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2000 DIGILAW 530 (PNJ)

State of Punjab v. Sutlej Const. Co.

2000-05-17

R.L.ANAND

body2000
JUDGMENT R.L. Anand, J. - State of Punjab has filed the present revision and it has been directed against the order dated 23.12.1995 passed by the court of Distt. Judge, Chandigarh, who affirmed the judgment dated 30.7.1994 passed by the Senior Sub Judge, Chandigarh, who allowed the application under section 14 r/w Section 17 of the Arbitration Act (hereinafter referred to as the Act) of M/s Sutlej Construction Company Private Ltd. (hereinafter referred to as the Company) and dismissed the objections of the State under section 30/33 of the Act and the award dated 28.10.1992 passed by Shri Om Parkash, Arbitrator, was made rule of the court and various amounts under different categories were awarded to the Company. 2. Some facts can be noticed in the following manner :- 3. The Company filed an application under section 14/17 of the Act and made a request to the court of Sr. Sub Judge, Chandigarh, that directions be given to the Arbitrator to file the proceedings of the arbitration and also to file the original award in the court and, thereafter, the same may be made rule of the court. 4. The work of construction of balance work of Dholbaha Dam was allotted by the State of Punjab to the Company and a regular contract agreement was signed and executed between the parties on 31.1.1985. Certain disputes arose between the parties and Shri Om Parkash, Superintending Engineer, Central Mechanical Circle, was appointed as Arbitrator, who entered upon the reference and, ultimately, gave his award dated 28.10.1992 to the effect that the Company was entitled to claim various amounts from the State of Punjab. He also awarded interest from 1.5.1988 to 28.10.1992, i.e. up to the date of making of the award, at the rate of 12-1/2% and this amount comes to Rs. 2,53,557-49. 5. The application under section 14/17 of the Act was filed in the court on 30.10.1992 and directions were given to the Arbitrator to file the award for making it the rule of court. The award was filed on 21.1.1993. Objections under section 30/33 of the Act were filed by the State against the award that it is illegal. 2,53,557-49. 5. The application under section 14/17 of the Act was filed in the court on 30.10.1992 and directions were given to the Arbitrator to file the award for making it the rule of court. The award was filed on 21.1.1993. Objections under section 30/33 of the Act were filed by the State against the award that it is illegal. It was pleaded by the State that the Arbitrator has misconducted the proceedings because he has not applied his mind to the terms and conditions of the agreement and has not returned the finding as to whether or not the executing agency was at fault. It was pleaded that the Company did not maintain progress of the work despite the supply of lubricants and as such it was a defaulter. The Arbitrator has not given any finding to that effect that on the failure of the contractor to take corrective measures, the State could terminate the contract and levy liquidated damages, detain his plant and machinery to safeguard the departmental interest and get the balance work completed by some other agency. According to the Objector, notice was given under clause 45 of the agreement on 14.11.1986 to the Company to take corrective action which it did not take as stipulated in the notice and clause 46 of the Agreement therefore stood attracted and further action regarding termination of the contract, levy of liquidated damages, detention of plant and machinery of the petitioner to safeguard the departmental interest was taken by the State well within the ambit of the agreement. The time was extended for the execution of the work from 30.6.1986 to 31.12.1986 but it was not availed of by the Company. According to the State, the Arbitrator has resorted to de-composition and disintegration of the provisions of clauses of the agreement. He illegally gave weightage to the claim of the company and held that the departmental action under clause 46 was illegal. The award of Rs. 9,68,240-00 under claim No. I to the company and award of Rs. 26,84,232-00 under claim No. II was wholly unjustified as the action has been taken by the State under clause 45 of the agreement which stipulated that the plant, equipment and machinery of the company shall be at the disposal of the Govt. in case any action was taken under clause 45 of the agreement. 26,84,232-00 under claim No. II was wholly unjustified as the action has been taken by the State under clause 45 of the agreement which stipulated that the plant, equipment and machinery of the company shall be at the disposal of the Govt. in case any action was taken under clause 45 of the agreement. The State had intimated to the Company that a sum of Rs. 10,06,946-14 was recoverable from it due to its default. So much so, a cheque dated 26.5.1988 drawn on the State Bank of India was issued by the company in favour of the State for settlement of the case but the cheque was dishonoured. This shows the fraudulent conduct of the company. This fact was not taken note of by the Arbitrator while giving the award. In case, the cheque had been honoured, the machinery of the company which was withheld by the State would have been released. Liquidated damages to the tune of Rs. 3,04,210/- levied under clause 46 of the agreement by the State have been arbitrarily set aside by the Arbitrator. A sum of Rs. 92,934/- was recoverable from the Company on account of escape channel work relating to the period 1982-83. Since, the item was abnormally old, interest accrued thereon was seizable and payable by the Company. It was further maintained by the State that the Arbitrator has violated the principle of natural justice, equity and conscience. Also, an objection was taken that the Courts at Chandigarh had no territorial jurisdiction to entertain the proceedings and that only the Hoshiarpur court had the jurisdiction to entertain the application under section 14/17 of the Act as the said work was situated at Hoshiarpur. 