claimants' book-1
Ex.C-12A is the work order No.DE/Por/koy/W.O.8/1999-2000
dated 19.03.2001
The said document is enclosed in page 130-131 of the
claimants' book-1
Ex.C-12A1 is the respondents' work completion certificate
The said document is enclosed in page 132-133 of the
claimant's book-1
Ex.C-12B is the AT report:SDE/AT/Cables/DIS/00/1950 dated
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26.11.2001
The said document is enclosed in page 134-143 of the
claimant's book-1
Ex.C-12C is the Bill No.GC/03/69 dated 30/07/2001
The said document is enclosed in page 144-155 of the
claimants' book-1
Ex.C-13A is the work order No.DE/KOD/EXTL-I/W.O./2000-
2001/13 dated 23.03.2001
The said document is enclosed in page 156-158 of the
claimants' book-1
Ex.C-13A1 is the respondents' work completion certificate
The said document is enclosed in page 5 of the claimant's
book-1
Ex.C-13B is the AT report:SDE/AT/Cables/DIS/2000-
2001/1882 dated 19.11.2001
The said document is enclosed in page 161-168 of the
claimant's book-1
Ex.C-13C is the Bill No.GC/03/76 dated 18.08.2001
The said document is enclosed in page 169-171 of the
claimants' book-1
Ex.C-14A is the work order No.DE/KOD/EXTL-I/W.O./VOL-
II/2001-2002/01 dated 21.07.2001
The said document is enclosed in page 172-174 of the
claimants' book-1
Ex.C-14A1 is the respondents' work completion certificate
The said document is enclosed in page 175-177 of the
claimant's book-1
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Ex.C-14B is the AT report:SDE/AT/Cables/DIS/00 at 28 dated
26.11.2001
The said document is enclosed in page 178-185 of the
claimant's book-1
Ex.C-14C is the Bill No.GC/03/146 dated 26.02.2002 with its
enclosed drawings.
The said document is enclosed in page 186-200 of the
claimants' book-1.
Ex.C-15B is the AT report:SDE/AT/Cables/DIS/00/5370 dated
03.03.2003
The said document is enclosed in page 201-206 of the
claimant's book-1
Ex.C-15C is the Bill No.GC/04/42 dated 22.06.2001
The said document is enclosed in page 207-213 of the
claimants' book-1
Ex.C-16A is the work order No.DE/KOD/EXT-I/W.O./2000-
2001/20 dated 19.07.2001
The said document is enclosed in page 214-215 of the
claimants' book-1
Ex.C-16A1 is the respondents' work completion certificate
The said document is enclosed in page 216-217 of the
claimant's book-1
Ex.C-16B is the AT report:SDE/AT/Cables/DIS/00 at 28
The said document is enclosed in page 218-223 of the
claimant's book-1
Ex.C-16C is the Bill No.GC/04/43 dated 22.06.2001
The said document is enclosed in page 224-226 of the
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Arb O.P.(Com. Div.)Nos.191, 196 and 197 of 2022
claimants' book-1
Ex.C-17 is the claimant's demand dated 28/05/2005 to the GM
for early payment of bills
The said document it enclosed in Page 227-228 of the
claimant's book-1
Ex.C-18 is the claimant's demand dated 04/07/2005 to the GM
for early payment of bills
The said document it enclosed in Page 229-230 of the
claimant's book-1
Ex.C-19 is the claimant's demand dated 10/10/2005 to the
CGM for early payment of bills
The said document it enclosed in Page 231-232 of the
claimant's book-1
Ex.C-20 is the claimant's demand dated 10.10.2005 for early
payment of bills
The said document it enclosed in Page 233-234 of the
claimant's book-1
Ex.C-21 is the claimant's demand dated 12.10.2007 for early
payment of bills
The said document it enclosed in Page 235-236 of the
claimant's book-1
Ex.C-22 is the claimant's demand dated 12/10/2007 for early
payment of bills
The said document it enclosed in Page 237-238 of the
claimant's book-1
Ex.C-23 is the Report dated 29.03.2004 on the sand filling etc
of the committee constituted by the Chief General Manage of BSNL
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Arb O.P.(Com. Div.)Nos.191, 196 and 197 of 2022
The said document is enclosed in page 239-244 of the
claimant's book-1.
Ex.C-24 is the Letter dated 30.12.2004 from Chief Accounts
Officer [FC] to all DGMs regarding settlement of the claims of Sea
Sand filling excess earth removal by the cable laying contractors
The said document is enclosed in page 245 of the claimant's
book-1'
12.Exhibit Ex.R.1 to Ex.R.4 are as follows:
'Ex.R-1 is the respondent's authorisation letter dated
05.10.2009 in my favour to adduce evidence in favour of
respondents.
