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2005 DIGILAW 654 (ORI)

State of Orissa v. Larsen and Toubro Limited

2005-11-14

L.MOHAPATRA

body2005
JUDGMENT L. MOHAPATRA, J. : This appeal is directed against the judgment dated 27.7.2004 passed by the learned District Judge, Khurda at Bhubaneswar in Arbitration M.J.C. No.130 of 2002 re¬jecting the application filed by the appellants under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter called as the ‘Act’). 2. A contract was executed on 30.8.1992 between the par¬ties in respect of three Packages for the work “Strengthening and Widening of Sambalpur-Rourkela Road (0.0 Km. To 162.931 Km”. In view of three separate packages three separate contracts were executed. The present dispute relates to Package No.S-3 and value of the said contract is Rs.49,31,155.00. Date of commencement of the work was 20.10.1992 and the same was to be completed within 48 months form the date of commencement. The agreement contained an Arbitration Clause. Undisputedly though the contract work was to be completed within 48 months, the same was completed after 53 months and extension of time had been granted to the respondent for completion of the work. On 1.6.1997 the respondent issued notice to the concerned Engineer of the appellants-State raising a dispute on the ground that the appellants did not fulfil their part of obligations and committed breach of contract by providing defective project contract drawing because of incorrect survey, delay in cutting and removing standing trees as well as acquisi¬tion of land, etc. Because of such conduct on the part of the appellants there was delay in completion of the work and accord¬ingly a claim was raised. The appellants rejected the claim for compensation and processed the final bill. The respondent re¬ceived the final bill amount under protest and invoked arbitra¬tion clause on 3.1.1998. As per the terms of the Arbitration clause the appellants nominated an Arbitrator whereas the Minis¬try of surface Transport (Road Wing) Government of India nominat¬ed another person as the Chairman of the Committee of Arbitra¬tors. The respondent filed claim petition on 12 items of claim. The Arbitration Committee after hearing did not award anything in respect of Claim Item No.12, whereas awarded full amount on Claim Item Nos.3 and 5. Rest of the claim items were partly allowed and the total award amount is Rs.5,78,80,530.00 with pendente lite and future interest @18% per annum. 3. The respondent filed claim petition on 12 items of claim. The Arbitration Committee after hearing did not award anything in respect of Claim Item No.12, whereas awarded full amount on Claim Item Nos.3 and 5. Rest of the claim items were partly allowed and the total award amount is Rs.5,78,80,530.00 with pendente lite and future interest @18% per annum. 3. The aforesaid award was challenged by the appellants before the learned District Judge, Khurda at Bhubaneswar by filing an application under Section 34 of the Act basically on two grounds. First ground taken is that at the time of extension of time for completion of work the respondent had undertaken that they shall not claim any damages or compensation for the extended period. The other ground taken by the appellants is that majority of claims are extra items and additional payments beyond the scope of the contract and as such they are hit under Clauses 53.1, 53.2 and 53.3 of the agreement as the claimant-contractor did not give notice to the Engineer of the appellants within 28 days after the event giving rise to the claims. 4. The respondent took the stand that while praying for extension it had given no-claim certificate under duress and therefore such so-called undertaking should not be accepted. So far as the ground No.2 is concerned, the respondent denied the allegation. The learned District Judge on perusal of the award and the relevant clauses of the agreement came to conclusion that there was no illegality in the award for interference and accordingly rejected the petition. 5. Shri Das, leaned counsel appearing for the appellants challenged the impugned order on the very same two grounds taken before the learned District Judge. According to Sri Das the re¬spondent having given an undertaking not to claim damages during the extended period, the Committee of Arbitrators cold not have passed the award for the said extended period. Learned counsel also referred to Clause 53.1, 53.2 and 53.3 of the agreement and submitted that the claim having not being raised within 28 days after the event, the Committee of Arbitrators could not have entertained such claim and pass an award. Learned counsel also referred to Clause 53.1, 53.2 and 53.3 of the agreement and submitted that the claim having not being raised within 28 days after the event, the Committee of Arbitrators could not have entertained such claim and pass an award. Shri S. K. Das, learned counsel appearing for the respondent submitted that the grounds for interference in an application under Section 34 of the Act are very limited and the appellants having not made out any such grounds, the learned District Judge rightly declined to interfere with the award and therefore this Court may not interfere with the impugned order. 