Research › Search › Judgment

Calcutta High Court · body

2018 DIGILAW 12 (CAL)

Deecon India Pvt. Ltd. v. Union of India (CPWD)

2018-01-03

SABYASACHI BHATTACHARYYA, SANJIB BANERJEE

body2018
JUDGMENT : 1. The appeal is by an award-holder complaining of the award on two heads of claim being disallowed on the respondent’s challenge under Section 34 of the Arbitration and Conciliation Act, 1996. 2. By the terse order impugned dated August 10, 2017, the arbitration Court held that the award of a sum of Rs.13 lakh and odd on account of compensation was unwarranted. It was also held that the arbitrator had no authority to allow pre-reference interest, particularly, when no notice in such regard may have been issued by the contractor claimant. 3. The appellant exhorts that it is not for a Court to sit in appeal over an award and if there is no jurisdictional error committed by an arbitrator, Courts should scarcely interfere with an award. The appellant submits that the award on the fifth head of claim was neither unconscionable nor opposed to public policy and, contrary to what is recorded in the order impugned, adequate reasons were indicated in the award. 4. The appellant first places the extent of the challenge in the petition under Section 34 of the Act to the award under the fifth head. The appellant next places the minutes of the proceedings before the arbitrator at the 15th sitting when the submission of the claimant was recorded in detail. The appellant finally relies on the nature of the objection taken by the employer in the counter-statement as recorded in the award and the reasons furnished by the arbitrator for allowing the head of claim to the extent claimed. 5. As to the award on the fifth head, the respondent says that merely because a claim was made did not imply that it would have to be awarded to such extent. The respondent seeks to support the order impugned to the extent that it found that no evidence was adduced as regards the claim on account of compensation and the arbitrator awarded the entirety of the amount claimed without attempting to justify the quantum thereof. 6. To begin with, it must be noticed that there was no prohibition under the matrix contract for the contractor to raise such head of claim or for the arbitrator to consider such claim. 7. 6. To begin with, it must be noticed that there was no prohibition under the matrix contract for the contractor to raise such head of claim or for the arbitrator to consider such claim. 7. Ordinarily, a Court in seisin of a challenge to an arbitral award does not go into the basis of every head of claim which is allowed but checks if the heads of claim were prohibited for being taken up for consideration. The arbitrator in this case noticed that the objection in the counter-statement was limited to an assertion that the compensation claimed under the fifth head depended on the claims in respect of the previous heads and, since the respondent herein denied that any amount was due under the previous heads, it was contended in the counter-statement that no amount would, accordingly, be due under the fifth head of claim on account of compensation. The arbitrator recorded that on facts the arbitrator had found that substantial sums were due on account of at least three of the four previous heads. The arbitrator then reasoned that as a consequence of the substantial amounts awarded in respect of the previous heads of claim, the claim under the fifth head was maintainable. As to the quantum to be awarded under the fifth head, the arbitrator relied on the claim made by the contractor, since “the base indices for both the price of material as also the labour charges at both the commencement and completion of the work” had been applied to arrive at the figure of Rs.13,37,358.67p. 8. It is not in dispute that Clause 10(CC) of the agreement provided the methodology for calculating escalation. The arbitrator specifically found the quantum of claim to be “in consonance with the formula laid down in Clause 10(CC).” 9. It is true that the arbitrator referred to such head of claim being virtually admitted, but such sentence has to be seen in the context of the relevant averment in the counter-statement. The respondent herein had asserted that no amount was due under the fifth head of claim since no amount was due under the previous heads of claims. It was also the respondent’s contention in the counter-statement that compensation was a consequence of the claim on the other heads. The respondent herein had asserted that no amount was due under the fifth head of claim since no amount was due under the previous heads of claims. It was also the respondent’s contention in the counter-statement that compensation was a consequence of the claim on the other heads. Since the arbitrator found that the appellant contractor was entitled to substantial amounts on other heads, the fact that compensation would be due to the contractor can be said to have been admitted in the counter-statement itself. 10. No evidence appears to have been adduced in support of the claim for Rs.13,37,358.67p. on account of compensation. However, the agreement between the parties provided a formula for such calculation and the formula referred to the base indices of the price of material and the labour charges. Since such base indices were indicated by the contractor to arrive at the quantum claimed, there was no error on the part of the arbitrator in accepting the quantum as claimed by the contractor. 11. As to the interest, Section 31(7) of the Act of 1996 appears not to make any distinction between the pre-reference period and the period covered by the arbitral reference. It does not appear that Section 31 of the Act prohibits the arbitrator from awarding interest for the pre-reference period. In any event, it is recorded in the order impugned that pre-reference interest could have been awarded only if a notice under the Interest Act had been issued in such regard. There is a notice to such effect dated July 9, 1997. 12. For the reasons aforesaid, the interference with the award by the order impugned on either count cannot be sustained. The judgment and order impugned dated August 10, 2017 is set aside and the entirety of the award dated September 30, 2008 restored. 13. APO No.478 of 2017 and GA No.3266 of 2017 are allowed accordingly, but without any order as to costs.