6. A reply to the objections was filed by the Company in which it denied the allegations of the State and stated that the award was perfectly legal and valid and the Arbitrator has not misconducted the proceedings at all. 7. From the pleadings of the parties, following issues were framed :- "1. Whether the award is liable to be set aside on the basis of the objections filed by the objector ? OPD 2. Whether this court has no jurisdiction ? OPD 3. Relief. 8. Vide order dated 30.7.1994, the learned Senior Sub Judge, Chandigarh, dismissed the objections of the State while deciding the issues in favour of the Company and the award of the Arbitrator, Ex. OPD 2. Whether this court has no jurisdiction ? OPD 3. Relief. 8. Vide order dated 30.7.1994, the learned Senior Sub Judge, Chandigarh, dismissed the objections of the State while deciding the issues in favour of the Company and the award of the Arbitrator, Ex. O2/A, was made rule of the court. Future interest on the principle amount of Rs. 4,51,169-92 at the rate of 12-1/2% was also awarded from the date of the decree till payment. 9. It appears that later on the company realised that there was a mistake made by the learned Sr. Sub Judge in the order dated 30.7.1994. It filed an application for correction of that order and the learned Sr. Sub Judge vide order dated 24.9.1994 allowed that application and further held that Rs. 9,68,240-00 and Rs. 26,84,232-00 along with future interest are due to the company as per the award. Resultantly, the court awarded these amounts also along with future interest. 10. The State was not satisfied with the decision of the trial court. It filed an appeal before the court of the learned Distt. Judge, Chandigarh, who vide judgment dated 23.12.1995 dismissed the appeal and affirmed the judgment and decree of the trial court, for the reasons given in paras 8 to 11, which read as under :- "8. I have heard Sh. Himmat Singh, learned Govt. Pleader on behalf of the appellants and Sh. S.P. Gupta, learned counsel for the respondent on behalf of the State of Punjab. It was urged that it is clear from the perusal of Ex. R-9 to R-20 that the liquidated damages were imposed upon the Company by the State for its failure to complete the construction work as per the stipulation of the contract by 31.12.1986. It was also submitted that these proceedings have been taken under clause 46 of the agreement and the fact that a cheque for Rs. 10,06,946/- was issued by the Company in favour of the State indicates that the Company had accepted the decision of the Chief Engineer regarding the extent of damages and so the Arbitrator had erred in not taking into consideration this aspect of the plea advanced by the State during the arbitration proceedings. 10,06,946/- was issued by the Company in favour of the State indicates that the Company had accepted the decision of the Chief Engineer regarding the extent of damages and so the Arbitrator had erred in not taking into consideration this aspect of the plea advanced by the State during the arbitration proceedings. In case due weightage had been given to this plea then there would be no question of the arbitrator proceeding to assess the loss caused to the Company on account of the detention of its plant and machinery and while doing so, the Arbitrator had misconducted himself in the proceedings and so the award is liable to be set aside. 9. On behalf of the Company, it has been submitted that since there was admittedly no termination of the contract after the issuance of notice under clause 45 here was no question of the State being entitled to impose liquidated damages as asserted by the learned counsel of the appellants. Even otherwise the Arbitrator has not accepted the plea of the State that the damages to the tune of Rs. 10,06,946/- were chargeable and this finding by the Arbitrator cannot be interfered with by this court. Even otherwise, there was no justification for the State having withheld the plant and machinery to the work Rs. 2 crores and the validity of the conclusions arrived at by the Arbitrator to this effect too cannot be gone into by the Court. 10. I have carefully considered the arguments advanced by the learned counsel for the parties and have perused the records. 11. While it is true that notice under clause 45 was issued on 14.11.1986 requiring the claim (claimant ?) to take corrective action and remove the deficiency in the progress of the work, yet, on the record there is noting to indicate that the contract had been terminated as required under the said clause so as to facilitate the imposition of liquidated damages under clause 46. In view of this factual position which emanates from the record, the argument that as liquidated damages to the tune of Rs. 10,06,946/- had been validly imposed on the contractor, therefore, the appellant was entitled to refuse the request of the respondents to release the machinery cannot be accepted. In view of this factual position which emanates from the record, the argument that as liquidated damages to the tune of Rs. 10,06,946/- had been validly imposed on the contractor, therefore, the