SURINDER MAHAJAN ENGINEERS v. NATIONAL PROJECTS CONSTRUCTION CORPORATION
1997-12-11
P.K.PALLI
body1997
DigiLaw.ai
JUDGMENT P. K. Palli, J.:- This judgment shall dispose of objections filed by the respondent/objector bearing OMP. No. 108/95 as well as objections filed by the plaintiff registered as OMP. No. 147/95. 2. The award has been received by this Court with an application under Section 14 of the Arbitration Act and notices were ordered to be issued to the parties on December 29, 1994. In the objections filed by the objector/defendant challenge has been made to the award on the ground that the arbitrator has mis-conducted in the proceedings and has passed the award beyond the scope of reference. 3. It is also said that in the order of reference made by this Court dated December, 7, 1989, the disputes as raised by the plaintiff in the amended plaint were referred for arbitration whereas the objector had been permitted to file their counter-claim before the arbitrator. 4. Mr. Anand Sharma, learned counsel for the defendant /objector is at pains to contend that where a reference is made, the adjudication by the arbitrator has to be in the limited scope. It is being argued that by no stretch of imagination there was a claim for settlement of accounts made by the plaintiff. Tie scope was limited to the claim with respect to the works carried out by the plaintiff. 5. It is next argued that the award is totally without any basis and contrary to the documents on record. The blame is being put on the plaintiff for delay in the execution of the work and the argument is that there was no delay on the part of the objector as concluded by the arbitrator and in support of this -contention, reliance is being placed on several letters written by the objector which have been placed on record from O-1 to O-10 at pages 84 to 94 of the record. 6. It is being argued that this important piece of evidence was placed on record before the arbitrator also but it has been conveniently ignored. Stress is also being laid on the fact that time was the essence of the contract and the arbitrator has gone wrong in concluding that time, in the given situation, may not be the essence of contract. Mr.
Stress is also being laid on the fact that time was the essence of the contract and the arbitrator has gone wrong in concluding that time, in the given situation, may not be the essence of contract. Mr. Sharma also contends that the figures in respect of the amounts arrived at by the arbitrator are without any basis and the award is not a speaking award. Case law has been cited that where the arbitrator fails to give reasons in support of the award, the award has to be set aside and where the award is beyond the reference made, in that situation too the award cannot be up- held. 7. Though in the objections filed by the plaintiff a prayer has been made that the award be modified and the claim raised by the respondent/objector be rejected. The plaintiff be given a total claim of Rs. 34 lacs and in addition to this, he is entitled to interest at the rate of 18% with effect from June 22, 1988 till the date of its payment. In all fairness, Mr. Bhogal has confined his objections for grant of interest and other objections raised are not pressed by him. 8. In reply to the arguments raised in support of the objections by Mr. Anand Sharma, Mr. Bhogal contends that the objections raised do not disclose any legal ground for setting aside the award. This Court cannot sit as a court of appeal over the findings recorded by the arbitrator and substitute its own wisdom in place of the arbitrator. It is being argued in reply that the act and conduct of the objector completely stops him from laying challenge to the award as he had acquiesced in the proceedings and took a chance in inviting the award and now he is completely estopped from laying challenge to it. 9. Mr. Bhogal further contends that it is not open for this court to re-appreciate or re-appraise the evidence even if a different conclusion could be arrived at. It is also being said that the disputes entertained and decided by the arbitrator lay well within the domain of his jurisdiction and also within the scope of the reference made by this court and the award cannot be said to have been vitiated on that ground.
