Narendra Kumar Tiwari v. Executive Engineers, Public Work Department
2017-01-23
VEERENDR SINGH SIRADHANA
body2017
DigiLaw.ai
JUDGMENT : Veerendr Singh Siradhana, J. 1. By order dated 3rd September, 2007, the District Judge, Dholpur, declined the objections instituted by the appellant/claimant under Section 34 of the Arbitration & Conciliation Act, 1996 (for short, 'the Act of 1996'), while upholding the award made by the Arbitrator dated 31st May, 2005, of which he is aggrieved of. 2. Briefly, the essential skeletal material facts necessary for appreciation of the controversy are that the appellant/claimant entered into an agreement for work of construction of road from Dholpur to Bumbroli via Bhjaisana with the Executive Engineer, P.W.D, Dholpur. According to the work order, the work of construction was to commence from 3rd August, 1987, and conclude on 2nd August, 1988. In the agreement between the parties, reduced to writing and signed; stipulation under Clause 45 of the agreement was deleted, which contemplated for increase or decrease in the cost due to labour and/or cost of materials according to the formula stipulated therein, in case there was a dispute as to the increase in the wages of labour and cost of materials due to additional work. Be that as it may, the dispute between the parties was referred to the Arbitrator in view of the arbitration clause in the agreement. 3. The Arbitrator vide award dated 31st May, 2005, declined the claim partially and made an award of Rs. 52,100/- payable to the appellant/claimant, within three months from the date of award with simple interest @ 18% per annum from the date of award uptil actual date of payment. 4. Learned counsel for the appellant has assailed the impugned award as well as the order dated 3rd September, 2007, made by the District Judge, Dholpur, declining the objection under Section 34 of the Act of 1996; on the ground that while making the impugned award dated 31st May, 2005, the Arbitrator as well as the Court below did not take consideration the element of excess payment for additional award that was contemplated under Clause 45 of the contract agreement, and therefore, the appellant/claimant is entitled for payment of Rs. 1,24,237/- (Rupees One Lac Twenty Four Thousand and Two Hundred Thirty Seven), under the price escalation clause. 5. A glance of the award would reveal that the parties to the contract agreement and their written agreement deleted Clause 45 of the agreement.
1,24,237/- (Rupees One Lac Twenty Four Thousand and Two Hundred Thirty Seven), under the price escalation clause. 5. A glance of the award would reveal that the parties to the contract agreement and their written agreement deleted Clause 45 of the agreement. The Arbitrator took a specific note of the fact that the contract agreement was signed by the parties were deletion of the Clause 45 of the agreement was struck off. Further, Clause 45 is attracted where contract value executed Rs. 5 Lacs and stipulated period of completion is more than 12 months and work is carried out within stipulated period or extension thereof. 6. Heard the learned counsel for the appellant and gave my thoughtful consideration to the submissions at Bar so also scanned the impugned award and the impugned order dated 3rd September, 2007, declining the objections of the appellant under Section 34 of the Act of 1996. 7. Indisputably, the contract agreement stipulated period less than 12 months for completion of the work. Clause 45 refers to a situation where completion of the contract is for more than a period of 12 months and not to the actual completion period. Based on the analysis of the pleadings of the parties and in the backdrop of the materials on record, in view of clause 45 of the agreement; the matter has been examined by the Arbitrator in detail, which reads thus: C - The claimant in his written argument has stated that clause 45 of agreement is applicable, if during progress of contract value of work exceed Rs. 5 lacs and where completion period is more than 12 months. The above clause also provide that it will be applicable only for the work that is carried out within stipulated period or extension thereof not attributable to the contractor. The total cost of work executed is over Rs. 10 lacs as per 19th final bill enclosed with arguments and actual date of completion is 31.7.89. Therefore the clause 45 is applicable even if it is deleted in Agreement, and the claimant is entitled for payment of escalation charges due to increase in price index @ 20 % i.e. Rs.1,24,237/- The claimant has also stated that the action of the respondent Additional Chief Engineer is impose a token compensation of Rs. 4000/- is just to escape from the responsibility of payment of damages.
4000/- is just to escape from the responsibility of payment of damages. R - The respondent department in their written agreement has stated that no representation was submitted by the claimant for restoration of clause 45 of agreement, and both parties had initially signed the deletion of clause 45 of agreement. The respondent has further stated that clause 45 is applicable to contract value exceeding Rs. 5 lacs and stipulated period of completion is more that 12 months and work is carried out within stipulated period or extension thereof are not attributable to the contractor and no price adjustment other than those provided in clause 45 of agreement 28 for 87-88 shall be entertained. So this clause is not applicable when the stipulated completion period is less than 12 months. This clause refers to stipulated completion period and not to the actual completion period as per agreement. The Additional Chief Engineer has imposed compensation of Rs. 4000/- due to delay attributable to the contractor. Hence, where delay is partly attributable to the contractor no claim for price adjustment as per clause 45 of agreement No. 28 for 89-88 is to be entertained. 8. The Additional Chief Engineer did impose compensation of Rs.4,000/- due to delay attributable to the contractor, and therefore, the Arbitrator, declined the claim for price adjustment that was claimed in the backdrop of Clause 45 of the agreement. The District Judge, Dholpur, on a consideration of the objections, confirmed the award made by the Arbitrator dated 31st May, 2005. 9. By a catena of judgments of the Apex Court of the land, by now it is well settled that the Arbitrator is required to decide the agreement in terms of the contract and where the Arbitrator construes a term of contract in a reasonable manner which is capable of two possible interpretations, then it will not mean that the award can be set aside on that ground alone. 10. In a recent pronouncement in the case of National Highways Authority of India v. ITD Cementation India Limited: 2015 (14) SCC 21 ; the Apex Court of the land, on a survey of the earlier opinions, held thus: 22. In Rashtriya Ispat Nigam Ltd. v. Dewan Chand Ram Saran, the Court held: (2012) 5 SCC 306 , (p. 320, para 43), 43.