appellant was entitled to refuse the request of the respondents to release the machinery cannot be accepted. Furthermore, even if the appellant was entitled to appropriate the machinery of the respondents with a view to secure the payments that may be due to the appellant then the refusal should have been confined to the machineries whose value corresponded to the amount that was sought to be recovered and there was no equity in favour of the appellant withholding the release of machinery worth Rs. 2,00,00,000/- to recover damages of Rs. 10,06,946/- only. The argument of the appellant that the fact that the respondents had issued a cheque for Rs. 10,06,946/- showed that the respondents had accepted the imposition of the penalty for the said amount has also been taken into consideration by the Arbitrator and rejected for reasons which do not suffer from any legal infirmity on account of the fact that the Arbitrator has after going into all the aspects of the claims raised before him by the respondents and countered by the appellant had come to the conclusion that the imposition of Rs. 10,06,946/- as penalty was not warranted by the circumstances brought on record. In view of this and in view of the settled law that the Arbitrator is the final Judge of all questions of law and fact and the courts of law should not examine and reappraise the evidence considered by the Arbitrator, I am of the considered view that the view taken by the trial court regarding the validity of the award cannot be interfered with." 11. I have heard the counsel for the parties and with their assistance have gone through the record of this case. 12. Section 30 of the Act provides that an award shall not be set aside except on one or more of the following grounds; namely, (a) that an arbitrator or umpire has misconducted himself or the proceedings; (b) that an award has been made after the issue of an order by the court superseding the arbitration or after arbitration proceedings have become invalid under section 35; and (c) that an award has been improperly procured or is otherwise invalid. 13. 13. A reading of the above would show that this clause starts with a negative note when it says that the award shall not be set aside except on one or more grounds as mentioned in section 30 itself. The purpose behind the negative clause is that the Legislature wanted to give respect to the arbitration agreement and to the mode adopted by the parties to the arbitration contract which they had selected for the determination of their suit but at the same time the Legislature was of the clear opinion that when the Arbitrator has misconducted himself or the proceedings, or when the award has been arbitrarily procured or is otherwise invalid, such an award should not sustain in the eyes of law. What is a misconduct is a question of fact because the term misconduct has not been defined under the Act. Misconduct should be legal misconduct and similarly if the Arbitrator has misconducted with regard to the proceedings or the award is otherwise invalid, such an award should not sustain in the yes of law. There is no dispute about the proposition of law that the Arbitrator is a master of law and facts. Rather, he is a master in chief. The jurisdiction of the civil court is not to sit as court of appeal over the decisions and opinions formulated by the Arbitrator. But if the Arbitrator, on the face of it, has exceeded his jurisdiction in interpreting the Arbitration Agreement for the benefit of one party, such an award made by an Arbitrator cannot sustain because in such a situation, the Arbitrator has misconducted himself and the proceedings. 14. "What is misconduct" is a question of fact and would depend upon case to case and has to be ascertained from the facts of entire proceedings. No exhaustive definition can be given as to what amounts to misconduct. Misconduct is an ambiguous word and includes any mis-handling of the arbitration proceedings or any neglect of duty on the part of the arbitrator which is likely to lead to substantial miscarriage of justice. To decide an issue of fact without any evidence or material before the arbitrators, is a serious dereliction of duty. If the Arbitrator overlooks the very material document it amounts to misconduct on his part. Misconduct under Section 30 sub-clause (a) has not a connotation of moral lapse. To decide an issue of fact without any evidence or material before the arbitrators, is a serious dereliction of duty. If the Arbitrator overlooks the very material document it amounts to misconduct on his part. Misconduct under Section 30 sub-clause (a) has not a connotation of moral lapse. It comprises legal misconduct which is complete if the arbitrator on the face of the award arrives at an irresistible conclusion even on his own finding or arrives at a decision by giving very material documents which throw abundant light on the controversy to help a just and fair decision. The Civil Court while setting aside the award keeps in mind that when the construction put by the arbitrator in the arbitration clause was conceivable or possible, even if there was some mistake in the construction, such mistake was not amenable to be corrected irrespective of the award but where the arbitrators go beyond the scope of the submission and decide the matter by showing utter disrespect to the fundamental clauses of the agreement, such award cannot be subscribed to or upheld. 