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2019 DIGILAW 468 (ORI)

Nanda Construction v. Mahanadi Coal Fields Ltd

2019-07-18

BISWANATH RATH

body2019
JUDGMENT : Biswanath Rath, J. Both the Arbitration Appeals involve an award involving Arbitration Case No.3/2010 being reversed in part by the District Judge, Angul in Arbitration Petition No.39/2014 involving an application under Section 34 of the Arbitration & Conciliation Act, 1996 (herein after called as "the Act, 1996"). 2. Arbitration Appeal No.22/2015 by M/s.Nanda Construction confined to the challenge of the judgment involving Arbitration Petition No.39/2014 so far it relates to reduction in the grant of interest by the Arbitrator involved therein reducing the interest @ 9% per annum whereas Arbitration Appeal No.25/ 2015 filed by the Mahanadi Coal Fields Ltd. and its C.M.D. challenging the award as well as the judgment involved herein more particularly on account of grant of benefit on the head of claim nos.4,11, 14 & 15. 3. Both the Appeals since involved common disposal of the arbitration proceeding as well as the judgment of the District Judge and for having a common set of facts, on consent of both the parties, are decided by this common judgment. 4. Brief facts involving the case is that the Mahanadi Coal Fields Ltd. (M.C.L.) invited a tender for construction of a stadium at South Balanda, Jagannath Area, M.C.L. In the bidding process, M/s.Nanda Construction became the successful bidder. As a consequence both the parties entered into an agreement signed by the parties on 4.3.1997. Dispute cropped up between the parties remaining within the condition of the agreement, a dispute in spite of being raised and having not been resolved, M/s.Nanda Construction, the appellant in Arbitration Appeal No.22/2015 pressed the Arbitration Clause for redressal through arbitration, vide his letter dated 23.9.2005, which being denied by the M.C.L. Authorities, M/s.Nanda Construction filed Arbitration Petition No.17/2006 before this Court for appointment of Arbitrator. This Court in disposal of the said Arbitration Petition appointed Hon'ble Justice A.S.Naidu, retired as Arbitrator for settling the dispute between the parties. The appointment of the Arbitrator was challenged before the Hon'ble apex Court in SLP(C) No.34845/2010. The Hon'ble apex Court was pleased to dismiss the SLP, vide its order dated 4.1.2011. The Arbitrator taking up the dispute allowed the claims, vide claim nos.1, 2, 3, 11, 14, 15 & 16 in favour of the appellant and rejected the other claims. The Arbitrator against claim no.17 awarded simple interest @ 18% from the date of final bill was signed till the date of payment. The Arbitrator taking up the dispute allowed the claims, vide claim nos.1, 2, 3, 11, 14, 15 & 16 in favour of the appellant and rejected the other claims. The Arbitrator against claim no.17 awarded simple interest @ 18% from the date of final bill was signed till the date of payment. The award of the Arbitrator was challenged by the M.C.L. under Section 34 of the Act before the District Judge, Sambalpur, vide Arbitration Petition No.7/2012, which was transferred to the District Judge, Angul and there registered as Arbitration Petition No.39/2014. This Arbitration Petition has been disposed of by partly allowing by judgment of the District Judge, vide order dated 25.4.2015 assailed in both the Arbitration Appeals indicated herein above. Arbitration Appeal No.22/2015 when confined to the interference of the District Judge so far as the interest part is concerned, Arbitration Appeal No.25/2015 involves non-consideration of the District Judge in respect of claim nos.4, 11, 14 & 15. For confining their claim by both the appellants, this Court confines its consideration also to claim nos.4, 11, 14, 15 & 17. 5. Sri K.B.Panda, learned counsel appearing for the appellant-M/s.Nanda Construction in Arbitration Appeal No.22/2015 taking this Court to the grant of interest and referring to the decisions in Union of India vrs. Susaka Pvt. Ltd. & others, (2018) 1 ArbLR 12 (SC), Jaiprakash Associates Ltd (Jal) vrs. Tehri Hydro Development Corporation Ltd. (THDC), 2019 2 ArbLR 1 (SC) and K.Marappan (Dead) Through Sole L.R. Balasubramanian vrs. The Superintending Engineer, T.B.P. H.L.C. Circle, Anantapur, 2019 2 ArbLR 499 (SC) contended that there is arbitrary reduction in granting of interest on the compensation awarded therein in disposal of the arbitration proceeding. Taking this Court to the aforesaid decisions, Sri Panda further contended that this Court should interfere in the interest aspect and enhance the interest in the interest of justice. 