It is also being said that the disputes entertained and decided by the arbitrator lay well within the domain of his jurisdiction and also within the scope of the reference made by this court and the award cannot be said to have been vitiated on that ground. The objector having participated in the proceedings and having led evidence is precluded from laying challenge on this ground. It is being finally stated that the award made by the arbitrator cannot be se aside simply on the ground that detailed reasons in support of the award or calculations in its support have not been disclosed in detail for arriving at the given figure. 10. After hearing the learned counsel for the parties at length and on careful perusal of the record, I am of the considered view that the objections raised by the defendant/objector are without any merit 11. Law is completely settled that unless an error of law is apparent on the face of the award, the award cannot be set aside nor the arbitrator can be said to have mis-conducted himself in the proceedings. It is also well settled that the arbitrator is the final Judge of law as well as facts and there is a limited scope for interference and that too on the grounds given under Section 30 of the Act. The award cannot be set aside unless the findings recorded appear to be absolutely perverse. My attention has been brought to para 7 of the plaint and also to the prayer made from the side of the plaintiff. I have also been taken through the documents placed on record by the parties. After having gone through the reference and the record, I find that the question of settlement of accounts was raised by the plaintiff and was consequently referred. Statements in respect of the cause of delay noticed by the arbitrator have also been perused alongwith the terms and conditions of the contract. 12. It is also too well settled by now that where there is a provision for extension of rime, then, on the facts and circumstances proved in the given situation, time may not form essence of the contract unless it is stipulated in unequivocal express terms. 13.
12. It is also too well settled by now that where there is a provision for extension of rime, then, on the facts and circumstances proved in the given situation, time may not form essence of the contract unless it is stipulated in unequivocal express terms. 13. Civil Suit.No.54 of 1988 was filed by the plaintiff and the matter was referred to the sole arbitration to one of the eminent Judges of our country Mr. Justice H.R. Khanna who is a retired Judge of the Supreme Court. 14. In the year 1989, National Projects Construction Corporation Ltd , here-in- after referred to as "NPCC", had invited tenders for the construction of temporary quarters under package A and permanent quarters under package D to be constructed in Sim blue Block at the Chamera Hydro Electric Project. The contract-for the construction was arrived at between the National Hydro Electric Corporation, here-in-after termed as "NHPC", and was the principal employer of NPCC. As per terms of the contract, NPCC was permitted to get the work completed from another contractor. It was, thus, in the giver, situation that the claim ant/plaintiff M/s Surinder Mahajan (Registered Partnership Firm) submitted its tender. It is further an admitted case of the parties that after certain negotiations, a rebate at the rate of 14% on the rates settled between NHPC and NPCC was to be allowed. 15. There is further no dispute that the plaintiff was informed by the respondent in respect of the award of the work regarding quarters in package A as well as quarters in package D’ There is further no dispute in respect of the proximate value of the work and the figures arrived at in respect of the two works after deduction of rebate. The letter in this respect is dated December 15, 1987. The work of package A was to be completed within four months from third day of the above said letter and six months for package D quarters. 16. In a way, both the works were to be concluded in April and June.. 1988. As per terms of the contract, it was obligatory on the part of the defendant to make available to the plaintiff the land, site staff and labour colonies.
16. In a way, both the works were to be concluded in April and June.. 1988. As per terms of the contract, it was obligatory on the part of the defendant to make available to the plaintiff the land, site staff and labour colonies. There is further no dispute that as per conditions contained in clause 15 of the agreement, the job was to be carried out as per specifications as well as drawing and, in sequence of the orders to be passed by the Engineer of the defendant. The Engineer, who was to be put in charge, was to scrutinise the marks, reference as well as elevations. 17. Interestingly, the Engineer in-charge under clause 18 was competent as well as authorised to make deviations in the original specifications, designs or drawings which in his opinion were necessary. It, thus, leaves no manner of doubt that the said Engineer, who was incharge of the affairs, was fully authorised to substitute his own wisdom for the purposes of additions, alterations, substitution etc. If the deviations were to have the effect of vitiating the contract, the matter could have been different. Interestingly, this was one of the terms of the agreement. 18, There is further no dispute that the material which was desired the purpose of construction, was to be made available by the defendant and was further under an obligation to supply power at site. It was also proved that the incharge Engineer, after verification and measurements, was to certify amount which the plaintiff was to be paid by way of interim relief. 19. It was some-where in the month of June, 1988 that the defendant j started threatening the plaintiff for terminating the contract as the construction work of package. D was not being speeded up. There is a letter dated Juce6, 1988 written by the defendant in this respect. This was followed by two notices _given on June 22, 1988. Both the contracts were terminated and the plaintiff was also held liable for penalty of 5% of the contract amount. 20. It was in die aforesaid situation and circumstances that a suit cams to be filed by the plaintiff laying challenge to "tire penalty and claiming Rs. 22, 55,633/- against the defendants and a further amount of interest at the rate of 12%.
