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1996 DIGILAW 65 (BOM)

Municipal Corporation of Greater Bombay v. Ghanekar Construction Company Pvt. Ltd.

1996-02-08

S.M.JHUNJHUNUWALA

body1996
JUDGMENT - S.M. JHUNJHUNUWALA, J. :---By this petition, the petitioners seek to have the Award dated 7th December, 1989 filed in this Court and numbered as 'Award No. 27 of 1990' set aside. 2. The petitioners are the Municipal Corporation of Greater Bombay, a body Corporate established under The Bombay Municipal Corporation Act, 1888. The respondents are a Private Limited Company duly incorporated and registered under the provisions of The Companies Act, 1956. The respondents carry on business at Bombay. 3. The petitioners had invited tenders for 'Providing and laying 700 mm dia. C.I. Rising mains from Banganga Pumping Station along the Bhagwanlal Indrajit Road with the proposed balancing Chamber along Keshavrao Khadye Marg, Bombay' (for short, 'the said work'). The tender of the respondents for the said work was accepted and contract was entered into by and between the petitioners and the respondents in respect of the said work. On 24th October, 1980, a formal Contract Agreement was entered into by and between the petitioners and the respondents in respect of the said work on the terms and conditions mentioned therein. The work under the said Contract related to excavation in rock for the purpose of laying down the pipelines. Under the said Contract, rates for excavation in the soil and the rock were fixed. The term of the said Contract relevant to the controversy involved in the petition reads as under:- Sr. Item Qty. Rate Unit Amount No. Per Rs. Ps. (1) (2) (3) (4) (5) (6) 1. Excavation in any material upto a depth of 2M. without shoring as directed including bailing or pumping out water using any number of pumps of any power and for any length of time singly or in combination cutting down rank vegetation, refilling, watering, fencing, lighting, watching, removing surplus excavated material anywhere in city wards and levelling the same etc. complete as specified and as directed. 375 C.M. 9.00 C.M. 3,375.00 2. Excavation in any material upto a depth of 2M. with shoring as directed, including bailing or pumping out water using any number of pumps of any power and for any length of time singly or in combination cutting down rank vegetation refilling, watching removing excavated material anywhere in city wards and levelling the same etc. complete. 16910 C.M. 21.00C.M. 3,55,110.00 3. --- do --- 2 M. to 3 M. depth, do--do 8460 C.M. 25.0C.M 2,11,500.00 4. complete. 16910 C.M. 21.00C.M. 3,55,110.00 3. --- do --- 2 M. to 3 M. depth, do--do 8460 C.M. 25.0C.M 2,11,500.00 4. --- do --- 3 M to 5 M. -do- depth. 4425 C.M. 32.00C.M. 1,41,600.00 5. --- do --- from 5 M. to 6 M. depth. 185 C.M. 43.00C.M. 7,955.00 NOTE: The work of excavation in any type of rock, ordinary as well as extra ordinary hard, shall be carried out by blasting, wedging or chiselling. In case, where the police / Municipal Authorities do not permit blasting excavation in any type of rock will have to be done by wedging and/or chiselling without any extra cost and also if it is required to use compressor etc., it will have to be done without any extra cost whatsoever over and above the rate of excavation for rock. 6. Extra over above rates for excavation in rock by any means i.e. by blasting, wedging or chiselling or by using compressor. 1307CM. 35.00C.M. 4,57,450.00 11,76,990.00 4. Before commencement of the said work, the respondents had requested the petitioners to recommend to the police authorities for grant of blasting licence to the respondents. Though the petitioners had issued recommendatory letter, the police authorities refused to grant the requisite blasting licence to the respondents. While executing the said work, the respondents came across extremely hard rock which could not be excavated or removed except by using the equipment required to be imported by the respondents. The respondents imported rock splitting equipment called 'Darda Hydraulic Rock Splitting Equipment' (for short, 'the said equipment') for importation whereof, the petitioners assisted the respondents in obtaining import licence. In respect of the work carried out by the respondents by using the said equipment, the respondents claimed extra amount from the petitioners. Correspondence subsequently ensued between the petitioners and the respondents and the meetings were also held between the officers of the petitioners and the representatives of the respondents. Ultimately, on 23rd April, 1987, a letter was addressed by the Chief Engineer (Severage Project) of the petitioners to the Sole Arbitrator (for short, ' the Arbitrator') intimating that the Municipal Commissioner of the petitioners was pleased to appoint him as the Arbitrator and that the respondents had consented to such appointment. Ultimately, on 23rd April, 1987, a letter was addressed by the Chief Engineer (Severage