Telangana High Court
The Municipal Corporation Of ... vs R.S. Rangadas And 2 Others on 27 January, 2025
Author: P.Sam Koshy
Bench: P.Sam Koshy, N.Tukaramji
THE HONOURABLE SRI JUSTICE P.SAM KOSHY
AND
THE HONOURABLE SRI JUSTICE N.TUKARAMJI
CIVIL MISCELLANEOUS APPEAL Nos.106 and 215 of 2006
and CIVIL REVISION PETITION Nos.1210 and 1599 of 2006
COMMON JUDGMENT:
(Per Hon'ble Sri Justice N.Tukaramji)
We have heard Mr.B.Adinarayan Rao, learned counsel for
the appellant/respondent No.1 and revision petitioner/petitioner in
C.M.A.No.215 of 2006 and C.R.P.No.1210 of 2006 respectively.
Also heard Mr.Srinivasa Rao Bodduluri, learned counsel for the
appellant/petitioner and revision petitioners/respondent
Nos.1 and 2 in C.M.A.No.106 of 2006 and C.R.P.No.1599 of 2006
respectively.
2. The appeals and revision petitions are against the common
judgment dated 26.09.2005 in O.P.No.30 of 1996 and O.P.No.10
of 2000 passed by the learned XI Additional Senior Civil Judge,
Fast Track Court, City Civil Court, Hyderabad. Thus, these
matters are heard together and are being decided by this
common judgment.
2 PSK,J & NTR,J
Cma Nos.106 and 215 of 2006 and Crp Nos.1210 and 1599 of 2006
3. C.M.A.Nos.215 of 2006 and 106 of 2006 are filed assailing
the decree and judgment dated 26.09.2005 in O.P.No.10 of 2000,
on the file of XI Additional Senior Civil Judge, Fast Track Court,
City Civil Court, Hyderabad.
4. C.R.P.Nos.1210 and 1599 of 2006 are filed challenging the
decree and judgment dated 26.09.2005 in O.P.No.30 of 1996
passed by the XI Additional Senior Civil Judge, Fast Track Court,
City Civil Court, Hyderabad.
5. C.M.A.No.215 of 2006 and C.R.P.No.1210 of 2006 are filed
by the appellant/petitioner/contractor (hereinafter be referred as
'the petitioner/contractor'), whereas C.M.A.No.106 of 2006 filed
by the respondent No.1-Municipal Corporation of Hyderabad and
C.R.P.No.1599 of 2006 filed by the respondent Nos.1 and 2-
Municipal Corporation of Hyderabad and its Chief Engineer
(hereinafter be referred to as 'the respondent Nos.1 and 2').
6. The case facts in brief are that the Municipal Corporation of
Hyderabad, through its Chief Engineer/respondent Nos.1 and 2
have called for tender for construction of Road Over Bridge at
Begumpet level crossing at Hyderabad and on successful bid the
3 PSK,J & NTR,J
Cma Nos.106 and 215 of 2006 and Crp Nos.1210 and 1599 of 2006
work was entrusted to the petitioner/contractor vide agreement
No.3/CE dated 17.12.1981. However, the site was entrusted
even before the date of agreement i.e. on 10.10.1981 and the
construction work of bridge was completed by 20.10.1985. In
regard to unagreed claims, the petitioner/contractor invoked
arbitration clause and filed suit vide O.S.No.126 of 1989 for
appointment of sole Arbitrator. Accordingly, the Arbitrator was
appointed and after due proceedings, the arbitration award was
passed on 28.01.1996 in favour of the petitioner/contractor
granting Rs.89,19,792/- with interest at 18% per annum.
7. Thereupon, the petitioner/contractor instituted O.P.No.30 of
1996 with a prayer to declare the award as Rule of Court. In
contrast, the respondent Nos.1 and 2 filed O.P.No.10 of 2000 with
a prayer to set aside the award on the grounds of Arbitrator
misconducted himself and by not referring to material documents
biasedly passed the award.
