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2011 DIGILAW 591 (CAL)

Harendra Prasad Roy v. UNION OF INDIA

2011-04-28

ASHOKE KUMAR DASADHIKARI

body2011
Judgment : ASHOKE KUMAR DASADHIKARI, J. This is an application filed by the petitioner challenging the award dated 19th June, 2001 published by the three Arbitrators. The matter was appearing in the list. No one for the respondents appeared on any occasion. I directed the learned Counsel for the petitioner to serve a notice upon the respondents as well as their learned Advocate. A notice was served on 4th March, 2011 upon the General Manager Eastern Railway, 17 N.S. Road, Calcutta 01, but no one appeared on their behalf on the date of hearing. On 18th April, 2011 another notice was served on S.S. Sarkar, Central Government advocate at 11 Stand Road, Calcutta 01, which was duly received by the Ministry of Law and Justice, department of legal affairs. Both letters bearing acknowledgment of receive are kept in records. In spite of, all efforts no one appeared on behalf of the respondents when the matter was heard. The learned Counsel for the petitioner submitted that pursuant to a notice inviting a tender by the respondents in respect of the work “Misc. works of extension of B. No. 80A, construction of drain, boundary wall, floor, barbed wire fencing, OHE foundation, inspection ladder, hume pipe, etc.,” the petitioner submitted his tender. The tender was accepted by the Chief Engineer at a price of Rs.32,69,246.68p and the period for completion of work was six months commencing from 19th March, 1996 to 18th September, 1996. The petitioner being the contractor was to deposit Rs.20,000 as earnest money. The agreement/contract was signed by and between the parties on 8th August, 1996. It was alleged on behalf of the petitioner that the delay in execution of agreement was solely due to fault of the respondents and only five weeks was left for execution of work. It was submitted that due to non-availability of drawing of the bridge and the barbed wire fencing and other foundation, the progress of the work was suffering. There was also a local disturbance and it was informed that people are threatening with some ulterior motive and not allowing petitioner’s men to work on different dates. Petitioner also wrote to the Chief Minister of the State for his personal intervention to stop miscreant activities. There was also a local disturbance and it was informed that people are threatening with some ulterior motive and not allowing petitioner’s men to work on different dates. Petitioner also wrote to the Chief Minister of the State for his personal intervention to stop miscreant activities. It was also alleged that the construction of the bridge was delayed due to non-supply of drawing by the respondents and due to all such obstruction and inconveniences the petitioner has suffered loss. On several occasions as per oral instructions for construction of bridge various changes had to be effected. It was claimed, as per Section 55 of the contract Act, losses for delay is to be compensated. It was also alleged that apart from causing theft of cement and steel, free site not handed over and hence breach of contract committed by the respondents. It was also contended that adequate labours engaged and the petitioner have completed some work and have made request to take steps to supply approved drawing of the bridge, remove antisocial elements, give full protection of site, to pay Running Account Bill for work already measured, to give layout of site where earth is to be filled, to instruct the Supervisor at site for rendering cooperation, etc.. The petitioner prayed for extension of time till 18th January, 1997 under Clause 17(3) of general condition of contract. The learned Counsel for the petitioner submits that, from the minutes of the meeting held with the Chief Secretary, it would appear there was law and order problem at this site. It was also contended that on several occasions meeting were held in the chamber of the S.D.O., Sadar Hooghly. The petitioner tried to lodge F.I.R. for missing materials and machineries, as per instruction of Deputy Chief Engineer, but the concern Police Station refused to accept. It was contended on behalf of the petitioner that time was extended up to 31st December, 1996 for execution of the award. Where after no extension was granted by the respondent and accordingly the contract legally came to an end on 31st December, 1996. However, the respondents illegally terminated the contract on 28th January, 1997. It was contended on behalf of the petitioner that time was extended up to 31st December, 1996 for execution of the award. Where after no extension was granted by the respondent and accordingly the contract legally came to an end on 31st December, 1996. However, the respondents illegally terminated the contract on 28th January, 1997. Ultimately, by and under letter dated 19th February, 1997 the petitioner informed the Assistant Engineer that he attend the site on 7th February, 1997 and 19th February, 1997, as per his instruction, for the purpose witnessing joint measurement for the work executed, but no officer of the Railway was present at the site and for that reason measurement could not be taken. He requested to fix new date of taking measurement but not such measurement was taken. The petitioner raised disputes in his letter dated 5th May, 1997 and requested to refer the matter to the arbitration. Again on 17th June, 1997 the petitioner gave a reminder. On 1st August, 1997, once again the petitioner requested the General Manager, Eastern Railway Calcutta to refer the dispute to the arbitration immediately. The disputes were referred by the General Manager before the Arbitrators appointed by him. Three Arbitrators viz. Shri A. K. Chattopadhyay, Shri M. Alam and Shri S. Guha were appointed at joint arbitrators and after considering the statement of fact and claims counter statement of facts and claims and all relevant of papers and documents the award was published by the said three Arbitrators on 19th June, 2001. The learned Counsel Mr. Ghosh appearing for the petitioner submits that the impugned award is unreasoned. He submitted that a bare reading of the award will show that the Arbitrator have not properly considered the materials and did not disclose the grounds and/or reasons for coming to a conclusion on the issues raised by the petitioner. It was submitted that the Arbitrators have not considered the vital documents as well as the