Project) of the petitioners to the Sole Arbitrator (for short, ' the Arbitrator') intimating that the Municipal Commissioner of the petitioners was pleased to appoint him as the Arbitrator and that the respondents had consented to such appointment. By mutual consent of the petitioners and the respondents as recorded in the said letter, the Arbitrator was requested to decide the dispute which had arisen between the petitioners and the respondents in respect of the work of excavation in rock carried out by the respondents by using the said equipment. The term of the reference to the Arbitrator was as under:--- "whether the Corporation is liable to pay any extra amount to Messrs. R.N. Ghanekar Co. Concrete Works Pvt. Ltd. for excavation in rock wherever the contractors have used rock splitting equipment for excavation in rock and the Arbitrator to decide the amount to be paid, if any" By the said letter, the Arbitrator was requested to communicate the time required for submitting his decision and the terms of payment of his fees. The Arbitrator accepted the appointment and agreed to act as Arbitrator in the reference made to him. By his letter dated 8th May, 1987, the Arbitrator directed the petitioners and the respondents to file the pleadings before him. The respondents were directed to file their Statement of Claims, the petitioners were directed to file their written statement in reply and the respondents were directed to file their rejoinder thereto. 5. Alongwith their letter dated 18th May, 1987, addressed to the Arbitrator, the respondents submitted their Statement of Claims along with copies of certain documents on which the respondents intended to rely and furnished a copy thereof to the petitioners. Alongwith their letter dated 14th July, 1987, the petitioners filed their written statement in reply to the statement of claims of the respondents together with copies of documents relied upon by the petitioners and furnished a copy thereof to the respondents. Alongwith their letter dated 14th August, 1987 the respondents submitted to the Arbitrator their Rejoinder to the written statement of the petitioners alongwith copies of certain further documents and furnished a copy thereof to the petitioners. Before the Arbitrator neither party desired to lead any oral evidence. Alongwith their letter dated 14th August, 1987 the respondents submitted to the Arbitrator their Rejoinder to the written statement of the petitioners alongwith copies of certain further documents and furnished a copy thereof to the petitioners. Before the Arbitrator neither party desired to lead any oral evidence. Both the petitioners and the respondents stated before the Arbitrator that they did not wish to lead any oral evidence and that they would be relying only upon documentary evidence. Before the Arbitrator, both the petitioners and the respondents were duly represented by their respective legal advisers. In all 39 meetings were held before the Arbitrator to hear the said reference. The Arbitrator gave full opportunity to the parties to present their respective case and make submissions. The hearing of the reference was closed on 15th November, 1989 after due notice to the parties. The time for making of the award was extended by mutual consent of the parties till 31st December, 1989. 6. Before the Arbitrator, both the petitioners and the respondents had produced copies of the correspondence and other documents on which reliance was placed by them. The respective advocates representing the parties made legal submissions and extracts from books relied upon by them were also produced before the Arbitrator. Oral arguments were advanced in detail. After carefully considering the pleadings filed before the Arbitrator, the documentary evidence produced by both the parties and the elaborate arguments advanced before him and also taking into consideration the provisions of the said Contract Agreement entered into by and between the parties hereto, the Arbitrator made his award on 7th day of December, 1989 awarding to the respondents herein the sum of Rs. 10,79,523/- in full and final settlement of the claims of the respondents against the petitioners referred for adjudication of the Arbitrator. The said Award made by the Arbitrator has been filed in this Court and numbered as 'Award No. 27 of 1990. The present petition has been filed by the petitioners to have the said Award set aside. 7. Mr. Dalal, learned Counsel for the petitioners, has submitted that the Arbitrator misconducted himself and the proceedings before him in making the said Award. In the submission of Mr. The present petition has been filed by the petitioners to have the said Award set aside. 