8. The Court below on considering the claims of both the
parties passed the impugned common judgment partly allowing
the petition in O.P.No.30 of 1996 by making the award a Rule of
Court excluding the claim for refund of cost of bearings at
4 PSK,J & NTR,J
Cma Nos.106 and 215 of 2006 and Crp Nos.1210 and 1599 of 2006
Rs.8,27,640/-, correspondingly partly allowed the O.P.No.10 of
2000. Aggrieved by the dismissal of claim No.1, the
petitioner/contractor preferred C.M.A.No.215 of 2006 and
dismissal of the petition to make the award Rule of Court to that
extent, filed C.R.P.No.1210 of 2006.
9. On the other hand, the respondent Nos.1 and 2 challenging
the dismissal of their petition to set aside the rest of the award
(i.e. Claim Nos.2, 4 to 11) filed C.M.A.No.106 of 2006 and
correspondingly in awarding the Rule of Court filed
C.R.P.No.1599 of 2006.
10. Learned counsel for the petitioner/contractor would contend
that the Court below fell in error in setting aside the awarded
amount under Claim No.1 and refusing to make that portion of the
award as Rule of Court. He contested that the Court below ought
not have interfered with the award without establishing any of the
factor specified in Section 30 of the Arbitration Act, 1940. He
pleaded that the tender was not called as lump sum but item-wise
and the tenderer was prohibited to include rates or lump sum
amount which is not part of the schedule, as per the Clause
No.17 of the agreement. The schedule-A has specified the items,
5 PSK,J & NTR,J
Cma Nos.106 and 215 of 2006 and Crp Nos.1210 and 1599 of 2006
as such, including the cost of bearings and fixings do not apply as
per Clause No.8 of the special conditions, thus, the
petitioner/contractor's claim is justified. The Court below should
have held that in the case of conflict of Clauses of the agreement,
the general principles of interpretation would be applicable, as
such, Clause No.8 will not have application as it would be
applicable in lump sum contract. The cost of bearings and
fixtures is not included in schedule 'A' of the tender, treating the
cost and fixation of bearings as other work. Therefore, such work
should be treated as additional, and expenses are to be paid by
the respondent Nos.1 and 2. For such reason, the findings of the
Court below in regard to Claim No.1 are contrary to the terms of
contract. Hence, the intervention of the Court below in regard to
Claim No.1 is unsustainable and prayed for setting aside the
rejection of the award in respect of Claim No.1 and to make the
entire award as Rule of Court.
11. Learned counsel for the respondent Nos.1 and 2 would
submit that the Court below failed to consider that the arbitration
award was passed beyond the materials on record. The
Arbitrator ought not to have allowed the claim No.2 on the
6 PSK,J & NTR,J
Cma Nos.106 and 215 of 2006 and Crp Nos.1210 and 1599 of 2006
assumption of escalated rates as the completion of work was
beyond the agreement period. Further, the amplified rates can be
awarded only for balance of total value of work in the agreement
i.e. Rs.1.28 crores minus Rs.93,81,848/-. In addition, the Court
below should have taken into account the material supplied for
the construction constitute 70% of the value, as such, confirming
the award without considering the written submissions of the
respondent Nos.1 and 2 is apparently improper. The Court below
failed to observe that the Arbitrator erred in considering the work
done even after 31.12.1983 while awarding the raised rates. The
Arbitrator erred in accounting the total value of work beyond the
estimated contract value by fixing 13.8%, excess over the
estimated contract value, which is unacceptable as per Clause 59
of the contract. That apart, the petitioner/contractor failed to put
the respondent Nos.1 and 2 on notice about the augmented rates
for balance of work and should have implemented Clause No.69,
which prohibits grant of interest, called upon by the
petitioner/contractor. The Court below should have observed the
Clause No.63 provides for settlement of rates for supplementary
items of work and the petitioner/contractor is bound to execute
supplementary agreement as per Clause No.6 of the general
7 PSK,J & NTR,J
Cma Nos.106 and 215 of 2006 and Crp Nos.1210 and 1599 of 2006
conditions of agreement and the rates to be arrived as per the
formula in that Clause. Further explained that, the schedule 'A' of
the agreement is prescribing the approximate quantities subject to
additions or deductions and for any added quantities the cost is
supposed to be paid as per Clause No.6 of general conditions of
the agreement. Therefore, the award is contrary to the
agreement, for that reason, the arbitral award shall be set aside in
toto and in consequence, the order as to making the award, Rule
of Court.
