AO/90/2023
2023 Latest Caselaw 662 UK

      IN THE HIGH COURT OF UTTARAKHAND
                  AT NAINITAL
        THE HON'BLE THE CHIEF JUSTICE SRI VIPIN SANGHI
                               AND
            THE HON'BLE SRI JUSTICE ALOK KUMAR VERMA

               APPEAL FROM ORDER NO. 89 OF 2023

                          17TH MARCH, 2023

Between:

M/s Kaushalya Contractors
and Developers Pvt. Ltd.                  ......          Appellant

and

B.H.E.L. and another                      ......        Respondents

AND

APPEAL FROM ORDER NO. 90 OF 2023

Between:

M/s Kaushalya Contractors and Developers Pvt. Ltd. ...... Appellant

and

B.H.E.L. and another ...... Respondents

Counsel for the appellant(s) : Mr. Aditya Pratap Singh, learned counsel

Counsel for the respondents : Mr. V.K. Kohli, learned Senior Counsel assisted by Mr. Kanti Ram Sharma, learned counsel

The Court made the following:

JUDGMENT: (per Hon'ble The Chief Justice Sri Vipin Sanghi)

Both these petitions, under Section 37 of the

Arbitration and Conciliation Act, are directed against the

common judgment and order dated 01.02.2023, rendered

by the Commercial Court, Dehradun, in Arbitration Case

No. 114 of 2018, C.G. No. 42 of 2022, as well as

Arbitration Case No. 246 of 2019, C.G. No. 41 of 2022,

respectively, whereby the objections to the Arbitral Award

dated 05.09.2018, rendered by the sole Arbitrator Shri

Suresh Kumar Bajaj, have been allowed, and the Award

has been set aside on the ground that the Award is

unreasoned.

2) We can do no better then to set out the Award

itself to demonstrate that the Award, is, infact, completely

unreasoned.

"ARBITRATION AWARD

IN THE MATTER OF ARBITRATION

BETWEEN

Kaushalya Contractors & Developers Pvt. Ltd.

......CLAIMANT

And

BHEL, (CFFP), Ranipur, Haridwar

......RESPONDENT

AWARD

This award is made on 5th September, 2018.

Whereas, vide a contract dated 3rd April 2008, between the claimant i.e. Kaushalya Contractors & Developers of the one part and the respondents BHEL (CFFP) on the other part. The claimant was to carry out the Extension of Steel Foundry on Eastern and Western sides and also the Extension of Heavy Machine Shop in CFFP, Haridwar amounting to Rs.2,23,79,427.09 and the work order agreement was drawn on 3rd April, 2008. In addition, the service tax @ 2% or as per statutory requirements on overall cost of the work was to be paid by BHEL. The claimant stated that nature of work was extension of running plant by construction of heavy foundation, fabrication and construction of heavy steel structures. The claimants were to provide labour and some material for the execution of work whereas the main construction materials like cement, reinforcement and structural steel, T&P, machines etc. required for the work were to be arranged and supplied by CFFP free of cost. The stipulated time for completion of the work was 12 months.

The claimant stated that respondent never supplied timely materials nor machines required as per the agreement. The claimant further stated that the respondent without resolving bottlenecks and obstacles at site kept on pressurizing for the progress of the work which was not possible. The claimant also stated that the respondents never made the payments of running bills on time.

Whereas, the dispute arose between the parties to the contract. I was appointed as an Arbitrator vide communication dated 15.10.2011 in the aforesaid dispute. Pursuant to the procedural directions issued by me vide communication dated 30.11.2011. The parties submitted their claims, the statement of defense, counter claims and rejoinder.

Whereas, I heard the parties at length on the sittings held at Administrative buildings of the respondent company at Ranipur, Haridwar and afforded full opportunity to both the parties and followed the principles of natural justice. Whereas, after hearing both the parties and after hearing the respective submissions of the parties and perusal of the documents / written submissions and evidences on records, I proceed to decide the respective cases of the parties herein as under.

Claimant's Case

Claim 1: Payment of final bill as per work executed at site.

Payment of final Bill of Rs.797,055/- + Rs 170,569/- against extra work done and certified in the annexure C- 73 maybe released as already certified by the respondents. Total amount 9,67,624/- to be paid subject to fulfilling the legal formalities by the claimants if any.

Claim 2: Release of security amount deposited either in the shape of DD, FDR or Deducted from the R.A. Bills

Security deposits of Rs. 12,68,972/- to be paid as per clause 16(a) of the contract. Also an additional amount of Rs.321,584/- deducted through RA bills is also to be refunded to the claimants.