Ex.R-2 is the agreement between the claimant and
respondent.
Ex.R-3 is the specification for cable laying.
Ex.R-4 is the CPWD Rule Volume II Para 10.2.7 (f) & para
32.2.2 CPWD Code conveying the maintenance of M-book.
3. As per clause 2 of the agreement, the work shall, in
general, comply with BSNL specifications existing on date. (Ex.R-2)
4. I state that as per clause 3.7(a) of the specification for
cable laying contract, the contractor may have to fill the trenches
with sand after the laying of cable, placement of bricks/RCC
troughs/ half round RCC pipes/ slabs over the cables as per each
estimate/work order. Since no mention in the work orders about sea-
sand filling and excess earth removal, the DGM (West) rightly
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Arb O.P.(Com. Div.)Nos.191, 196 and 197 of 2022
disallowed the claim. (Ex.R-3)
5. I submit that as per clause 6.0 of the specifications for
cable laying, 'A log book shall be kept at the work site (temporary
store dump) by the contractor. All observation and instructions of
the Inspecting Officers of CTD will be recorded therein'. In this
case, no log book of such nature is produced by the contractor for
verification. (Ex.R-3)
6. I submit that as per clause 7.1 of Specifications for cable
laying, 'The contractor in his own interest shall obtain the work
order/s before the commencement of the work and submit the bills
duly supported by work order/s. The contractor will be responsible
to submit the bills prepared accurately giving all details to facilitate
early payment'. In this case, all such details are not available with
regard to sea-sand filling and excess earth removal. Hence
department is not able to settle the claim. (Ex.R-3)
7. I submit that as per clause 7.3 (a) of specifications for
cable laying, 'No work should be executed without a proper work
order issued by Divisional Engineer and approved by DGM.
However, if such exigencies arise to meet certain emergent
situation, the contract may carry out the job under verbal
instruction of DE/his representative with intimation to the DGM/s
concerned in writing of such occasions indicating the quantum of
work done'. In this case, no such intimation of any nature is given to
the DGM concerned in writing by the contractor.(Ex.R-3)
8. I state that as per CPWD Rule Volume II Para 10.2.7(f) &
Pare 3.2.2 CPWD Code envisages the maintenance of M-Book with
details of quantities which is to be measured then and there strictly
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Arb O.P.(Com. Div.)Nos.191, 196 and 197 of 2022
as per the work executed. Further the rule strictly prohibits the
practice of taking measurement in one place and its recordance
elsewhere. Contravening the basic rule, the copies of M-books only
contains the consolidated quantities of work done and hece the
measurements and quantities of work done and hence the
measurements and quantities could not be relied upon as strict
measurement of record and therefore the details of check sheets
were to be consulted necessarily to arrive at the exact measurement.
This document may be marked as Ex.R-4.'
13.As already alluded to supra, paragraph No.6 of the first impugned
award makes it clear that Ex.R.1 has been marked subject to objection and
proof. In this regard this Section 34 Court deems it appropriate to remind
itself that owing to Section 19(1) of the A and C Act, AT is not bound by 'The
Code of Civil Procedure, 1908(5 of 1908)' {'CPC' for the sake of brevity}
and 'the Indian Evidence Act, 1872 (1 of 1872)' {'Evidence Act' for the sake
of brevity}.
14.This brings this Court back to the manner in which issues 1 to 4
have been answered by the AT in paragraph Nos.10 to 18 first impugned
award. To be noted, all these paragraphs have been extracted and reproduced
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Arb O.P.(Com. Div.)Nos.191, 196 and 197 of 2022
supra, in the considered view of this Court, paragraph Nos.12 and 13 provide
a complete answer to the argument that has been projected now and therefore
the same have been underlined in the excerpted reproduction supra (in this
order) inter alia for ease of reference. Thus, the AT has gone by the evidence
before it and on the basis of the terms of contract. AT has clearly recorded the
position that BSNL itself has admitted that the earlier bills have been settled,
without seeking for the documents that are being now sought for by the
accounts department and the procedure adopted is based on the M-book
(measurements) and these have been duly certified by the BSNL authorities.
