Madras High Court
The State Of Tamil Nadu vs M/S.Rao Constructions on 1 February, 2023
C.M.A(MD)Nos.824 to 829 of 2002
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED : 01.02.2023
CORAM:
THE HONOURABLE DR.JUSTICE G.JAYACHANDRAN
AND
THE HON'BLE MR JUSTICE SUNDER MOHAN
C.M.A(MD)Nos.824 to 829 of 2002
C.M.A(MD)No.824 of 2002
The State of Tamil Nadu,
represented by
The Superintending Engineer(WRO),
Periyar Vaigai Basin Circle,
Public Works Department,
Madurai -1. ... Second Respondent/Appellant
.Vs.
1.M/s.Rao Constructions,
represented by Managing Director,
Thiru.C.P.Rao,
Office at M.P.2/2,
P.T.A.Buildings,
Pannarahatta Road,
Bangalore – 560 076. ...Ist Respondent/Respondent
2.K.Thirunavukkarasu ... Petitioner/Arbitrator/Respondent
PRAYER in C.M.A(MD)No.824 of 2002: Civil Miscellaneous Appeal filed
under Section 39 of the Arbitration Act against the parent and decretal
order made in Arbitration O.P.No.36 of 1997, dated 30.4.2001, on the file
of the Principal Subordinate Judge, Madurai.
1/10
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C.M.A(MD)Nos.824 to 829 of 2002
C.M.A(MD)Nos.824 to 829 of 2002
For Appellant : Mr.R.Baskaran
Addl.Advocate General
assisted by
Mr.C.Baskaran,
Government Advocate
For Respondent-1 :Mr.Anand Chandrasekar
for M/s.Sarvabhauman Associates
For Respondent-2 :Arbitrator
(No appearance)
COMMON JUDGMENT
DR.G.JAYACHANDRAN,J.
AND
SUNDER MOHAN,J.
Against the award passed by the Arbitrator under the Arbitration Act,
1940 and confirmed by the Sub-Court, Madurai, the State, represented by
the Superintending Engineer(WRO), Periyar-Vaigai Basin Circle, Public Works
Department, Madurai-1, has preferred these batch of Civil Miscellaneous
Appeals.
2.A perusal of the records indicate that against the Arbitration award,
dated 14.07.1997, the State had preferred three Arbitration OPs' to set
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C.M.A(MD)Nos.824 to 829 of 2002
aside the award,whereas, the claimant has filed three Arbitration O.Ps' to
confirm the award. The said six Arbitration O.P.Nos.35,36,37, 47,48 and 49
of 1997 were taken up together for consideration by the Subordinate Court,
Madurai and passed a common order confirming the award and dismissing
the Petition filed to set aside the award. Aggrieved by the
same,C.M.A(MD)Nos.824 to 829 of 2002 are filed and these appeals
pending for the past two decades, for final disposal.
3.Though several adjournments were granted for the appellant to
argue the matter, under some pretext or other, they have successfully got
adjournemnts. From the records, it is seen that on 11.02.2014, for the non-
appearance of the appellant, the Division Bench of this Court, had dismissed
all these Civil Miscellaneous Appeals, but later, it was restored to file, in
order to give an opportunity to the appellant to purforth the case. The said
restoration order is dated 12.7.2016.It was an unconditional order of
restoration with the fond hope that the appellant will be ready to argue the
appeals within a reasonable time. Unfortunately, that never happened
which again prompted this Court to impose cost of Rs.30,000/-(Rs.5000/-
for six cases), when adjournment was sought. This order was passed on
23.11.2016.Thereafter, the appellant is not ready and nearly 15
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C.M.A(MD)Nos.824 to 829 of 2002
adjournments have been granted in all these years.
4.On change of roster, this Bench took up the matter on 16.12.2022
and at the request of the appellant, the appeals were again adjourned to
20.1.2023 and then to 27.01.2023 and finally to 01.02.2023.
5.Today, when the matter is taken up for hearing, the learned
Additional Advocate General appearing for the appellant submitted that the
first respondent is a construction company which entered into a construction
agreement with the State/Public Works Department for laying down link
canal/parallel canal from Vaigai to Anaikudi in connection with Periyar Vaigai
Irrigation Scheme. Dispute arose regarding settlement of contract
amount and the matter was referred to the Arbitrator.The Arbitrator, after
considering the claim, passed an award on 31.3.1993 in respect of three
contracts relating to link Canal Km 4 to 8, Link Canal Km 8 to 11 and Link
Canal 18 to 22 and a sum of Rs.68,08,820/-, Rs.77,62,516/- and Rs.
52,88,352/- respectively in respect of three claims werre awarded with
interest. Aggrieved by the same, appeals were filed before the High Court
and the matter was remanded back for reconsideration by the Arbitrator.
