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2016 DIGILAW 506 (UTT)

State of Uttarakhand through Superintending Engineer, Haridwar v. Bansal Construction

2016-08-22

SERVESH KUMAR GUPTA

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JUDGMENT : Servesh Kumar Gupta, J. 1. This appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the ‘Act’) has been preferred assailing the judgment and order dated 19.8.2014 rendered by the District Judge, Haridwar, whereby the learned Judge has disallowed the objections under Section 34 of the Act pertaining to the claim no. 2, 3, 6, 7, 8, 9, 10, 11, 14 and 15. The objection of the State in respect of claim no. 1 has partly been allowed, while it has been allowed completely pertaining to claim no. 12. Feeling aggrieved, the State has come up in appeal before this Court. 2. It would be pertinent to lay down certain facts, shorn of unnecessary details. In the year 2008-09, tenders were invited by the appellant for construction and improvement of Manglore-Landhora Road in the wake of upcoming Kumbh Mela, 2010 in District Haridwar. The respondent floated its tender, which after due scrutiny was accepted by the Public Works Department (PWD) of the State and an agreement dated 28.6.2008 was reduced into writing depicting the whole terms and specifications of such contract. Total cost of the tender was Rs. 3,85,76,350/-. The work had to be initiated w.e.f. 28.6.2008 and to be completed within the next nine months, i.e. uptill 27.3.2009. However, the contractor on account of myriad constraints could not complete the work. So, the time for such completion was extended up to 15.6.2009. One of the primary reasons for this delay in completion of work was that during the course of working, when a third party Shri Ram Institute for Industrial Research, New Delhi was called to check and test the quality and standards of the work as per the specifications of the Ministry of Road Transport and Highways (MORTH), then it was found that the work of the contractor in laying down the road of as long as six kilometres was not up to the mark. Therefore, the Superintending Engineer/Executive Engineer of the PWD issued a letter dated 19.11.2008 directing the contractor to dismantle the executed work for deficiencies and redo the work after removing those shortcomings as per the specifications and this was the reason, the State was impelled to extend the time for completion of such work up to 15.6.2009, but still the same could not be completed and the contractor took almost 13 months further to commission the road on 24.7.2010. 3. When the dispute arose regarding the enhanced payments as demanded by the respondent, the matter was referred to the arbitrator at the initiation of the contractor. Mr. Girish Chandra Garg, retired Chief Engineer of the PWD, was appointed arbitrator by the High Court to adjudicate the dispute. Award was made on 17.11.2011. The arbitrator did not consider it appropriate to accept the claim no. 4, 5, 10 and 13 which were regarding the compensation for loss of overhead charge, compensation for loss of profit, reimbursement required for renewal of bank guarantee and future recovery respectively. Most the claims were accepted by the arbitrator subject to certain modifications. In total, the arbitrator had awarded Rs. 2,03,60,197/- along with 9 per cent interest w.e.f. 1.9.2010 to the date of award and future interest on all claims further @ 9 per cent from the date of award to the date of payment. 4. Feeling aggrieved, PWD filed a revision under Section 34 of the Act before the learned District Judge, who vide the impugned judgment and order had affirmed the award on most of the claims except reducing the amount of claim no. 1, which relates to the payment of residual amount of final bill and the learned District Judge had mitigated such amount to the tune of Rs. 10,53,250/-. This way the payment of Rs. 1,58,107 has been reduced on this score. 5. That apart, the learned District Judge did not find any basis for awarding rupees two lakhs towards the claim no. 12 and it was omitted in its entirety. On rest of the scores including the interest, the learned District Judge did not find it appropriate to disturb the same. 6. Still feeling dissatisfied, the State Government has come up invoking the powers of this Court under Section 37 of the Act. 7. 