This has been clearly captured in paragraph No.14 of the first impugned
award. As regards Ex.R.4 which has been marked with objection and proof, a
scanned reproduction of the same as placed before this Court is as follows:
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Arb O.P.(Com. Div.)Nos.191, 196 and 197 of 2022
https://www.mhc.tn.gov.in/judis
Arb O.P.(Com. Div.)Nos.191, 196 and 197 of 2022
15.The above appears to be one page from a book. The book has not
been placed before this Court. The first page of the book showing the title of
the book, name of the publisher or year of publication has also not been
made available and in any event, there is nothing to demonstrate that
reference to some important items of measurement therein applies to the
contract which governs the parties in the cases on hand. Therefore, the AT
has proceeded to deal with the arbitrable disputes on the basis of oral and
documentary evidence before it i.e., documentary evidence which have been
marked without objection ignoring Ex.R.4 that has been marked subject to
objection/proof. In this regard Section 19(1) of A and C Act which says that
AT is not bound by CPC and Evidence Act ring fences the impugned award
from Section 34 attack/challenge on hand. This Court has already alluded to
and delineated supra that it reminds itself that the Evidence Act is not
applicable for the proceedings before the AT, owing to Section 19(1) of A
and C Act. Even if the principles of Evidence Act are applied, one sheet of
paper from a book cannot be marked as an exhibit and that cannot become
the basis. After all, an AT has to go by terms of the contract and this is clearly
set out in sub-section (3) of Section 28 of A and C Act.
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Arb O.P.(Com. Div.)Nos.191, 196 and 197 of 2022
16.Captioned three Arb OPs on hand mention Section 34(2)(b)(ii) of A
and C Act. To be noted, Section 34(2)(b)(ii) is conflict with Public Policy of
India. Public Policy of India was explained elucidatively by Hon'ble
Supreme Court in oft-quoted Associate Builders case law [Associate
Builders Vs. Delhi Development Authority reported in (2015) 3 SCC 49]
and Associate Builders was again elucidatively explained by Hon'ble
Supreme Court in Ssangyong judgment [Ssangyong Engineering and
Construction Company Limited Vs. National Highways Authority of India
reported in (2019) 15 SCC 131] post 23.10.2015. To be noted Associate
Builders case law was rendered prior to 23.10.2015 and Ssangyong case law
was rendered post 23.10.2015. Relevance of the date 23.10.2015 is, the
expression 'Public Policy of India' being statutorily explained in the A and C
Act vide explanations 1 and 2 qua Section 34(2)(b)(ii), relevant paragraphs
in Ssangyong case law are Paragraphs 34 to 36 and the same read as
follows:
'34. What is clear, therefore, is that the expression “public
policy of India”, whether contained in Section 34 or in Section 48,
would now mean the “fundamental policy of Indian law” as
explained in paras 18 and 27 of Associate Builders [Associate
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Arb O.P.(Com. Div.)Nos.191, 196 and 197 of 2022
Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] i.e.
the fundamental policy of Indian law would be relegated to
“Renusagar” understanding of this expression. This would
necessarily mean that Western Geco [ONGC v. Western Geco
International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12]
expansion has been done away with. In short, Western Geco
[ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 :
(2014) 5 SCC (Civ) 12] , as explained in paras 28 and 29 of
Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 :
(2015) 2 SCC (Civ) 204] , would no longer obtain, as under the
guise of interfering with an award on the ground that the
arbitrator has not adopted a judicial approach, the Court's
intervention would be on the merits of the award, which cannot be
permitted post amendment. However, insofar as principles of
natural justice are concerned, as contained in Sections 18 and
34(2)(a)(iii) of the 1996 Act, these continue to be grounds of
challenge of an award, as is contained in para 30 of Associate
Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2
SCC (Civ) 204] .
35. It is important to notice that the ground for interference
insofar as it concerns “interest of India” has since been deleted,
and therefore, no longer obtains. Equally, the ground for
interference on the basis that the award is in conflict with justice
or morality is now to be understood as a conflict with the “most
basic notions of morality or justice”. This again would be in line
with paras 36 to 39 ofAssociate Builders [Associate Builders v.
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Arb O.P.(Com. Div.)Nos.191, 196 and 197 of 2022
DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , as it is only
such arbitral awards that shock the conscience of the court that
can be set aside on this ground.
36.Thus, it is clear that public policy of India is now
constricted to mean firstly, that a domestic award is contrary to the
fundamental policy of Indian law, as understood in paras 18 and
27 of Associate Builders[Associate Builders v. DDA, (2015) 3 SCC
49 : (2015) 2 SCC (Civ) 204] , or secondly, that such award is
against basic notions of justice or morality as understood in paras
36 to 39 of Associate Builders [Associate Builders v. DDA, (2015)
3 SCC 49 : (2015) 2 SCC (Civ) 204] . Explanation 2 to Section
34(2)(b)(ii) and Explanation 2 to Section 48(2)(b)(ii) was added by
the Amendment Act only so that Western Geco [ONGC v. Western
Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ)
12] , as understood in Associate Builders [Associate Builders v.
DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , and paras 28
and 29 in particular, is now done away with.'