20. It was in die aforesaid situation and circumstances that a suit cams to be filed by the plaintiff laying challenge to "tire penalty and claiming Rs. 22, 55,633/- against the defendants and a further amount of interest at the rate of 12%. It was on the joint application moved by the parties that the matter came to be referred to the sole arbitration of Mr. Justice H.R. Khanna, retired Judge of the Supreme Court. 21. In the reference order it was specifically, made clear that the dispute raised by the plaintiff as well as the one raised by the defendants as well as the counter-claim which shall be filed before the arbitrator, shall be amended plaint as well as the counter claim raised by the defendant, i.e. NPCC, to the filed before the arbitrator. 22. Initially, there was some dispute of the plaintiff firm being registered or not and vide order dated June 11, 1990 this Court up-held the objection of the defendant and held that the reference could not be sustained. After registration of the firm, an application against came to be file under Section 20 of the Arbitration Act and consequently, this court again on June 28, 1993 passed an order directing the matter to be referred for arbitration. 23. So far as the argument of Mr. Anand Sharma in respect of the claim beyond reference is concerned, it would take within its ambit which the plaintiff has raised in the amended pleadings. A look at the prayer clause of the amended plaint in clear terms states that the defendants be directed to settle the accounts of the plaintiff for the work done. The work which was carried out by the plaintiff, is given in para 12 of the plaint. I am in complete agreement with the arbitrator that the prayer in respect of the settlement of the accounts was wide enough to include within its ambit the work carried out by the plaintiff. The said work is based on measurements. 24. So far as the contention raised by the objector that the delay in the execution of the work was solely attributable to the plaintiff is concerned, reference has been made to the ten letters placed on record which are O-1 to O-10.
The said work is based on measurements. 24. So far as the contention raised by the objector that the delay in the execution of the work was solely attributable to the plaintiff is concerned, reference has been made to the ten letters placed on record which are O-1 to O-10. A look at these letters, which are almost in repetition, reveals that the plaintiff has been blamed that his representatives were not available at the site and that there was shortage of man-power, skilled as well as unskilled labour to cope up the progress of the work. It is on the strength of these letters that it is sought to be urged that the delay has wrongly been held on the part of the defendants by the arbitrator whereas it was factually not correct. 25. Mr. Bhogal has taken me through the statements which were prepared by the Unit Officer of the defendant. These letters in point of time are also of the same dates as given in O-1 to O-10. It appears that both the parties were trying to put blame on each other for the delay in the execution of the work. 26. It is further not disputed that the defendant terminated the contract entered upon with the plaintiff solely on the ground of delay in the completion of the job. From the statements placed on record the arbitrator has drawn right conclusion that there was a delay of 50 days in handing over the site of block No.54. This too has been correctly found that there was delay of 65 days in allocation of the site for block No. 53 The statements further reveal that the site off package D consisting of blocks 8 to 13 was not made available to the plaintiff till May 25, 1988. 27. A reading of these statements does go to show that a case was tried to be made out by the defendant in order to take benefit of extension of time from the principal employer. In order to appreciate that time/was the essence of the contract this aspect as well as the conduct of the defendant cannot be lost sight of. There is further evidence on record that there was a delay of 30 days in handing over the site of package D. The design of steel windows further took a sufficient long time to reach finality.
