Union Of India vs M/S Maheshwari Enterprises ...
2023 Latest Caselaw 1289 Raj

[2023/RJJD/004202]

      HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
                       JODHPUR
                D.B. Civil Misc. Appeal No. 1748/2022

Union Of India, Through HQ Chief Engineer, Military Engineering
Service, Jodhpur Zone, Pin 900066 C/o 56 APO
                                                                   ----Appellant
                                    Versus
M/s    Maheshwari     Enterprises,         1St    'C'    Gole    Building   Road,
Sardarpura, Jodhpur (Raj.), Through Its Authorised Signatory.
                                                                 ----Respondent


For Appellant(s)          :     Mr. Muktesh Maheshwari
For Respondent(s)         :     Mr. R.K. Purohit


            HON'BLE MR. JUSTICE SANDEEP MEHTA
              HON'BLE MS. JUSTICE REKHA BORANA
                                 Judgment
03/02/2023

BY THE COURT : (PER HON'BLE BORANA, J.)

The present appeal has been preferred against the order

dated 12.05.2022 passed by the Commercial Court No.1, Jodhpur

(hereinafter referred to as 'the learned Court below') whereby the

objections under Section 34 of the Arbitration and Conciliation Act,

1996 (for short 'the Act of 1996') preferred by the appellant-Union

of India against the arbitral award dated 29.04.2019 have been

rejected.

The facts of the case are that some disputes arose between

the parties, out of the contract executed between them for the

work CA NO CEJZ/JODH/25/2004-05: PROVN OF DEF OTM

ACCN FOR 12 CORPS ARMY AVN BASE OF RALAWAS AT

JODHPUR. For resolution of the disputes as arisen, the sole

Arbitrator was appointed who entered into reference vide his letter

dated 24.11.2017. Vide the award dated 29.04.2019, the learned

[2023/RJJD/004202] (2 of 6) [CMA-1748/2022]

Arbitrator proceeded on to allow four claims and reject four claims

out of the eleven claims raised by the claimant. Three claims were

withdrawn by the claimant. Therefore, objections qua the allowed

four claims were filed by the Union of India before the learned

Court below. The learned Court below proceeded on to reject all

the objections as preferred by the appellant-Union of India against

which the present appeal has been preferred.

Only two grounds have been raised in the present appeal,

firstly that the learned Arbitrator has erred in entertaining the

total time barred claims and in rejecting the objections of the

Union on the said issue. Secondly, that the award qua Claim No.2

had been wrongly allowed by the learned Arbitrator in favour of

the claimant totally in contravention of Condition No.7 of the

contract.

First ground raised by learned counsel for the appellant is

that the claims regarding escalation amount (Claim No.1) as well

as the losses due to delay in payment of final bill (Claim No.10)

were grossly time barred and therefore, could not have been

entertained by the learned Arbitrator.

A perusal of the order impugned reveals that the learned

Court below has specifically observed that the final bill was paid to

the claimant by the respondent-Union on 15.10.2014 and

subsequently, during pendency of the arbitral proceedings, the

amount of Rs.5,94,564/- was paid on 22.02.2019. Prior to

22.02.2019, the amount as claimed by the claimant was never

denied to be paid by the respondent-Union. It is only on

22.02.2019 that a part payment of Rs.5,94,564/- was made and

the payment of remaining amount as claimed was denied. Prior to

[2023/RJJD/004202] (3 of 6) [CMA-1748/2022]

this payment, the same was never denied rather proceedings for

computation of the amount payable were being undertaken by the

Department. Therefore, the limitation, if any, would commence

only on/after 22.02.2019 when the remaining claim of the

claimant was denied by the respondent-Union.

Further, learned Court below has observed that the ground of

the claims being time barred was never raised by the Union before

the learned Arbitrator but still the question of limitation being a

ground based on public policy, the same was being entertained

and adjudicated. After a thorough analysis of the fact, the learned

Court below held that the claims of the claimant were within the

limitation as provided in terms of law.