15. In the present case, in the opinion of this Court the basic consideration before the Arbitrator was, who was responsible for that period when the machinery/plant remained idle. Moment this Court is satisfied after examining the aspect of fair play that the arbitrator had exceeded the scope of his authority, any award made by him would be in excess of his authority and cannot be upheld. 16. Now, let us see how the things have gone in the present case. The work was allotted to the company and this work supposed to be completed by 30.6.1986. Before I advance further with this order, it will be useful for me to incorporate the two relevant clauses, i.e. clauses 45 and 46, forming part of the arbitration agreement which read as under :- "45. Default By Contractor : If the contractor shall neglect or fail to proceed with the works with due diligence or he violates any of the provisions of the contract, the Engineer- in-Charge may give the contractor a notice, identifying deficiencies in performance and demanding corrective action. Such notice shall clearly state that it is given under the provision of this clause. After such notice is given, the contractor shall not remove from the site, any plant, equipment and materials. Such notice shall clearly state that it is given under the provision of this clause. After such notice is given, the contractor shall not remove from the site, any plant, equipment and materials. Government shall have a lien on all such plant, equipment and materials from the date of such notice, till the deficiencies have been corrected. If the contractor fails to take satisfactory corrective action within fourteen days after receipt of the notice the Engineer-in-Charge will terminate the contract in whole or in part. In case the entire contract is terminated, the amount of security deposit together with the value of the work done but not paid for shall stand forfeited to the Government. The plant, equipment and materials held under lien shall then be at the disposal of the Government. The Engineer-in-Charge may also take possession of the whole or part of the works, site, plant, equipment and materials brought or placed thereon and cause the whole or part of the work to be completed by utilizing them through other agencies, at the cost of the contractor. In such case, the value of the work done through such agencies shall be credited to the contractor at his contract prices. On completion of such works if the expenses incurred for carrying out such work, as certified by the Engineer-in-Charge, are in excess of the value of the work credited to the contractor, the difference shall be paid by the contractor to the Government. He shall also be liable for the liquidated damages under the contract. The Engineer-in-Charge may direct that a part or the whole of such plant, equipment and materials be removed from the site within a stipulated period. If the contractor fails to do so, the Engineer-in-Charge may cause them to be sold, holding the net proceeds of such sale to the credit of the contractor. After completion of the works and settlement of amounts (accounts ?), the lien by the Government on the contractors plant, equipment and balances of materials shall be released. Termination of the contract either in whole or in part shall be adequate authority for the Engineer-in-Charge to demand discharge of the obligations from the guarantors of the security for performance." "46. After completion of the works and settlement of amounts (accounts ?), the lien by the Government on the contractors plant, equipment and balances of materials shall be released. Termination of the contract either in whole or in part shall be adequate authority for the Engineer-in-Charge to demand discharge of the obligations from the guarantors of the security for performance." "46. Liquidated Damages : If the contractor fails to complete the work or a designated part thereof by the stipulated completion date he shall pay liquidated damages at one-tenth of one per cent of contract value for each incomplete part per day of delay in completion and handing over to the Government. The amount of liquidated damages shall, however, be subject to a maximum of ten per cent of contract value. Delays in excess of one hundred days will be cause for termination of the contract and forfeiture of all security for performance." 17. Clause 45(1) clearly lays down that if the contractor (company) neglects or fails to proceed with the works with due diligence or he violates any provisions of the contract, the Engineer-in-Charge may give the contractor a notice, identifying deficiencies in performance and demanding corrective action. Such notice should clearly state that it is given under clause 45 of the agreement. Once this power has been exercised by the Govt. the contractor shall not remove from the site, any plant, equipment and materials. Government shall have a lien on all such plant, equipment and materials, from the date of such notice, till the deficiencies have been corrected. 18. The Govt. had exercised this power vide notice dated 14.11.1986 and demanded a corrective action from the company by clearly showing its intention that failing the same, action under clause 46 of the contract shall be taken against the company which will entail imposition of liquidated damages or any other penalty as per the terms of the agreement apart from action under clause 45 of the Agreement. 19. According to clause 45(2), if the contractor fails to take satisfactory corrective action within fourteen days after receipt of the notice, the Engineer-in-Charge has the power to terminate the contract in whole or in part and in such an eventuality, the amount of security deposited by the contractor together with the value of the work done shall stand forfeited to the Govt. and the plant, equipment and materials held under lien shall be at the disposal of the Government. 