12 and it was omitted in its entirety. On rest of the scores including the interest, the learned District Judge did not find it appropriate to disturb the same. 6. Still feeling dissatisfied, the State Government has come up invoking the powers of this Court under Section 37 of the Act. 7. I have heard the rival contentions and feel that the grounds stated in the appeal are by and large bald in nature and without any specific details as to on what score, the arbitrator and the District Judge have gone wrong in making out their findings. Argument of learned Deputy Advocate General also could not point out any material irregularity or incongruity or mistake, which is apparent on the face of record, while the learned Counsel on behalf of the respondent/contractor has relied upon the precedent of this Court rendered in AO No. 143/2015 on 17.3.2016 in case of Superintending Engineer, NH Circle 10, Uttarakhand, PWD, Dehradun vs. M/s Madhva Hytech Engineers Pvt. Ltd. wherein this Court, while basing its findings on many other judgments of the Hon’ble Apex Court, has propounded that scope of interference under Section 34 and 37 of the Act is very limited. The Court would not be justified in re-appraising the material on record and substituting its own view in place of arbitrator’s view. But where there is an error apparent on the face of the record or the arbitrator has not followed the statutory legal position, then and then only it would be justified in interfering with the award published by the arbitrator. 8. I have perused the findings of the learned arbitrator and intensely feel that if the road concerned could not be constructed as per the norms of the MORTH and this fault was detected in the investigations done by an independent agency, i.e. Shri Ram Institute of Industrial Research, New Delhi, then it was not unusual for the authorities of the PWD to ask the contractor to dismantle the executed work in order to remove the deficiencies and redo the same as per the specifications of MORTH. Therefore, it is difficult to exonerate the contractor for the delayed work as well as the extra cost, which he was to incur in laying down the road after removing the deficiencies. 9. Therefore, it is difficult to exonerate the contractor for the delayed work as well as the extra cost, which he was to incur in laying down the road after removing the deficiencies. 9. When I look up this award from the aforesaid point of view, then I find it difficult to allow the claim no. 6 at least in its entirety, as has been demanded by the contractor. This claim pertains to the payment of work involved in redoing the work of WBM (Two coats of G-2) from Km 0 to Km 6. On this score, the contractor claimed Rs. 1,29,17,240/- and the same has been awarded by the arbitrator without looking to the apparent slackness on the part of the contractor so that the quality of the road fell short of required standards. Learned District Judge has also gone into oblivion while upholding the award of the arbitral tribunal on this score. 10. It has been vehemently argued by the learned Counsel of the respondent that when the contractor was asked to reconstruct the road after dismantling the earlier one, then all the stones which were used by him had become useless and it was required to lay down the layer of fresh stones. 11. This argument may be accepted partially, but not wholly because the stones which were used in constructing this road could not have been permitted to go waste completely, and certainly at least 20 per cent of the material which was used earlier could have been re-used while reconstructing the road as per the guidelines issued by the department on 19.11.2008. Therefore, it would be in the fitness of things that at least 20 per cent of this amount, what was claimed and granted, must be reduced and while doing so, such 20 per cent of Rs. 1,29,17,240/- comes to Rs. 25,83,448/-. If this amount is reduced from what was granted, then it comes to Rs. 1,03,33,792/-. 12. Besides, the inordinate delay in completing the work had not completely served the purpose, wherefor the contract was granted because the major period of Kumbh Mela had passed away by the time the road could be commissioned by the contractor on 24.7.2010. 13. 25,83,448/-. If this amount is reduced from what was granted, then it comes to Rs. 1,03,33,792/-. 12. Besides, the inordinate delay in completing the work had not completely served the purpose, wherefor the contract was granted because the major period of Kumbh Mela had passed away by the time the road could be commissioned by the contractor on 24.7.2010. 13. So, I find that this material irregularity, which had completely been ignored not only by the arbitrator but also by the learned District Judge, now should be subject to rectification by this Court and I hereby modify the award on the claim no. 6 from Rs. 1,29,17,240/- to Rs. 1,03,33,792/-. 14. Subject to the above modification, as indicated supra, I do not find any force in this appeal. Hence, I partly allow the appeal in the above terms.