There is further evidence on record that there was a delay of 30 days in handing over the site of package D. The design of steel windows further took a sufficient long time to reach finality. It has further come on record that the material for the purpose of these windows was to be supplied but the same was not available in the stores of NHPC. The delay has, thus, been caused on account of taking final decision in the matter of windows and further there was no material in stock. 28. A perusal of the record further reveals that extra work had to be carried out for water tank which took 20 days and delay was further caused for an approach road to the site of work which was blocked for over 15 days on account of land-slide and rain. 29. I, therefore, find no hesitation in holding that the delay in the non-completion of the job within the time schedule was on the part of the defendant and not on the plaintiff. 30. The defendants, in the given set of circumstances, cannot be permitted to urge that time was the essence of the contract as they had themselves made out a case for extension of time in certain contingencies. There was, thus, no justification in terminating the contract of the plaintiff on the ground that the work has not been completed within the-time frame work. 31. Though this Court cannot re-appreciate the evidence placed on record by the parties nor can act as an Appellate Court for the purpose of examining the validity or otherwise of the impugned award, yet I find from the record that the total work was to the tune of Rs.75,14,000/-. There was deviation in the work which the plaintiff had done to the extent of rupees one lac. It has been found by the arbinrator, on appreciation of evidence, that the plaintiff had completed the work to (he extent of Rs.16 lacs and had he been permitted to execute the work to its finality, he would have made a minimum profit of 10 percent over the value of unfinished work and this amount appears to have been correctly awarded. 32. Mr. Anand Sharma has also stressed that measurements were to be carried cut in cubic meters and not in square meters.
32. Mr. Anand Sharma has also stressed that measurements were to be carried cut in cubic meters and not in square meters. This question has been considered by the arbitrator and it has been found that the earlier mode of measurement was in square meters but it was on account of some typographical error. It was in the given situation that the work was measured in square meters and there was no change in the mode of measurement after the work had already been executed by the plaintiff. 33. Mr. Sharma has also highlighted that the arbitrator has wrongly held the claimant/plaintiff to be enroled to 50% cost of the un-used bricks". It has come in evidence of the defendants that no short-fall was noticed in the bricks which were lying at the site. The short-fall, as stated, came to their notice a later stage. It was for the defendants to account the bricks when the contract was being terminated. The matter has been examined by the arbitrator and it has been found that the plaintiff was not carrying out any other activity near the site where the bricks, meant for the purpose, were used else-where. It has come in evidence that there are barriers put up by NHPC and these were under the control of their guards. It is further not denied that the" construction was carried out by another contractor near the site where the bricks had been earlier stored. The plaintiff, thus, cannot be held liable for removing the bricks from the scene and the arbitrtor has rightly fixed the liability of both the parties to share the cost of un-used bricks as both have been held to be at fault. 34. It is too well-known that complete mathematical details were not supposed to be given by the arbitrator in arriving at the calculations made in the award. The award cannot be said to be not a speaking award or without any reasons as a look at the award does go to show that the evidence placed on record by the parties as well as the points put forth for determination have been carefully gone into and it is thereafter that the defendants have been held liable to pay the amount under various heads to the plaintiff. The plaintiff has, thus, been rightly found to be entitled to Rs.
The plaintiff has, thus, been rightly found to be entitled to Rs. 14, 24,648- 90 paise from the defendant - NPCC. The costs also appear to have been rightly assessed and learned counsel for the objector has not been able to persuade me to take a different view in the matter than the one which has been arrived at by the arbitrator in the impugned award. 35. So far as the claim of interest raised by the plaintiff is concerned, though the law is well settled that the arbitrator has the jurisdiction to award interest, yet it is in the discretion of the arbitrator to award interest, in the given set of circumstances, in the event of a party making case for the grant of the interest. The arbitrator in the present case has not awarded any interest on the amount found due in the award and in my opinion, it would be deemed to have been refused. The learned counsel for the plaintiff has not been able to persuade me for the grant of interest to the plaintiff and, thus, the solitery objection raised is rejected. 36. Before parting, it is to be noticed that in the application under Section 14 of the Arbitration Act the arbitrator has stated that Rs. 60,000/- as fee of the arbitrator is due from the defendants. They had undertaken to pay this amount within a month from the date of award but unfortunately this has not been paid by the defendants. A further amount of Rs. 2,400/- is said to be due by the defendants to the Secretary of the arbitrator who had rendered secretarial assistance. I, therefore, direct the defendants to clear this amount within six weeks from today. 37. In view of what has been said above, the objections raised by the parties are ordered to be dismissed and the award is ordered to be mad« a rule of the court. The plaintiff shall, however, be entitled to costs incurred before this court.