A perusal of the record shows that the stipulated dates of

commencement of work in question were 18.02.2005 (Phase I)

and 18.02.2005 (Phase II) respectively. The stipulated dates of

completion of work were 17.11.2005 (Phase I) and 17.11.2006

(Phase II) respectively. However, the work of Phase II could not be

completed in stipulated time and the same was extended four

times by the Union. Ultimately, the work was completed on

17.11.2005 (Phase I) and 05.02.2009 (Phase II) respectively. The

final bill qua the work was submitted by the claimant on

25.12.2010 which remained under consideration and kept on

travelling from one officer of the Department to another for a

period of more than 4 years. The final bill as passed by the

Department was accepted by the contractor 'under protest' and

the same was ultimately paid on 15.10.2014. Thereafter, the

question as to - 'whether the escalation amount as claimed by the

contractor was to be deducted or not' remained under

[2023/RJJD/004202] (4 of 6) [CMA-1748/2022]

consideration with the Department and in the meanwhile, the

dispute was referred to the Sole Arbitrator. The claim was

preferred by the claimant on 22.07.2017 and that by the Union

was filed on 04.07.2017. The learned Arbitrator entered into

reference on 24.11.2017.

From an analysis of the overall facts, it is clear that by any

angle, the cause of action, if any, for the claims arose to the

claimant on 15.10.2014 when the payment of final bill was made

to him. As per the record, the claims were raised by the claimant

on 22.07.2017 i.e. within a period of 3 years of 15.10.2014. It is

clear that the dispute, if any, arose between the parties only after

the payment of final bill to the contractor i.e. on 15.10.2014. The

claims had been raised by the contractor clearly within a period of

3 years of the said date and the same were specifically within the

limitation. So far as the payment of Rs.5,94,564/- on 22.02.2019

during the arbitral proceedings is concerned, the same is clearly a

further acknowledgment of the claim of the claimant and

therefore, the same definitely gave further period of limitation to

the claimant to raise its claim qua the unpaid amount regarding

the said claim. By all means, the claim of the claimant cannot be

termed to be time barred and therefore, the finding of the learned

Court below cannot be interfered with.

The second ground has been raised regarding Claim No.2

qua the 'losses due to omission of construction of Watch Tower'

towards which, an amount of Rs.1,51,200/- with interest @9%

has been awarded by the learned Arbitrator. It has been submitted

by learned counsel for the appellant that Condition No.7 of the

agreement/General Conditions of Contract specified/authorised for

[2023/RJJD/004202] (5 of 6) [CMA-1748/2022]

variation of the work by the Accepting Officer. Therefore, the claim

qua the losses due to omission of construction of Watch Tower

could not have been awarded to the claimant. Learned counsel

submitted that during the course of execution of the work, it was

found by the Authorised Officer that the Watch Tower was not

required to be constructed and therefore, the same was directed

not to be constructed. The said act was within the power of the

Accepting Officer in terms of Condition No.7 of the contract, which

provides as under :

"The Accepting Officer, or person specifically authorized by him on his behalf, may vary by the way of addition to and/or deduction from the work so described provided that the contract sum be not thereby varied on the whole by more than percentage set out in the tender documents."

A perusal of the above condition makes it clear that the

Accepting/Authorised Officer could have varied the terms of the

contract to the extent permissible under the terms of the contract.

The said authorisation or power of the Officer is not disputed but

if, in terms of the conditions of the contract, any work is

undertaken by a contractor prior to the same being varied, he

cannot be denied the amount qua the costs incurred by him for

completion of the said amount of work. Admittedly, in the present

case, the fabrication of two Watch Towers by using 4400 Kgs steel

had already been carried out by the claimant prior to the

communication of letter dated 13.10.2008 whereby, he was

directed not to execute the work of construction of Watch Towers.

Admittedly, the letter dated 13.10.2008 was issued after a lapse

of more than 3 years from the date of commencement of the

work. So far as the fabrication of two Watch Towers is concerned,

[2023/RJJD/004202] (6 of 6) [CMA-1748/2022]

the same was recorded in the Measurement Book/Work Diary and

has also not been denied by the respondents. In view of the

admitted facts, the firm was very much entitled for payment of

costs which had already been incurred by it till that date and the

same cannot be denied to it on the basis of a letter communicated

to it after the completion of the said amount of work. Therefore,

the amount as awarded in favour of the claimant by learned

Arbitrator qua Claim No.2 after deduction of the amount equal to

the scrap value cannot be said to be in contravention of any

condition of the contract and the same has therefore, rightly been

affirmed by the learned Court below.

No other ground has been raised in the present appeal.

In view of the above observations, this Court is not inclined

to interfere with the order dated 12.05.2022 or the arbitral award

dated 29.04.2019.

The appeal being devoid of merit is therefore, dismissed.

The stay petition as well as all pending applications also

stand dismissed.

                                   (REKHA BORANA),J                                        (SANDEEP MEHTA),J
                                    18-Vij/-









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