20. Thus, it will be clear that clause 45(2) is independent from clause 45(1). The moment a contractor commits default and shows his neglect or fails to proceed with the work, it gives the power to the Govt. under clause 45(1) to serve a notice upon the contractor to rectify the mistake within the time stipulated in the notice and the Govt. has also the right to withhold the plant, equipment and machinery, etc. of the contractor till the deficiencies are rectified. Clause 46 is an independent clause which gives the power to the Govt. to impose liquidated damages upon the contractor at 1/10th of 1% of the contract value for each incomplete part per day of the delay in completion and handing over to the Govt. This amount of liquidated damages shall, however, be subject to a maximum of ten per cent of contract value. Thus, the Govt. has an independent power under clause 46 to impose liquidated damages. If the machinery has been withheld by the Govt. under clause 45(1) on account of negligence in the performance of the contract by the company, in such a situation, it could not be held that the action on the part of the State in withholding the plant, machinery etc. was illegal because the contractor has to suffer for his own wrong and he cannot be allowed to become rich. If even the naked clauses of the agreement have been looked into properly by the Arbitrator, it is nothing short of a misconduct and it has to be held that the Arbitrator has misconducted himself and the proceedings and any award in violation of the basic clauses of the agreement cannot stand to the limited scrutiny of the civil court. Clause 45(2) is a clause of termination of the contract. It is totally independent from clause 45(1). The Govt. can impose liquidated damages under clause 46 by invoking the aid of clause 45(1) without adhering to clause 45(2). Under clause 45(2), if the Govt. terminates the contract wholly or in part, it gives an additional right to the Govt. not only to withhold the plant, equipment and material, but such plant, equipment and material/machinery, shall be at the disposal of the Govt. Under clause 45(2), if the Govt. terminates the contract wholly or in part, it gives an additional right to the Govt. not only to withhold the plant, equipment and material, but such plant, equipment and material/machinery, shall be at the disposal of the Govt. and it is at liberty to deal with it in any manner as it likes. 21. In the present case, it is amply proved on the record that the Company did not execute the work within the stipulated period. There was deficiency in the work. So much so even the time was extended up to 31.12.1986 and in spite of the extended time, the work could not be done satisfactorily. This is clear from the letter dated 23.2.1987, issued by the Executive Engineer to the Company which clearly specifies that the date of completion of the Dam has expired on 31.12.1986 and the progress of the company with regard to the work remained very poor. The company was informed that the work was almost stand- still for the last more than a fortnight and that the Dam was to be inaugurated in the middle of March, 1989. The Govt. through the Executive Engineer, clearly intimated that it has been decided that the balance work, i.e. the remaining fill-placement, Rock Toe, Toe Drain, Out-off-dyke and Turfing, be got done from some other agency at the risk and cost of the company. The company was even called to attend the office for final measurement. While invoking the powers under clause 46, liquidated damages to the tune of Rs. 10,06,946-14 were imposed and this amount was even sent to the Govt. by the company through a cheque which, ultimately, bounced. Be that as it may, it is to be seen whether the liability upon the company could be imposed by the State till it terminated the contract under clause 45(2). Both the courts have proceeded on the presumption that since there is nothing to indicate that the contract had been terminated as required under clause 45, therefore, the imposition of the liquidated damages under clause 46 to the tune of Rs. 10,06,946-14 was not justified. I have even gone through the award of the Arbitrator itself, who has totally misconstrued the provisions of the arbitration agreement. He has exceeded his jurisdiction by holding that the Govt. was responsible when it did not allow the contractor to lift the machinery. 10,06,946-14 was not justified. I have even gone through the award of the Arbitrator itself, who has totally misconstrued the provisions of the arbitration agreement. He has exceeded his jurisdiction by holding that the Govt. was responsible when it did not allow the contractor to lift the machinery. In fact, the entire awarded amount which has been awarded to the company is for the reason that the machinery of the company remained idle as a result of that the company suffered losses, it suffered losses on account of supervision, watch and ward, etc. Even the amount of Rs. 26,84,232/- was awarded to the Company for the alleged retention of the machinery by the State, little realising that the said detention/retention of the machinery was never unauthorised. Rather, the State was within the competency to impost liquidated damages by invoking the clauses 45(2) and 46. There was no pre- requisite regarding the termination of the contract as illegally interpreted by the Arbitrator for the benefit of the contractor. 