12. We have carefully considered the submissions of the
learned counsel and perused the materials on record.
13. In the above noted rival contest, the Points fall for
determination are:
1) Whether setting aside the arbitral award
dated 28.01.1996 so far as Claim No.1 by the Court
below is sustainable?
2) Whether the arbitral award passed is liable to be set
aside as contested by the respondent Nos.1 and 2?
3) Whether the impugned judgment is sustainable in the
facts in law?
8 PSK,J & NTR,J
Cma Nos.106 and 215 of 2006 and Crp Nos.1210 and 1599 of 2006
Point No.1 :
14. The petitioner/contractor sought relief by presenting claims
towards (i) refund of cost of bearings; (ii) payment of extra
percentage over rates of agreement; (iii) establishment and
over-head charges; (iv) payment of interest on delayed payments;
(v) supplementary items in respect of works not covered by
agreement; (vi) rates for the items executed over and above
agreement quantities; (vii) general damages on account of loss of
profit; (viii) to (xi) the bill amount due with interest and interest on
the sums due, respectively.
15. The Arbitrator had rejected claim Nos.(iii) and (vii) i.e.
establishment and over-head charges, general damages on
account of loss of profit and allowed the other claims awarding
Rs.89,19,792/- with interest at 18% per annum on all the claims
from the date of completion of work till the date of realization.
The petitioner/contractor has accepted the award.
16. Nonetheless, the respondent Nos.1 and 2/employer
principally agitated the award on the ground of the Arbitrator had
gone beyond the terms of agreement.
9 PSK,J & NTR,J
Cma Nos.106 and 215 of 2006 and Crp Nos.1210 and 1599 of 2006
17. Before proceeding to valuate the merits, it would be
appropriate to call upon the settled position of the Court's
jurisdiction under Sections 30 and 33 of the Arbitration Act, 1940.
18. On this aspect, the Honourable Apex Court in M/s.
S.D.Shinde Tr. Partner vs. Government of Maharashtra and
others 1 in Para Nos.23 and 24 held as follows:
23. It is axiomatic that courts, while adjudging whether
an arbitration award calls for interference has to be
conscious that the arbitrator is the sole judge of facts; unless
an error of law is shown, interference with the award should
be avoided. In Bijendra Nath Srivastava v Mayank
Srivastava 2, it was observed,
"If the arbitrator or umpire chooses to give reasons in
support of his decision it would be open to the court to
set aside the award if it finds that an error of law has
been committed by the arbitrator umpire on the basis of
the recording of such reasons. The reasonableness of
the reasons given by the arbitrator cannot, however, be
challenged. The arbitrator is the sole judge of the
quality of the 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. The court should
approach an award with a desire to support it, if that is
reasonably possible, rather than to destroy it by calling
it illegal. [See Champsey Bhara & Co v Jivraj Baloo
2023 (INSC) 751
1994 Supp (2) SCR 529
10 PSK,J & NTR,J
Cma Nos.106 and 215 of 2006 and Crp Nos.1210 and 1599 of 2006
Spq and Wvg. Co. Ltd. (AIR 1923 PC 66); Jivrajbhai
Ujameshi Sheth v Chintamanrao Balaji (1964 (5) SCR
480); Sudarshan Trading Co v Govt of Kerala (1989 (2)
SCC 38); Raipur Development Authority v Chokamal
Contractors (1989 ((3) SCR 144); and Santa Sila Devi v
Dhirendra Nath Sen (1964 (3) SCR 410)."