6. To this submission of Sri K.B.Panda, learned counsel for M/s.Nanda Construction, Sri S.D.Das, learned senior counsel for the respondent-M.C.L. in Arbitration Appeal No.22/2015 contended that the interest component should be in consonance with the interest operating in the field at different point of time. Sri Das further contended that for the discussion of the District Judge involving disposal of the arbitration petitions, it appears, there is a justified reduction in the interest component, which need not require any interference. Sri Das further contended that for the discussion of the District Judge involving disposal of the arbitration petitions, it appears, there is a justified reduction in the interest component, which need not require any interference. Similarly, advancing his argument involving grounds in Arbitration Appeal No.25/2015, Sri S.D.Das, learned senior counsel for the respondent-M.C.L. taking this Court to the claim involving the claimant involved herein submitted that when the claimant has only asked for Rs.2100/- as a whole claim involving claim no.4, there was no reason on the part of the Arbitrator to enhance the sum to Rs.21,000/-. Taking this Court to the claim involved therein, Sri Das, learned senior counsel contended that there has been improper consideration by both the Arbitrator as well as the District Judge herein and sought for interference of this Court so far it relates to claim no.4. Making his submission on claim nos.11, 14 & 15 again taking this Court to claim nos.11, 14, & 15, Sri S.D.Das, learned senior counsel submitted that there being no satisfactory evidence establishing the entitlement therein the Arbitrator failed in appreciating the dispute involved therein properly and has illegally granted exorbitant compensation to the claimant, which is also without any foundation. On the allegation of exorbitant grant of compensation on claim nos.11, 14 & 15, Sri Das, learned senior counsel also contended that the decision of the Arbitrator opposes to the public policy of the country and there is ultimately heavy loss to be sustained by the Public Sector Company. Taking this Court to the observation of the District Judge involving disposal of the arbitration petition, Sri S.D.Das, learned senior counsel for the M.C.L. also submitted that the District Judge failed in appreciating the above aspect and has arrived in wrong and illegal impugned judgments, which need to be interfered with. 7. In his opposition on the submission of Sri S.D.Das, learned senior counsel on claim nos.4, 11, 14 & 15, Sri K.B.Panda, learned counsel for the respondent in Arbitration Appeal No.25/2015 taking this Court to the observation of the Arbitrator in respect of claim no.4 fairly admitted that the claimant confines its claim to Rs.2100/- only. Sri Panda thus contended that grant of sum of Rs.21,000/- on this score may be a typographical error. Sri Panda thus contended that grant of sum of Rs.21,000/- on this score may be a typographical error. Answering on the dispute being raised on claim nos.11, 14 & 15, Sri Panda appearing for M/s.Nanda Construction taking this Court to the discussions of the Arbitrator submitted that there is a fair consideration of the compensation involving claim nos.11, 14 & 15 and position involving the claim being well appreciated by the District Judge involving the arbitration proceedings, there is no infirmity in either of the impugned awards or judgments. Hence, it requires no interference in either the awards or the judgments involved herein and thus prayed this Court for rejection of the claim of the M.C.L. so far it relates to claim nos.11, 14 & 15. 8. Considering the rival contentions of the parties, coming to claim no.4 and reading the document available here, this Court finds, in fact the claimant had made a claim of Rs.2100/- involving claim no.4. For the fair submission of Sri K.B.Panda, learned counsel for M/s.Nanda Construction, this Court finds, grant of Rs.21,000/- is an outcome of a typographical error. Therefore, this Court interferes in the grant of compensation of Rs.21,000/- against claim no.4 and reduces the same to Rs.2100/- only. 9. Coming to the dispute involving claim nos.11, 14 & 15, from the award of the Arbitrator, this Court from paragraphs-61, 64 & 65 therein finds, the discussion and the finding of the Arbitrator remains as follows :- "61. Claim Item No.11 relates to compensation towards underutilization of the deployed labour component. The amount of the said claim is Rs.13,81,967.57. According to the claimant though, he deployed labour, he was not able