7. Mr. Dalal, learned Counsel for the petitioners, has submitted that the Arbitrator misconducted himself and the proceedings before him in making the said Award. In the submission of Mr. Dalal, the above quoted term in the said contract prescribed the rates at which the payments were to be made by the petitioners to the respondents in respect of excavation in any material upto a depth of 2 M. without shoring and with shoring as also the rate of extra payment for excavation in rock and by awarding the amount in excess of the contracted rate for extra payment, the Arbitrator has ignored the express term of the said Contract and exceeded his jurisdiction and has misconducted himself and the proceedings before him. Mr. Dalal has further submitted that the Arbitrator was bound by the express terms of the said contract and it was not permissible for him to ignore the express term of the said contract. Mr. Dalal also submitted that the claim made by the respondents against the petitioners fell within the excepted matters by reason of Clause 7 of the General Conditions of Contract made applicable and as such, the Arbitrator had no jurisdiction to arbitrate in respect thereof. Mr. Dalal further submitted that the view taken by the Arbitrator is a biased one and the said Award is null and void. In support of his submissions, Mr. Dalal has put reliance on the judgments of the Supreme Court and this Court in cases of: (1) (Thawardas Pherumal another v. Union of India)1, A.I.R. 1955 S.C. 468; (2) (M/s. Alopi Prasad v. Union of India)2, reported in A.I.R. 1960 S.C. 588; (3) (Jivarajbhai Ujawshi Sheth others v. Chintamanrao Balaji others)3, reported in A.I.R. 1965 S.C. 214; (4) (K.P. Ponlose v. State of Kerala another)4, reported in A.I.R. 1975 S.C. 1259; (5) (Continental Construction Co. Ltd. v. State of Madhya Pradesh)5, reported in A.I.R. 1988 S.C. 1166; (6) (Vishwanath Sood v. Union of India another)6, reported in A.I.R. 1989 S.C. 952; (7) (Associated Engineering Co. v. Government of Andhra Pradesh another)7, reported in A.I.R. 1992 S.C. 232; (8) (Trustees of the Port of Madras v. Engineering Constructions Corpora tion Ltd.)8, reported in A.I.R. 1995 S.C. 2423; (9) (Union of India v. M/s. Ajit Mehta Associates, Pune others)9, reported in A.I.R. 1990 Bom. v. Government of Andhra Pradesh another)7, reported in A.I.R. 1992 S.C. 232; (8) (Trustees of the Port of Madras v. Engineering Constructions Corpora tion Ltd.)8, reported in A.I.R. 1995 S.C. 2423; (9) (Union of India v. M/s. Ajit Mehta Associates, Pune others)9, reported in A.I.R. 1990 Bom. 45 : 1989(3) Bom. C.R. 535; (10) Unreported Judgment of Division Bench of Bombay High Court in Appeal No. 733 of 1992 decided on 10th February, 1994, (The Municipal Corporation of Greater Bombay v. M/s. Asian Techs. Ltd.)10. 8. Mr. Sathe, learned Counsel for the respondents, has supported the said Award and submitted that the said Award is proper, valid, legal and binding on the parties hereto. Mr. Sathe has further submitted that the Arbitrator has neither ignored the express term of the said Contract nor exceeded his jurisdiction nor misconducted himself or the proceedings before him. Mr. Sathe has also submitted that since the claim of the respondents was not based in variance of the terms of the said contract, the Arbitrator has acted within the parameters of his jurisdiction in awarding the same to the extent awarded to the respondents. Mr. Sathe has also submitted that the question of interpretation of the said item at Sr. No. 6 in the 'Note' to the term in the said Contracted quoted above was specifically referred to the Arbitrator and as such, it was a question of law specifically referred to him and the decision of the Arbitrator on the question of law referred is binding on the parties hereto more particularly since the view taken by the Arbitrator is a possible or plausible view. Mr. Sathe also submitted that the Arbitrator neither had biased approach nor there was any merit in the allegation of the petitioners that the Arbitrator was biased against the petitioners. Mr. Sathe further submitted that the claim of the respondents against the petitioners did not fall in the category of 'excepted matters'. In support of his submissions Mr. Sathe has put reliance on the judgments of the Supreme Court in the cases of: (1) (State of Andhra Pradesh v. R.V. Rayanim)11, reported in A.I.R. 1990 S.C. 626; (2) (Hindustan Construction Co. Ltd. v. State of Jammu Kashmir)12, reported in A.I.R. 1992 S.C. 2192; (3) (Gujarat Water Supply Severage Board v. Unique Erectors (Gujarat) P. Ltd. another)13, reported in A.I.R. 1989 S.C. 973; (4) (Tarapore Co. Ltd. v. State of Jammu Kashmir)12, reported in A.I.R. 1992 S.C. 2192; (3) (Gujarat Water Supply Severage Board v. Unique Erectors (Gujarat) P. Ltd. another)13, reported in A.I.R. 1989 S.C. 973; (4) (Tarapore Co. v. State of M.P.)14, reported in (1994)3 S.C.C. 521 ; (5) (Bijendranath Srivastava v. Mayank Srivastava)15, reported in (1994)6 S.C.C. 117; (6) (Food Corporation of India v. Great Eastern Shipping Co. Ltd.)16, reported in 1995(2) Mah.L.J. 587 9. Both the learned Counsel have relied upon several authorities in support of the submission made. There is no dispute as to the legal propositions laid down by the authorities relied upon by the