24. It is also noteworthy that the scope of jurisdiction of
a court, under Section 30/33 of the Act, never extended
beyond discerning if the award disclosed an "error apparent
on the face of the award" which is an "error of law apparent
on the face of the award and not an error of fact. The error of
law can be discovered from the award itself or from a
document actually incorporated therein." (Refer to Trustees
of Port of Madras v Engineering Constructions3). In the
facts of the present case, the award did not, facially disclose
any error of law; damages were awarded in accordance with
principles embodied in law, and the findings were based on
the evidence placed before the tribunal. The ruling of the trial
courts and the High Court is nothing short of intense
appellate review, which is impermissible in law and beyond
the courts' jurisdiction.
19. In the light of above settled propositions, the case facts on
hand need assessment. In claim No.(i), the petitioner/contractor
prayed for refund of Rs.8,27,640/- towards the cost of bearings
contending that the respondent Nos.1 and 2 deducted the cost of
bearings without any basis.
1995 (Supp 2) SCR 672
11 PSK,J & NTR,J
Cma Nos.106 and 215 of 2006 and Crp Nos.1210 and 1599 of 2006
20. Before the Arbitrator, the claim of the petitioner/contractor
was that the respondent Nos.1 and 2 invited lump sum tender on
Item-wise rate basis incorporating (31) conditions and the
Schedule 'A' covered 27 items. Clause 17 of Tender Notice
reads as follows:
"17. Tenderers offering a percentage deduction from or
increase on the estate amount and, those not submitted in
proper form or in due time will be rejected. Rates of lump
sum amounts for items not called for shall not be included in
the tender. No alteration, which is made by the tenderer in
the contract form, the conditions of contract, the drawings,
specifications, or quantities accompanying same will be
recognized; and if any such alterations are made, the tender
will be void."
In the Schedule 'A', Clause (a) reads as follows:
"(a) The quantities here given are those upon which the
lump sum tender cost of the work is based, but they are
subject to the alterations, omissions, deductions or additions
as provided for the condition of this contract and do not
necessarily show the actual quantities of work to be done.
The unit rates noted below or those governing payments for
extra or deductions for omissions according to the conditions
of the contract, as set forth in the preliminary specification of
A.P.D.S.S. and other conditions or specifications of this
contract."
12 PSK,J & NTR,J
Cma Nos.106 and 215 of 2006 and Crp Nos.1210 and 1599 of 2006
21. As part of Special Conditions for Tenders for Departmental
Design in Clause (8), it is specified that the lump sum amount
quoted must include the cost of bearings for the bridge and the
bearings will not be supplied by the Department.
Additional Condition (6) reads as follows:
6. Tenderers offering a percentage deduction from or
increase in the estimate amount and these not submitted in
the prescribed form in due time will also be rejected. Rates of
lumpsum amounts for items not called for shall not be included
in the tender. No alterations which is made by the tenderer in
the tender form or in the time allowed for carrying out the work
or in the conditions of contract, the drawings specifications or
quantities accompanying the same or containing, other
conditions of any sort will be recognised and, if any such
alterations are made, the tender will be void.
22. The Tender Notice, Schedule 'A', Special and Additional
Conditions were mutually agreed by the petitioner/contractor,
respondent No.2/Chief Engineer and affixed their signatures.
Clause 17 of Tender Notice is clarifying that rates or lump sum
amounts in regard to the items not called for, shall not be included
in the tender and the special condition is prescribing that the lump
sum amount quoted must include the cost of bearings for the
bridge. This stipulation cannot be stretched to read that the
13 PSK,J & NTR,J
Cma Nos.106 and 215 of 2006 and Crp Nos.1210 and 1599 of 2006
petitioner/contractor is prohibited to include the amounts in lump
sum is not included in the schedule.