22. Shri Ashok Aggarwal, Sr. Advocate, appearing on behalf of the respondent invited my attention to the citation reported as 1999(3) RCR (Civil) 81, Himachal Pradesh State Electricity Board v. R.J. Shah and Company, a judgment of the Honble Supreme Court wherein, it was observed that the Civil Court cannot interfere with the award of the Arbitrator merely on the ground that the same was non-speaking and does not indicate the reasons in support of its findings. It was further observed by the Honble Supreme Court that Court can interfere only if the Arbitrator had acted without jurisdiction and has delved into an arena not subject matter of the reference of dispute. It was also observed by their Lordships that if the matter could be dealt with by the arbitrator, mere erroneous decision will not vitiate the award. Distinction has to be made between exercise of jurisdiction not vested and erroneous exercise of jurisdiction. Erroneous exercise of jurisdiction is no ground to interfere with the award of an arbitrator. Also it was observed by their Lordships that interpretation of terms of agreement of contract by the Arbitrator is binding upon the parties howsoever erroneous it may be and that Court can interfere only on a question of law relating to the jurisdiction of an arbitrator. Also it was observed by their Lordships that interpretation of terms of agreement of contract by the Arbitrator is binding upon the parties howsoever erroneous it may be and that Court can interfere only on a question of law relating to the jurisdiction of an arbitrator. There is no quarrel with the proposition of law as enunciated by the Supreme Court in this judgment and to this extent I had already made my observation in the earlier portion of this judgment. 23. The point for determination is that if the Company has committed the breach of the contract by not completing the work within the stipulated time or within the extended period of limitation what are the rights of the Government ? At the cost of repetition, it can be said that the rights of the Government are given in clause 45 sub-clause (1), sub-clause (2) and in clause 46 which authorise the Government to impose liquidated damages which were imposed upon the Company and at one point of time the amount was given to the State through a cheque which could not be honoured. If the Arbitrator had ignored all these vital clauses of the magna carta upon which the foundations were made by the parties themselves and had tried to exercise jurisdiction which was not vested in him, such an award cannot be sustained on judicious scrutiny and this Court has to give the finding against the Company (respondent) that the award is otherwise invalid and that the arbitrator had misconducted himself or the proceedings when he had gone all the ways for the benefit of the contractor by throwing the relevant clauses into the winds and into waste paper basket. 24. My attention was also invited during the course of submission to the judgment reported as 1998(4) RCR (Civil) 15, Haryana State Electricity Board v. M/s Sunil Engineering Works, wherein it was observed that Civil Courts will not sit in appeal against the award and Court will not go into appraisement of evidence by the Arbitrator. Even if the Court may arrive at a different conclusion to that one arrived by the Arbitrator, still that itself is no ground for setting aside the award. Again there is no quarrel with the proposition laid down by his Lordship. Even if the Court may arrive at a different conclusion to that one arrived by the Arbitrator, still that itself is no ground for setting aside the award. Again there is no quarrel with the proposition laid down by his Lordship. Civil Court much less High Court will not sit as a judgment of appeal over the three decision i.e. Arbitrator, trial Court and the first appellate Court but definitely High Court will see how the things have gone at the level of the Arbitrator. 25. After going through the contents of the award, I have been able to formulate this opinion that an untenable claim of the Company has been accepted for no reasons whatsoever when the company itself was at fault when it did not execute the contract in terms of the agreement within the stipulated period justifying the State to retain the machinery at the site. The moment justification is there on the part of the department to retain the machinery irrespective of the fact that contract has not been terminated, the contractor could not be allowed to derive the benefits of his own wrongs. After considering all the pros and cons of the matter, this Court is of the considered opinion that the judgments and orders of the lower Courts cannot be sustained and have to be set aside and I order accordingly. 26. The net result is that revision filed by the State is hereby allowed and the impugned judgments and decrees dated 23.12.1995 and 30.7.1994 passed by the District Judge and Senior Sub Judge, Chandigarh, respectively, are hereby set aside. The order dated 24.9.1994 passed by the Senior Sub Judge, Chandigarh is also set aside. The application under Section 14 read with Section 17 of the Company is hereby dismissed. The objections under Sections 30/33 of the Indian Arbitration Act filed by the Government are hereby allowed. 27. During the course of proceedings, this Court was also informed that under the orders of the High Court dated 26.7.1996, a sum of Rs. 30 lacs has been paid to the Company. The Government will be at liberty to realise the amount as per law contained under Section 144 of the Civil Procedure Code or under any other law which permits the State Government to realise that amount besides interest, if any, permissible to it. Revision allowed.