leaned Counsel. The issue involved is, however, in a narrow compass. The 'Note' to the above quoted term in the said Contract specifies the extra rate at which payment in excess of the rates earlier mentioned therein could in specified circumstances be made. As per this 'Note', the work of excavation in any type of rock ordinary as well as extra ordinary hard was required to be carried out by blasting, wedging or chiselling. In case where the Police/Municipal Authorities did not permit blasting, excavation in any type of work was required to be done by wedging and/or chiselling and if required by use of compressors without any extra cost. However, payment at extra rate of Rs. 35/- per C.M. was agreed to be made by the petitioners to the respondents for excavation in rock by means of blasting, wedging or chiselling or use of compressor as mentioned therein. This term specifying extra rate at Rs. 35/- per cu. meter did not cover all eventualities and as such, payment in excess of extra rate of 35/- per cu. meter could, in given circumstances, be made for excavation in rocks. As mentioned at Sr. No. 6 in the said 'Note', if the excavation in rock was carried out by blasting, wedging, chiselling or by use of compressor, the petitioners were liable to pay at the extra rate of Rs. 35/- per C.M. over the rates specified in the said quoted term. Therefore, when the excavation in rock was not carried out by blasting, wedging, chiselling or by use of compressor but by adopting any other method or means then the extra rate of Rs. 35/- per cu. meter mentioned at Sr. No. 6 in the said 'Note' was not applicable. Therefore, when the excavation in rock was not carried out by blasting, wedging, chiselling or by use of compressor but by adopting any other method or means then the extra rate of Rs. 35/- per cu. meter mentioned at Sr. No. 6 in the said 'Note' was not applicable. Since the excavation in the hard rock was not carried out by blasting, wedging, chiselling or use of compressor but by the use of the said splitting equipment which was specifically imported for the said purpose, the respondents made demand for extra payment from the petitioners, the liability in respect whereof was disputed by the petitioners. 10. According to the respondents, the officers of the petitioners were agreeable for extra payment to be made to the respondents for carrying out the excavation work in rooks whereas, according to the petitioners, no such agreement was arrived at. In the present proceedings, it is not for this Court to decide whether such an agreement was or not arrived at by and between the parties. By the said letter dated 27th April, 1987, address by the Chief Engineer (Severage Project) of the petitioners to the Arbitrator, the reference to the Arbitrator was by consent despite the said Clause 7 of the general conditions of contract. In the circumstances, there is no merit in the submission now made on behalf the petitioners that the claim of the respondents was in the category of the excepted matters or that the same could not be referred to Arbitration or that the Arbitrator had no jurisdiction in the matter. The claim for the extra payment was in fact agreed to be referred and referred to arbitration with the consent of the petitioners. The said letter dated 27th April, 1987 addressed by the Chief Engineer to the Arbitrator records the agreement between the petitioners and the respondents for referring the claim of the respondents against the petitioners for extra payment to arbitration and hence, the Arbitrator had the jurisdiction to arbitrate in or upon or in respect thereof. 11. The said Award of the Arbitrator is made neither in contravention or breach of the express terms of the said Contract nor by ignoring the express term of the said Contract in granting the claim of the respondents to the extent it has been awarded to the respondents. 11. The said Award of the Arbitrator is made neither in contravention or breach of the express terms of the said Contract nor by ignoring the express term of the said Contract in granting the claim of the respondents to the extent it has been awarded to the respondents. The item serially at 6 in the 'Note' to the above quoted term in the said contract permitted payment at the extra rate of Rs. 35/- per cu.meter over the rates mentioned therein if excavation in rock was carried out by means of blasting, wedging or chiselling or use of compressor. However, when the excavation in the rock was carried out by the respondents not by means of blasting, wedging or chiselling or use of compressor but by other mode or means viz., by use of the said splitting equipment specially imported for the said purpose, the entitlement of the respondents for extra payments was not restricted to the extra rate of Rs. 35/- per cu.meter mentioned therein. In these circumstances, the issue as to whether the petitioners were liable to make payment of extra amount to the respondents for excavation in rock wherever the