Claim 3: Reimbursement of Liquidated Damages illegally received by the Respondents of Rs.22,37,943/-

Since the responsibility of delay in the works solely by the claimants could not be established by the Respondents and hence the LD deducted for Rs.22,37,943/- is also to be refunded to the Claimants.

Claim 4: Reimbursement of deductions illegally made out of second RA bill dated 04.08.2008 and 4th RA bill 21.11.2008.

The amount of Rs.26,700/- and Rs.27,900/- were deducted by the Respondents against the repair charges

for optical fiber cable damages. This was informed to the Claimants vide letter PMG/75 dated 01.07.2008 and PMG/75 dated 12.07.2008 and PMG/169 dated 12.12.2008

Hence the claim is not admissible.

Claim 5: Rent charges of welding machines arranged by the Claimants

Welding machines for Fabrication purposes are to be arranged by the Claimants as per the contract conditions. However, Respondents provided 8 welding machines for the errection purposes which are more than sufficient for the purpose.

Hence the claim is not tenable.

Claim 6: Losses suffered by the Claimants due to labor and machines remaining idle.

As this was a works contract where the Claimants had to arrange resources like manpower tools and plant as per his own plan to complete the work so the resources lying idle is the responsibility on the part of the Claimants.

So, the claim is not admissible.

Claim 7: Claim for escalation of rate of labor and construction material

As per the clause 26 of special condition to the contract, the contractors is not entitled for any escalation.

The claim is not admissible.

Claim 8: Loss of contractor profit on balance work

There is no provision in the contract to substantiate the claim.

Hence the claim can not be admitted.

Claim 9: Interest on pending dues of the Claimant

Simple interest @ 10% to be paid for the delayed payment of final bill of Rs.9.67,624/- and also for the extra amount of security deducted i.e. Rs.3,21,584/- from the day of my appointment as arbitrator in the case i.e. 30.11.2011 till the amount is settled. No interest on LD amount can be admissible as the case is being decided now.

Claim 10: Cost of Arbitration

The cost of arbitration is to be shared equally by both the parties.

Respondent's Case

Claim 1: Compensation for extra days of the crane used

There is no provision in the contract for the same and also there is no written notice given to the Claimants to this respect.

Hence the claim is not tenable.

Claim 2: Cost of welding machine issued to the contractor

Again, this is not covered in the terms of contract and hence not admissible.

Claim 3: Loss of Profit to BHEL due to non-completion of the Extension of Steel Foundry

It is not covered within the terms and conditions of the contract.

Hence the claim cannot be admitted.

Claim 4: Loss of Profit to BHEL due to non-completion of Extension of Heavy Machine Shop

There is no provision in the contract to this effect. Hence the claim is rejected.

Claim 5: Interest on amount paid to the Claimants as running bills for incomplete work which was of no use to BHEL as it was not complete

There is no provision in the contract to substantiate the claim.

Hence the claim is not tenable.

Claim 6: Interest on the amount spent by BHEL on Steel which was brought to the site but could not be put to use due to non-completion of the work by the Claimant contractor

There is no condition in the contract to substantiate this claim.

Hence the claim cannot be accepted.

Cost of litigation / Arbitration is to be shared equally by both the parties.

                        Summary of Award

     A.    Claims:

1. Payment of final bill plus the extra work done and certified by the respondent for Rs.9.67,624/- to be paid to the Claimants by the Respondents subject to clearance of any legal formalities left by the Claimants if any.

2. Release of security deposit of Rs.12,68,972/- to be made to the Claimants. And an extra deduction of security amount of Rs.3,21,584/- by the respondents is also to be refunded to the claimants.

3. Refund of Liquidated Damages deducted from the running bills of the Claimants for the amount of Rs.22,37,943/- is to be paid to the Claimants.

4. The simple interest @ 10% on the amount of final bill of Rs.9,67,624/- and on the extra security amount Rs.3,21,584/-deducted to be paid to the

claimant with effect from 30.11.2011 till the date of realization.

B. Counter Claims:

No counter claim is admissible for any payment.

Sd/-

Suresh Kumar Bajaj

Sole Arbitrator"

3) The submission of Mr. Singh, learned counsel for

the appellant is that the parties have been set at knot after

11 years, since the learned Arbitrator entered into the

reference in 2011. There is nothing that this Court can do

about the loss of time.

4) Both the appeals are dismissed, leaving it open

to the parties to agitate their claims in such other

proceedings, as may be permissible in law.

________________ VIPIN SANGHI, C.J.

_________________ ALOK KUMAR VERMA, J.

Dt: 17th MARCH, 2023 Negi