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2011 DIGILAW 631 (CAL)

M/S A. K. Ghosh & Co. v. STATE OF WEST BENGAL

2011-05-05

ASHOKE KUMAR DASADHIKARI

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Judgment : ASHOKE KUMAR DASADHIKARI, J. This is an application under Section 34 of the Arbitration and Conciliation Act of 1996, filed by the petitioner company challenging the award dated January 28, 2008 passed by the sole Arbitrator. The case made out by the petitioner in the instant petition is that, pursuant to an invitation to tender by the respondent for construction of building for Asansol Fire Station, the petitioner submitted its tender on 7th November, 1973. By a letter of acceptance dated 31st January, 1974 the respondent communicated the claimant that he has become successful to get the work. A formal agreement was entered into by and between the parties and the said agreement was numbered as contract No. 9 of 1974. It was contended on behalf of the petitioners that due to reasons attributable to the respondent the petitioner had to suspend the work and he was put to loss on various accounts, which was communicated by petitioner by his letter dated 11th June, 1975. The petitioner also raised his claim in that regard. The work was completed by the petitioner on 30th June, 1997 in place of stipulated date of completion by 30th January, 1975. Although, the work was required to be completed by 12 months, the actual time taken for completion of the work is 41 months. After completion of the entire work on 30th June, 1997, the respondent was persuaded by the petitioner for preparation and payment of the final Bill. However, after expiry of more than 8 months since completion of the work, the respondent prepared one purported final Bill which did not include all the sums payable to the petitioner. The petitioner received the final Bill payment with objection since his claims were not accepted by the respondents. In spite of several letters and reminders the respondent authorities did not pay the amount as claimed by the petitioner. The petitioner by its letter to the Chief Engineer, PWD requested to enter upon a reference for adjudication of the claims/disputes as raised by him. The said Chief Engineer was also requested to appoint another Arbitrator in his place and stead in case he is unwilling to Act as Arbitrator. The petitioner by its letter to the Chief Engineer, PWD requested to enter upon a reference for adjudication of the claims/disputes as raised by him. The said Chief Engineer was also requested to appoint another Arbitrator in his place and stead in case he is unwilling to Act as Arbitrator. In spite of all request and letters issued by the petitioner the respondents did not take any steps and the petitioner caused their solicitor and advocate to serve the reminder by letter dated 8th June, 1988 to the Chief Engineer, public works department Government of West Bengal for entering upon the disputes that has arisen between the parties. Thereafter another letter was issued by the solicitor of the petitioner which was also not replied, nor any Arbitrator was appointed. By letter dated 4th August, 1998 the solicitor and advocate of the petitioner appointed Mr. G.C. Law, Bar-at-Law, Bar Library Club, Calcutta, High Court, the Arbitrator to adjudicate the dispute and in that letter the Chief Engineer was requested to concur in the appointment of Mr. Law as arbitrator within 15 days from the date of receipt of the said letter. By a subsequent letter dated 6th August, 1998, the solicitor and advocate on behalf of the petitioner informed Mr. G.C. Law that he has been appointed as arbitrator in the matter. G.C. Law enter upon the reference and directed the petitioner to file their statement claims. Said Shri G.C. Law made and published the award thereafter, but the award was set aside by the High Court pursuant to an application filed by State of West Bengal to that effect. In the said letter the Hon’ble High Court directed that the Arbitrator be appointed for adjudication of disputes and differences that have arisen between the parties. As the respondent did not appoint arbitrator for a pretty long period, having knowledge with the order or the direction given by the Hon’ble High Court, the petitioner made an application before the Hon’ble High Court for appointment of arbitrator after revoking the authority of Chief Engineer of the department to appoint arbitrator in terms of the earlier order. However, Shri Partha Sarathi Basu, solicitor and advocate was appointed by the Hon’ble High Court for adjudication of the claims raised by the petitioner and award was passed by Mr. However, Shri Partha Sarathi Basu, solicitor and advocate was appointed by the Hon’ble High Court for adjudication of the claims raised by the petitioner and award was passed by Mr. Basu and the said award was confirmed by the High Court and the petitioner received payment in terms of the said award by execution of decree. The learned Counsel for the