respondents had used the rock splitting equipment was by consent referred to arbitration and the Arbitrator was to decide the factum and extent of the petitioners' liability in regard thereto. (emphasis supplied). In the facts of the case, it was for the Arbitrator to decide the liability of the petitioners for payment of extra amount over the agreed rates in respect of excavation in rock carried out by the respondents by means of rock splitting equipment. After taking into consideration the pleadings of the parties, the documentary evidence produced and arguments advanced before him, the Arbitrator was satisfied that the respondents did carry out excavation in rock by means of splitting equipment to the extent, on facts, determined by him and ascertained the liability of the petitioners in this regard for being paid by the petitioner to the respondents at Rs. 10,79,523/-. The Arbitrator exercised the jurisdiction with which he was vested by mutual consent of the petitioners and the respondents without exceeding his authority. The terms of reference to the Arbitrator did not limit his jurisdiction to decide the claim of the respondents as per the terms of the said contract. 10,79,523/-. The Arbitrator exercised the jurisdiction with which he was vested by mutual consent of the petitioners and the respondents without exceeding his authority. The terms of reference to the Arbitrator did not limit his jurisdiction to decide the claim of the respondents as per the terms of the said contract. The Arbitrator has neither ignored the terms of the said contract nor acted in breach or contravention thereof. There is no misconduct on the part of the Arbitrator. The Arbitrator has not misconducted the proceedings before him. The approach of the Arbitrator in awarding the amount to the extent awarded to the respondents is not biased. In the said Award made by the Arbitrator. I find no infirmity. 12. The ambit and scope of challenge to an award under section 30 of The Arbitration Act, 1940 has now been laid down by the catena of decisions of the Supreme Court as also of our Court and other High Courts. An award is not vulnerable to any challenge thereto. When an arbitrator is made the final arbiter of the disputes between the parties, an award is not open to challenge on the ground that the arbitrator has reached a wrong conclusion or has failed to appreciate the facts. The appreciation of evidence by the Arbitrator is never a matter which the Court questions and considers. The Arbitrator was the sole Judge of the quality as well as the quantity of evidence and it will not be for this Court to take upon itself the task of being a Judge on the evidence before the Arbitrator. The said award is a nonspeaking award and unless there is an error of law on the fact thereof, it is not permissible for this Court to probe into the mind of the Arbitrator to find out as to what impelled upon him to decide what he has decided. There is no error of law on the face of the said award. This Court is not sitting in appeal over the said award. Once there is no dispute as to the terms of the said Contract, what is the interpretation thereof was a matter for the Arbitrator on which this Court is not to substitute its own decision. There is no error of law on the face of the said award. This Court is not sitting in appeal over the said award. Once there is no dispute as to the terms of the said Contract, what is the interpretation thereof was a matter for the Arbitrator on which this Court is not to substitute its own decision. The view on interpretation of the said terms of the Contract taken by the Arbitrator being a possible view, the said award cannot be examined by this Court. Moreover, the question of interpretation of the said term of the Contract was a specific question of law referred to the Arbitrator for this decision and as such, the decision of the Arbitrator as the specific question of law referred to him is binding on the parties. 13. In the result, the petition is dismissed with costs. 14. Mr. Sathe applied for pronouncement of judgment and passing of decree in terms of the said award since the petition to set aside the same has been dismissed. 15. Under Rule 787(5) of the Rules of this Court as applicable on its Original Side, this Court on refusal to set aside the award has the power to pass the decree in terms thereof. Accordingly, judgment is pronounced and decree passed in terms of the said award dated 7th December, 1989 filed in this Court and numbered as 'Award No. 27 of 1990'. The petitioners are further ordered and decreed to pay interest on principal sum of -- Rs. 10,79,523/- at the rate of 12% per annum from the date of the said award till decree and from the date of the decree till payment or realisation, whichever is earlier. Interest from the date of the said award till the date of decree is ordered in view of judgment of the Supreme Court in Gujarat Water Supply Severage Board (supra). CC expedited. Petition dismissed.