6. In order to decide the dispute between the parties it is profitable to take note of the decision of the Apex Court in the case of Olympus Superstructures Pvt. Ltd. -v- Meena Vijay Khetan and others, reported in (1999)5 Supreme Court Cases 651. The learned District Judge has taken note of the said decision and has also quoted the relevant paragraph of the judgment in the impugned order. I, therefore, do not feel it necessary to repeat the same in this judgment. In the said case the Apex Court held that the issues relating to default, time being the essence, readiness and willingness etc. are all issues of fact. If Section 34(2) of the Act is examined it will be seen that under Clause (b) of Section 34(2) interference is permissible by the Court only if (i) the subject-matter of dispute is not capable of adjudication by arbitration under law, or (ii) the arbitral amount is in conflict with the public policy of India. The factual points do not fall within Section 34(2)(b)(ii). The Apex Curt also in the case of Oil and Natural Gas Corporation Ltd. -v- SAW Pipes Ltd, reported in 2003(2) Arb.L.R. 5 (SC) had taken the same view. Relying on the aforesaid two decisions several other deci¬sions have also been rendered by this Court. This being the position of law, I proceed to examine the grounds raised by the learned counsel for the appellants. 7. So far as the first ground is concerned, same relates to Claim Item No.4. Relying on the aforesaid two decisions several other deci¬sions have also been rendered by this Court. This being the position of law, I proceed to examine the grounds raised by the learned counsel for the appellants. 7. So far as the first ground is concerned, same relates to Claim Item No.4. The Committee of Arbitrators while deciding the claim took note of the objections raised to the above extent and the claim of respondent that they had given the undertaking under duress was accepted because of the reason that the claimant received final bill under protest and without prejudice to their rights and that the escalation benefits have been given to the claimant-respondent for the period of their over stay. However, the Committee of Arbitrators on examination of the records al¬lowed compensation for 73 days delay as against claim of 155 days. Reasons have been assigned by the Committee of Arbitrators in allowing the claim and I do not find any justification to interfere with the said reasons specifically in view of the provisions contained in Section 34 of the Act. 8. So far as the second ground taken by the learned coun¬sel for the appellants is concerned, it appears that Clause 53.1., 53.2 and 53.3. of the agreement provide that the claimant-respondent is responsible to give notice to the appellants within 28 days of occurrence of such event giving rise to the claim for payment of any additional amount. However, 53.4 provides for settlement of claims in absence of 28 days notice. It specifical¬ly provides that in the event of failure of the contractor to give 28 days notice his entitlement to payment shall not exceed such amount as the Engineer or any arbitrator/arbitrators ap¬pointed under the Arbitration clause determines. However, 53.4 provides for settlement of claims in absence of 28 days notice. It specifical¬ly provides that in the event of failure of the contractor to give 28 days notice his entitlement to payment shall not exceed such amount as the Engineer or any arbitrator/arbitrators ap¬pointed under the Arbitration clause determines. For convenience Clause 53.4 of the agreement is quoted below: “If the Contractor fails to comply with any of the provi¬sions of this Clause in respect of any claim which he seeks to make, his entitlement to payment in respect thereof shall not exceed such amount as the Engineer or any arbitrator or arbitra¬tors appointed pursuant to Sub-Clause 67.3 assessing the claim considers to be verified by contemporary records (whether or not such records were brought to the Engineer’s notice as required under Sub-clauses 53.2 and 53.3).” It is clear form the aforesaid clause that the Committee of Arbitrators appointed under Clause 67.3 of the agreement is competent to determine a dispute and pass award in respect of extra items/additional claim even though above clauses of the agreement have not been complied with. On this ground also I do not find any justification to interfere with the award or the impugned order. 9. Learned counsel for the appellants having failed to substantiate both the grounds taken before this Court, the appeal fails and accordingly stands dismissed. Appeal dismissed.