facts of the case. It was submitted that since the claim is denied by the respondents the Arbitrators, being employees of the respondents have accepted such denial and accordingly rejected the claim of the petitioner. It was submitted that the Arbitrators traveled beyond the parameters of the contract and purportedly considered the different contract which has no manner of relevance and/or connection with the present claims of the petitioner. It was submitted that the Arbitrators traveled beyond the parameters of the contract and purportedly considered the different contract which has no manner of relevance and/or connection with the present claims of the petitioner. It was further submitted that under Clause 63 of the arbitration agreement, of the general conditions of contract, the Arbitrators to give intelligible award. It was also submitted that reasoning leading to the award should be stated separately with each individual items of disputes referred to arbitration. In this regard it was referred by the learned Counsel the provision under Sub-section (3) of Section 31 of the Arbitration and Conciliation Act, 1996. It was further submitted that the award is opposed to public policy and contrary to Section 31(3) of the Arbitration and Conciliation Act, 1996 and, therefore, liable to set aside. Mr. Ghosh, learned Counsel, therefore, submitted the award should be set aside under Section 34(2) of the aforesaid Act. He had referred the judgment reported in 2003(5) SCC (ONGC vs. Shaw Pipes) and the relevant paragraphs as referred by Mr. Ghosh are Paragraphs 15, 16, 22, 26, 27, 30, 31, 41, 42, 55 and 74. According to Mr. Ghosh on these grounds the impugned award cannot be sustained and the same is liable to be set aside. Heard the submissions of Mr. Ghosh considered the relevant materials available in records and also considered the award passed by the three Arbitrators which is Annexure ‘G’ to the petition. After going through the award I find that the award is an unreasoned one. It appears from a plain reading of the impugned award that the Arbitrators did not apply their mind properly and also did not assign reasons while deciding the issues and/or claims raised by the claimant/petitioner. Under Sub-section (3) of Section 31 of the Arbitration and Conciliation Act, 1996 the Arbitrators are under a statutory obligation to disclose the reasons, but in the instant case no proper reasoning was given by the Arbitrators before coming to a conclusion against the respective issues. On this ground alone the award itself is liable to set aside. It also appears to me that the learned Arbitrators did not consider the vital documents which were disclosed by the petitioner. On this ground alone the award itself is liable to set aside. It also appears to me that the learned Arbitrators did not consider the vital documents which were disclosed by the petitioner. It appears from the award, when the Arbitrators considering claim No.6 made by the petitioner, it was recorded by them:- “claimant, however, could not produce any evidence wherein request for returning of materials and machines left at site was made by him to the respondent.” Mr. Ghosh, learned Counsel refer to a letter dated 13th January, 1997 which was disclosed before the learned Arbitrator and a plain reading of the said letter reveals that a request was made for returning back the materials, etc., valued Rs.6 lakhs, but the Arbitrators have held otherwise without taking note of such document and have denied the claim of the petitioner without consideration of the relevant materials available before them. In this regard, Mr. Ghosh cited a decision reported in AIR 1975 Supreme Court 1259 Paragraph 6, wherein it was held by the Hon’ble Apex Court that non-consideration of materials available on record is Arbitrator’s misconduct. I find substance in that argument of Mr. Ghosh and hold that the Arbitrators mis-conducted themselves by not considering the materials which were placed before them. In my opinion the award lacks consideration of material documents and, thus, it is a perverse award and as such the same should be set aside. As regards, claim No. 1 (unpaid amount for works already executed) no justifiable reason was given for awarding amount of Rs.32,640.51. It is not clear why the said amount was awarded against a claim of Rs.3,90,221.36 and such an award passed by the Arbitrators is without any basis and/or without any reason whatsoever. So far as claim No. 2 of the petitioner is concerned, it relates to return of security deposit and the Arbitrators without considering the relevant documents and/or papers and/or materials available on record came to a conclusion that the claimant could not establish the reason behind delay in execution of work and, therefore, such conclusion is perverse. While considering the claim the Arbitrators recorded that the respondent submitted some documents to establish that the other contractors acknowledge to work in the same area during the same material time had completed their work and their bills were also paid. While considering the claim the Arbitrators recorded that the respondent submitted some documents to establish that the other contractors acknowledge to work in the same area during the same material time had completed their work and their bills were also paid. It appears to this Court that those are not relevant materials for consideration of the claim raised by the petitioner. In the instant case the Arbitrators ought not to have relied on those documents and/or papers relating to other contractors which are not at all material for the purpose of deciding the claim of the petitioner. In my view the Arbitrators have traveled beyond the contract and have come to a wrong conclusion. Thus, they have traveled beyond their jurisdiction and, therefore, the award passed by the learned Arbitrators are liable to be set aside. In view of my aforesaid findings I set aside the award dated 19th June, 2001 and direct the three learned Arbitrators to rehear and re-determine the issues strictly in accordance with law upon giving proper opportunity of hearing to both sides. In case anyone of the three learned Arbitrators or all of them is or are not available or not inclined to Act as arbitrator, liberty is granted to the General Manager, Eastern Railway, Calcutta to appoint new arbitrator or arbitrators in place of the aforesaid three joint Arbitrators or anyone of them. The application is allowed. There would be, however, no order as to costs.