petitioners submitted that the claim which has been adjudicated by Shri Basu is completely different from the statement of claims preferred in the claimant’s letter dated 18th June, 1979. He contended that the executive Engineer did not make payment of the sums demanded out of the aforesaid claims at all and the claim Nos. 1.1 to 1.13 under serial number of 1 list of claims/outstanding dues are all in respect of extra works executed by the claimant, on instruction and direction by the respondent. Such extra items of work were all required to be executed to complete the job as per the drawings made available to the petitioner. However, being directed afresh the Chief Engineer, PWD appointed Shri Santanu Basu Roi Chowdhury have entered into the reference and after considering the claims, statement of defence and materials on record, the Arbitrator rejected claim No. 1 to 6 and against claims No. 7 and 8 awarded nil. Although, the learned Arbitrator considered the claims separately but he has rejected the claims mainly on the ground that the claims and disputes as made by the petitioner had already been adjudicated by the earlier Arbitrator Mr. Basu. It was submitted by the learned Counsel for the petitioner that the award is perverse, opposed to public policy. It was argued that the very basis of award is wrong and the Court should interfere. It was submitted that the earlier claim was for increase of rates which was awarded in favour of the petitioner and the present claim is totally different from that of earlier one but the learned Arbitrator passed the award on the basis of earlier decision and/or award given by Mr. Basu. The learned Counsel for the petitioner submitted that following the principles as decided in (ONGC Vs. Shaw Pipes) reported in 2003, Vol. 4 SCC Page 705, the award should be set aside specially when the award is patently illegal and opposed to public policy. Basu. The learned Counsel for the petitioner submitted that following the principles as decided in (ONGC Vs. Shaw Pipes) reported in 2003, Vol. 4 SCC Page 705, the award should be set aside specially when the award is patently illegal and opposed to public policy. The learned Counsel as referred various paragraphs of the said decision and contended that the award should be set aside. The learned Counsel for the respondent on the other hand submitted that the award is lawful and valid and the learned Arbitrator have quoted the earlier claims and also after a careful analysis of the claims as raised in the earlier arbitration proceedings as well as the present claims, have come to definite conclusion that the previous Arbitrator, Mr. Basu have adjudicated the claims and disputes placed before him after completion of the work and receiving payment of final Bill with protest. He contended that it was the finding of the learned Arbitrator that the present claims are covered by the earlier claims and once the earlier award is held and directed with full and final settlement of the disputes and claims, there is no scope of any further adjudication of any claim on the same contract. He submitted that the award passed by the learned Arbitrator is a reasoned one and the learned Arbitrator have passed the award after careful examination of the claims and, therefore, there cannot be any grievance on the part of the petitioners. Heard the learned Counsel appearing for both sides and considered the materials on record as well as the submissions made by the respective learned Counsel of either side. It appears from the decision of the learned Arbitrator that the claims made by the petitioner in the instant arbitration proceedings, has already been decided by the previous Arbitrator. The decision of the Arbitrator under Paragraph 9.7 reads as follows:- “It is clear from the above that the Ld. Arbitrator of the previous Arbitration Sri Bose adjudicated the claims and disputes placed him by the Claimant after completion of the work and receiving payment of the final bill with protest. The claimant had all the time and opportunity to assess his losses, damages, extra expenses, interests, costs, etc., whatsoever as deemed right and had preferred his claims on the basis of the same in the previous Arbitration before Ld. The claimant had all the time and opportunity to assess his losses, damages, extra expenses, interests, costs, etc., whatsoever as deemed right and had preferred his claims on the basis of the same in the previous Arbitration before Ld. Arbitrator Sri Bose and finally after adjudication of the dispute and claims the Award was held with full and final settlement. As a principle of res judicata there shall be no multiplicity of proceedings and there shall be finality of proceedings. Once the Award is held and directed with full and final settlement of the disputes and claims by the Ld. Arbitrator long after the completion of the work and receipt of payment of final bill with protest, there is no scope of any further adjudication of any claims on the same contract. The contract is