Orissa High Court
Steel Authority Of India Limited vs M/S. G. C. Kanungo Construction on 19 April, 2022
IN THE HIGH COURT OF ORISSA AT CUTTACK
ARBA No.40 Of 2014
(Through hybrid mode)
Steel Authority of India Limited .... Appellants
and another
Mr. N.K.Sahu, Advocate
-versus-
M/S. G. C. Kanungo Construction .... Respondent
(P) Ltd., CTC.
Mr. M.Kanungo, Senior Advocate
CORAM: JUSTICE ARINDAM SINHA
ORDER
19.04.2022
Order No.
20. 1. Mr. Sahu, learned advocate appearing on behalf of appellants
resumes his submissions in continuation of those made and recorded in
order dated 29th March, 2022. He refers to paragraph 24 in the award,
which deals with whether his client was entitled to recover cost of
material and interest. He submits, there was a cost and interest
component, outstanding from respondent on account of supply of
steel. The tribunal committed illegality in rejecting the counter claim.
On query from Court he submits, the supply was made on request of
respondent and not as an obligation under the contract.
2. The then draws attention to clause (iii) under paragraph 30 in
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the award. He submits, there was award of Rs.2000/- per school,
aggregating Rs.1,00,000/- said to be payable due to use of potable
water. Referring to clause 8 in the Letter of Intent dated 24th April,
2000 (Ext. R-10), he demonstrates that, inter alia, water was to be
arranged by the contractor at its cost.
3. Moving on to clause (iv) under the paragraph he submits, extra
transportation cost including lifts and leads were awarded at Rs.
31,50,000/-. There was clear mention under clause 4 in additional
special conditions (Ext. R-10) that all leads, lifts, transportation was
included in the scope of work.
4. With reference to clause (x) under the paragraph he submits,
compensation could not have been awarded. There was arbitrary
award of Rs.1000/- for each completed school, i.e., 86 in number. The
contract did not provide for payment of compensation and the
arbitrator could not have awarded. Furthermore, there was award of
Rs.8,95,000/- also arbitrarily made at the rate of Rs.10,000/- per
school for 60 schools taken out of the scope of work, Rs.15,000/- for
13 schools and Rs.20,000/- for 5 schools. He submits,
claimant/respondent itself pleaded for reducing scope of the work.
Hence from total number of schools in original scope of work, some
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schools were taken out. Compensation for pilferage or stealing or
whatever could not have been awarded as not provided in the contract.
The arbitrator travelled beyond four corners of the contract and hence
there should be interference.
5. He relies on several judgments of the Supreme Court.
i) MMTC Ltd. vs. M/S.Vedanta Ltd., reported in (2019) 4 SCC
163, paragraphs 10 to 12, wherein earlier judgments of the Court in
Associate Builders vs. BDA, ONGC Ltd. vs. Saw Pipes Ltd. etc.
were referred for well settled law that Court does not sit in appeal over
the arbitral award and may interfere on merits on limited grounds
provided under section 34, Arbitration and Conciliation Act, 1996.
ii) Maharashtra vs. Rashid Babu Bhai Mulani, reported in
AIR 2006 SC 825, paragraph 14. The Supreme Court, in the
paragraph, said regarding postal dispatch under certificate of posting
and the ease, with which such certificate can be procured by affixing
ante dated seal with the connivance of any employee of the post office,
was a matter of concern. He reiterates, the tribunal relied on
documents introduced by additional rejoinder. Those were copies of
letters allegedly sent to his client under certificate of posting.
iii) Steel Authority of India Ltd. Vs. J.C. Budharaja, reported in
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(1999) 8 SCC 122. He submits, this judgment was rendered in
adjudication under Arbitration Act, 1940 but the principle of law
applies. The Court found that the award was passed in disregard of
express terms of the contract and therefore was arbitrary, capricious
and without jurisdiction, as in the case here.
iv) Food Corporation Of India vs M/S.Chandu Construction,
reported in (2007) 4 SCC 697, paragraphs 11 to 13. He submits, this
judgment too was rendered under the Act of 1940, on jurisdictional
error committed by the arbitrator in travelling beyond four corners of
the contract.
6. Mr. Sahu concludes his submission. Mr. Kanungo, learned
senior advocate appearing on behalf of respondent will be heard on
adjourned date.
7. List on 26th April, 2022.
(Arindam Sinha)
Judge
Prasant