23. Clause 17 of Tender Notice, Additional Condition (6) and
Preamble of Schedule 'A" are referring to rates of lump sum
amount against the petitioner/contractor's claim that the tender
was an item-wise basis.
24. A harmonious reading of the averments in Clauses are
evidencing that the quote of lump sum amount would include cost
of bearings. But in the Tender, it has been specified that the
items, which are not called for, shall not be included in the
Tender. Therefore, as the Bearing in the bridge is an item called
for as part of lump sum amount, it would be an item in the tender.
As such, the petitioner/contractor would have included the cost of
bearings in the lump sum amount proposed in Tender. For the
aforesaid, the claim of the petitioner/contractor for considering the
bearing as an item not called for, not covered in Schedule 'A' but
made use in execution of contract shall be reimbursed with costs,
is unacceptable.
14 PSK,J & NTR,J
Cma Nos.106 and 215 of 2006 and Crp Nos.1210 and 1599 of 2006
25. That apart, as per the Clause (8) of the Special Condition,
the petitioner/contractor has to bear the expenses of bearings as
part of lump sum quoted amount and as the bearings were
supplied deducting that portion by the respondent Nos.1 and 2
has to be held within the scope of agreement. Reading beyond
terms of contract would certainly be a ground to hold that the
Arbitrator had exercised excess of jurisdiction. In this view, it
shall be held that the Court below had considered this issue in
right perspective. In effect, the conclusion recorded in the
impugned common judgment on this aspect deserves affirmation.
Point No.2:
26. In regard to other claims, though the respondent Nos.1 and
2/employer contested that the material evidence has not been
properly considered by the Arbitrator, failed to make out any
specific case and in the impugned common judgment the Court
below categorically observed that the contentions raised by the
respondent Nos.1 and 2 are pointing to reassessment and
re-appreciation of the cause determined by the Arbitrator.
Further, there is no specific circumstance evidencing the
Arbitrator's misconduct in determining the reference. In absence
15 PSK,J & NTR,J
Cma Nos.106 and 215 of 2006 and Crp Nos.1210 and 1599 of 2006
of error apparent, the Arbitral award shall be final on both facts
and law and intervention is impermissible without substantive
material indicating dissolute exercise of jurisdiction by the
Arbitrator and mere availability of an alternative view is not a
ground to review the award under Sections 30/33 of the
Arbitration Act, 1940.
27. Furthermore, the Court below by citing the settled
propositions in the authorities held that "Regarding quantum of
interest, this Court feels that the rate @ 18% p.a. on the award
amount (except on claim No.1) from the date of completion of
work. But the above rate of interest is permissible, till date of
decree only."
28. To note, the interest granted by the Arbitrator on delayed
payments has been affirmed by the Court below in the impugned
common judgment by reading Section 73 of the Indian Contract
Act, 1872. Therefore, the contentions raised by the respondent
Nos.1 and 2 against the award, interest granted and the findings
of the Court are failing on merit.
16 PSK,J & NTR,J
Cma Nos.106 and 215 of 2006 and Crp Nos.1210 and 1599 of 2006
Point No.3 :
29. For the foregoing reasons, we are of the considered view
that the Court below has rightly exercised its jurisdiction within the
scope of Sections 30/33 of the Arbitration Act, 1940 in
ascertaining the contentions raised by the petitioner/contractor
and the respondent Nos.1 and 2. In the absence of impropriety or
illegality, the impugned common judgment deserves affirmation
and is accordingly confirmed.
30. Resultantly, C.M.A.Nos.106 and 215 of 2006 and
C.R.P.Nos.1210 and 1599 of 2006 are dismissed. There shall be
no order as to costs.
As a sequel, pending miscellaneous applications if any,
stands closed.
_______________
P.SAM KOSHY, J
_______________
N. TUKARAMJI, J
Date : 27.01.2025
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