17.It is clear as daylight that no review on merits of the disputes is
permissible in a Section 34 legal drill. This by itself downs the curtains in the
matter on hand. However, even if the arguments are tested on a demurer by
stretching it a little further it can at best proceed towards Patent Illegality
qua sub-section (2A) of Section 34 of A and C Act which is a codified
provision post 23.10.2015. To be noted, it was still available albeit by way of
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Arb O.P.(Com. Div.)Nos.191, 196 and 197 of 2022
Judge made law qua Saw Pipes case law [Oil and Natural Gas Corporation
Ltd. Vs. Saw Pipes Ltd., reported in (2003) 5 SCC 705] prior to 23.10.2015.
The proviso to sub-section (2A) of Section 34 of A and C Act makes it clear
that there can be no re-appreciation of evidence. In the cases on hand, it is
not only a case where re-appreciation of evidence is impermissible, it is also
a case where there is nothing to demonstrate that appreciation of evidence is
perverse. In this regard, as regards Ex.A.4, one sheet of paper from a book
and a photo copy of the same cannot serve as an exhibit and that cannot be
telescoped into a already concluded contract between the parties, particularly
when measurement and certification at various stages have been approved by
BSNL.
18.This Court deems it appropriate to delineate the scope of a legal
drill under Section 34 of A and C Act.
19.Section 34 of A and C Act is a default provision. Section 34 of A
and C Act is neither an appeal nor a revision, it is not even a full-fledged
legal review. It is a delicate balance between sanctity of finality of arbitral
awards on minimal judicial intervention on one side ingrained in Sections 35
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Arb O.P.(Com. Div.)Nos.191, 196 and 197 of 2022
and 5 of A and C Act on one side and judicial review forming part of bedrock
of due process of law on the other. It is a mere challenge to an arbitral award
and various slots adumbrated under Section 34 have been repeatedly
described as pigeon holes by this Court. In a challenge to an arbitral award, if
a protagonist of Section 34 petition is able to demonstrate that any/some/all
of the challenge/s 'snugly fit/s' into any one of the pigeon holes, the award
will be dislodged, failing which there would be no judicial intervention. In
the cases on hand, the narrative thus far makes it clear that there is nothing to
demonstrate that the petitioners' challenge to impugned awards fits into much
less snugly fits into any of the pigeon holes under Section 34, more
particularly, Public Policy under Section 34(2)(b)(ii) and Patent Illegality
which this Section 34 Court has taken upon itself to examine.
20.This Court also reminds itself that a Section 34 legal drill is a one
issue summary procedure. This principle has been laid down as a ratio by
Hon'ble Supreme Court in oft-quoted Fiza Developers case law [Fiza
Developers and Inter-Trade Private Limited Vs. AMCI (India) Private
Limited reported in (2009) 17 SCC 796]. By saying one issue summary
procedure, it does not mean that the entire exercise should be on one issue
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Arb O.P.(Com. Div.)Nos.191, 196 and 197 of 2022
qua lis. It was elucidatively explained by Hon'ble Supreme Court that an
arbitral award being put to challenge i.e., being assailed, itself is an issue
before a Section 34 Court and that is the one issue which shall be decided by
way of a summary procedure. This takes this Court to the Rules made by
Madras High Court by exercising its powers under Section 82 of A and C
Act i.e., 'The Madras High Court (Arbitration) Rules, 2020' {'MHC Arb
Rules' for brevity}. As already alluded to supra, captioned Arb OPs have
been listed in the Admission Board and therefore, this Court examined the
same in accordance with Rule 8 and Paragraph 8.3 of the Practice Directions
thereat. A careful perusal of the same makes it clear that a protagonist of a
Section 34 petition has to make out a case for Admission.
21.In the cases on hand, in the light of narrative thus far, as there is
nothing to demonstrate the manner in which the issues 1 to 4 have been dealt
with by the AT is a implausible view, the lone point urged before this Court is
completely flattened and the sequitur of the same is the captioned Arb OPs
do not pass muster qua Rule 8 / paragraph 8.3 of MHC Arb Rules i.e., they
do not pass through the gate way of Admission. To be noted, the view of AT
that the certification in the M-Books and other documents by the BSNL
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Arb O.P.(Com. Div.)Nos.191, 196 and 197 of 2022
authorities at various stages by themselves presupposes that work has been
done by the contractor in accordance with the terms of contract i.e., by filling
the sea-sand to the required extent. To be noted, when the view taken by the
AT is not a implausible view a Section 34 Court will not judicially intervene
in an award in a Section 34 legal drill. In other words, the captioned Arb
OPs fail and the same are dismissed. There shall be no order as to costs.
25.04.2022
Speaking/Non-speaking order
Index : Yes / No
Internet : Yes / No
pgp/nsa
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Arb O.P.(Com. Div.)Nos.191, 196 and 197 of 2022
M.SUNDAR. J
pgp/nsa
and 197 of 2022
Dated : 25.04.2022
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