The appeals in A.A.O.Nos.1230 to 1232 came to be disposed of with a
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C.M.A(MD)Nos.824 to 829 of 2002
direction on 9.4.1996. Thereafter, the Arbitrator considered the matter
afresh and passed fresh award on 14.7.1997 in all the three claims for a
sum of Rs.65,16,471/- in total with interest at the rate of 15% p.a.The said
award was confirmed by the Sub-Court, Madurai and at the same time, the
applications filed by the Public Works Department for setting aside the
award was dismissed. In the said circumstances, aggreived by the order if
the Sub-Court in the batch of Arbitration O.Ps referred to above, the present
Civil Miscellaneous Appeals are filed.
6.In the appeals, it is contended that price adjustments as laid in
clause 54 of the Contract will not compensate the escalation of costs, when
the contract itself is a self contained one and provides for all contingency.
Further, it is submitted that the Arbitraror has misconducted himself while
passing the award. Also submitted that the entire award amount with
interest been already deposited and withdrawn by the claimant later by
way of an interim order, the claimant was directed to repay the difference
amount of Rs.41,28,471 and the same was repaid by the claimant after
nearly two years.
7.As far as the allegation of misconduct against the arbitrator is
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C.M.A(MD)Nos.824 to 829 of 2002
concerned, this Court finds no material evidence at all. Regarding the
application of Clause 54 of the Contract, it reads as below:
''54(1)Price Adjustment:- The amounts paid to
the Contractor for the work done shall be adjusted for
increase or decrease in the rates of labour or materials
excepting those materials supplied by the Government as
per the schedule.
54(2)Price adjustment clause shall be applicable only
for the work that is carried out in the stipulated time and
extended thereof due to the reason as are not attributable
to the Contractors.''
8.We find that after remand, the Arbitrator has gone into the reason
for fixing differental cost by applying the price adjustment as contemplated
under Clause 54 of the Contract. From the materials placed before this
Court, it is seen that the contract was completed within the time extended
for completion and on the part of the Contractor, there was no fault. While
Clause 54 provides for adjustment of money for increase or decrease in the
labour or materials, except those materials supplied by the Government.
As per the schedule, specific formula has been provided for such increase
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C.M.A(MD)Nos.824 to 829 of 2002
or decrease in the award. This Court finds that the said formula has been
adopted by the Arbitrator to arrive at the conclusion.The reasonableness of
the reasoning given by the Arbitrator cannot be questioned by the Court, in
an appeal under this Act and therefore decline to entertain these appeals.
It is also pertinent to note that reduced award amount after remand by this
Court has not been challenged by the Contractor and has accepted the
award. Hence this Court finds no reason to interfere with the award which is
impugned in these batch of appeals.
9.The learned Additional Advocate General appearing for the appellant
would submit that for the difference in the award amount which was repaid
by the first respondent/Contractor, after nearly 2 ½ years of enjoyment, it
should bear some interest to the State. Since along with the award,
interest was also paid to the Contractor, the same has to be reciprocated
when the award was modified and reduced. The learned Additional Advocate
General would further submit that pursuant to the first award, which was
later remanded, the award of Rs.1,06,44,942/- was withdrawn by the
claimant on 17.02.1995.Thereafter, pursuant to the modified award, dated
14.7.1997, followed by the interim order passed by this Court to return the
difference amount, the Contractor has repaid the money to the Public Works
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C.M.A(MD)Nos.824 to 829 of 2002
Department on 14.07.1997 san interest.
10.This Court finds some force in the submission and therefore, while
confirming the award, dated 14.07.1997, all these Civil Miscellaneous
Appeals are dismissed. The first respondent/Contractor is directed to pay
interest for a sum of Rs.41,28,471/- at the rate of 15% pa. for the period
between 17.02.1995 to 14.07.1997 and the same is directed to be paid
within a period of three months from the date of receipt of a copy of this
judgment. No Costs.
[G.J.,J.] [S.M.,J.]
01.02.2023
Index : Yes / No
Internet : Yes / No
NCC :Yes/No
vsn
To
The Principal Subordinate Judge,
Madurai.
https://www.mhc.tn.gov.in/judis
C.M.A(MD)Nos.824 to 829 of 2002
Copy to
1.The Record Keeper,
Vernacular Section,
Madurai Bench of Madras High Court,
Madurai.
https://www.mhc.tn.gov.in/judis
C.M.A(MD)Nos.824 to 829 of 2002
DR.G.JAYACHANDRAN, J.
and
SUNDER MOHAN,J.
vsn
COMMON JUDGMENT MADE IN
C.M.A(MD)Nos.824 to
829 of 2002
01.02.2023
https://www.mhc.tn.gov.in/judis