closed in all respect and as such, there shall be no other claim to be adjudicated and all the claims of the present Arbitration are liable to rejection.” Before coming to such conclusion the Arbitrator considered the claims raised by the petitioner before the previous Arbitrator and in his award quoted the claims under Paragraphs 14, 15 and 23 of statement of facts of the claimant placed before Shri Basu in the previous arbitration proceedings. The contains of aforesaid three paragraphs are quoted hereunder:- “Due to abnormal delay in executing the work the claimant has suffered various losses as under:- (i) An increased cost in his running on-site overhead for a period of 41 months in place of contemplated 12 months. (ii) Inflationary or other increase in the cost of materials and labour which he would not have incurred but for the delay. (iii) A loss of profit earning capacity due to its being retained longer in the contract in question without any corresponding increase in the monetary benefit earned and without being free to move elsewhere to earn the profit which it might otherwise do. (iv) A loss owing to the fact that his offsite over-heads (Head Office expenses etc.) need to be recovered from a smaller annual turnover than that budgeted for. (v) Lower productivity from claimants plant, equipments and labour. (vi) Interest on capital blocked due to aforesaid expenditures not contemplated in the contract. (iv) A loss owing to the fact that his offsite over-heads (Head Office expenses etc.) need to be recovered from a smaller annual turnover than that budgeted for. (v) Lower productivity from claimants plant, equipments and labour. (vi) Interest on capital blocked due to aforesaid expenditures not contemplated in the contract. In the premises the claimant is justly and properly entitled to claim reimbursement of the increase of the expenses or additional cost of the execution for all works done. In the course of the execution of the work the Respondent effected various changes in the specification governing the contract. On instruction from the Respondent the claimant execute the work under the said contract subject to various changes of a specification. The claimant also on the direction and instruction of the Respondent executed various extra works in connection with or relating to the said contract. The changes in the specifications and the extra works which the Respondent instructed the claimant to do were duly intimated by the Claimant to the Respondent from time to time and various letters were exchanged between the parties in connection therewith. Due to such changes and expenses and from time to time the claimant duly intimated the Respondent that the claimant was so entitled. In the light of the above background the Claimant now submits his schedule of claims as under:- Schedule of Claims Description of claim Amount claimed Re-imbursement of added expenses or Rs. 86,648/-Additional cost of execution for works Executed in the enlarged period. Besides the claim, claims regarding interests and cost of Arbitration, Court cases etc. had been preferred.” After taking note of the statement of claim in the previous arbitration proceedings and comparing with the present claim the Arbitrator have come to the definite conclusion that the claimant assessed all his losses, damages and extra expenses after completion of the work on the basis of considerations stated in the said paragraphs and submitted his claim i.e. all added expenses of losses and additional costs on the enlarge period of the contract. The learned Arbitrator after careful consideration of the previous claims and also the present claims have further being pleased to held that the circumstances and considerations on which the claims have been preferred are basically same in both previous as well as in the present arbitration. The learned Arbitrator after careful consideration of the previous claims and also the present claims have further being pleased to held that the circumstances and considerations on which the claims have been preferred are basically same in both previous as well as in the present arbitration. The learned Arbitrator also found that the previous Arbitrator, Shri Basu adjudicated the claims of all losses, damages and additional costs for the entire period of work put forward by the claimant before him. He has also decided that in the present arbitration almost all the claims of the claimant are same as the previous arbitration already adjudicated on the same contract. He did not find any difference between the statement of claims submitted before the previous Arbitrator and the statement of claims made before him in the present arbitration proceedings. He has also concluded that previous arbitration have already adjudicated all the issues and passed the award and, therefore, all the claims have been rejected. In my opinion these are all findings of facts and the Court should not interfere in it. The petition is dismissed. There would be no order as to costs.