In Rashtriya Ispat Nigam Ltd. v. Dewan Chand Ram Saran, the Court held: (2012) 5 SCC 306 , (p. 320, para 43), 43. In any case, assuming that Clause 9.3 was capable of two interpretations, the view taken by the arbitrator was clearly a possible if not a plausible one. It is not possible to say that the arbitrator had travelled outside his jurisdiction, or that the view taken by him was against the terms of contract. That being the position, the High Court had no reason to interfere with the award and substitute its view in place of the interpretation accepted by the arbitrator. 23. In Sumitomo Heavy Industries Ltd. v. ONGC Ltd., the Court held: (2010) 11 SCC 296 (p.313 para 43), 43...The umpire has considered the fact situation and placed a construction on the clauses of the agreement which according to him was the correct one. One may at the highest say that one would have preferred another construction of Clause 17.3 but that cannot make the award in any way perverse. Nor can one substitute one's own view in such a situation, in place of the one taken by the umpire, which would amount to sitting in appeal. As held by this Court in Kwality Mfg. Corn. v. Central Warehousing Corpn. the Court while considering challenge to arbitral award does not sit in appeal over the findings and decision of the arbitrator, which is what the High Court has practically done in this matter. The umpire is legitimately entitled to take the view which he holds to be the correct one after considering the material before him and after interpreting the provisions of the agreement. If he does so, the decision of the umpire has to be accepted as final and binding. 24. In a recent decision in Associate Builders v. DDA while discussing "the public policy of India" contained in Section 34(2)(b)(ii) of the Arbitration Act, 1996 this Court dealt with each of the heads contained in Saw Pipes Judgment in the light of three distinct and fundamental juristic principles added in ONGC Ltd. v. Western Geco. International Ltd. "Patent illegality" which is one of the heads contained in Saw Pipes judgment (Supra) was then elaborated and we quote paras 42 to 42.3: 42.
International Ltd. "Patent illegality" which is one of the heads contained in Saw Pipes judgment (Supra) was then elaborated and we quote paras 42 to 42.3: 42. In the 1996 Act, this principle is substituted by the 'patent illegality' principle which, in turn, contains three sub-heads: 42.1(a) A contravention of the substantive law of India would result in the death knell of an arbitral award. This must be understood in the sense that such illegality must go to the root of the matter and cannot be of a trivial nature. This again is a really a contravention of Section 28(1)(a)of the Act, which reads as under: 28. Rules applicable to substance of dispute.- (1) Where the place of arbitration is situated in India,- (a) in an arbitration other than an international commercial arbitration, the arbitral tribunal shall decide the dispute submitted to arbitration in accordance with the substantive law for the time being in force in India; 42.2 (b) a contravention of the Arbitration Act itself would be regarded as a patent illegality-for example if an arbitrator gives no reasons for an award in contravention of Section 31(3) of the Act, such award will be liable to be set aside. 42.3(c) Equally, the third sub-head of patent illegality is really a contravention of Section 28(3) of the Arbitration Act, which reads as under: 28. Rules applicable to substance of dispute.- (1)--(2) *** (3) In all case, the arbitral tribunal shall decide in accordance with the terms of the contract and shall take into account the usages of the trade applicable to the transaction. This last contravention must be understood with a caveat. An arbitral tribunal must decide in accordance with the terms of the contract, but if an arbitrator construes a term of the contract in a reasonable manner, it will not mean that the award can be set aside on this ground. Construction of the terms of a contract is primarily for an arbitrator to decide unless the arbitrator construes the contract in such a way that it could be said to be something that no fair minded or reasonable person could do. 25. It is thus well settled that construction of the terms of a contract is primarily for an arbitrator to decide.
25. It is thus well settled that construction of the terms of a contract is primarily for an arbitrator to decide. He is entitled to take the view which he holds to be the correct one after considering the material before him and after interpreting the provisions of the contract. The court while considering challenge to an arbitral award does not sit in appeal over the findings and decisions unless the arbitrator construes the contract in such a way that no fair minded or reasonable person could do. 11. Thus, in view of the settled proposition of law to the effect that the construction of the terms of a contract is primarily for an Arbitrator to decide unless the construction is unfair or unreasonable; the adjudication made by the Arbitrator as to the non-applicability of clause 45 of the contract agreement, cannot be faulted. 12. No other point was raised before this Court for consideration, while assailing the impugned award as well as the order made by the District Judge, Dholpur, dated 3rd September, 2007. 13. For the reasons and discussions aforesaid, the misc. appeal is devoid of any substance and lacks in merits, and therefore, deserves to be dismissed. Ordered accordingly. No costs.