to execute the entire work within the period stipulated due to faulty drawings and designs. It is further stated that the respondents took long time to furnish the revised drawings. Consequently, the labourers were to sit idle. Anticipating the drawings and designs the claimant could not disengage the labourers. Further, there was an apprehension that if he disengages the labourers he will not get adequate man power when the work starts. Consequently, he had to maintain idle labour, pay their wages and also provided other infrastructural facilities. According to the contract, the labour component is 25 per cent. Fact remains that there was delay in execution of the work and the delay was mainly due to defective designs and drawings. Consequently, he had to maintain idle labour, pay their wages and also provided other infrastructural facilities. According to the contract, the labour component is 25 per cent. Fact remains that there was delay in execution of the work and the delay was mainly due to defective designs and drawings. Admittedly, the drawings and designs were revised more than once that too in peace-meal. The civil work cannot continue in absence of design and drawings. Consequently, the labourers had to sit idle awaiting modified designs and drawings. But then no evidence has been adduced to prove the exact period for which, the labourers had to sit idle. In the absence of such evidence it is not possible to award the amounts claimed. Taking into consideration all these aspects and the fact that labourers in fact were forced to sit idle for few months in course of execution of the work, the claimant is entitled to receive some amount towards compensation for idle labour. According to me, a consolidated sum of Rs.3,00,000/- (Rupees Three Lakhs) would be just and equitable and I award the said amount. 64. Claim Item No.14 relates to compensation towards cost or shuttering materials though it has been wrongly mentioned as deployed labour component. According to the claimant shuttering materials have been procured on rent for a period of 12 months, but it remained for excess period of 24 months, consequently, the claimant had to make extra payment towards rent of the said materials. The claimant has examined the person from whom the shuttering materials and other machineries were hired as a witness. He has deposed with regard to letting out of the shuttering materials to the claimant. Though, he has been cross-examined in extenso nothing much could be brought out to disbelieve his statement. But fact remains the work could not be completed within one year and continued for more than 3 years. Thus, there was a delay of near about 2 years. The delay was caused due to the various reasons, but then the main reason was due to defective drawings and designs which were revised more than once in course of execution of the work. However, the claimant has not specifically averred the amount paid by him towards hire charges. In the absence of such particulars, it is not possible to assess the exact hiring charges. However, the claimant has not specifically averred the amount paid by him towards hire charges. In the absence of such particulars, it is not possible to assess the exact hiring charges. Considering all the materials I feel that award of a consolidated sum of Rs.5,00,000/- (Rupees Five Lakhs) will be just and proper. 65. Claim Item No.15 relates to hire charges of Machineries, tools, plant and vehicles etc. The total claim in this head is Rs.34,49,600/-. According to the claimant, he has hired three concrete mixtures, six vibrators, 3 water pumps, once truck and one dumper and also hired a Car for the purpose of executing the aforesaid work. The said machineries over stayed from 1.11.1998 to 31.10.2000. Thus, he is entitled to rent for 24 months. The owner of the aforesaid machineries has been examined who supports the case of the claimant. The Respondents on the other hand, strongly disputes the said claim. According to the respondents it is the responsibility of the claimant to arrange his own machineries for due execution of the work and thus he is not entitled to any amount. Respondents also reiterated that the delay in execution of the work was caused due to inaction of the claimant. But then, the said plea has been negative for the reasons assigned in the preceding paragraphs. Be that as it may according to the terms of the agreement, the claimant had to arrange his own machineries. Thus, the respondents are not liable to pay the hiring charges. In the case in hand, however, it appears that for some period the machineries remained idle and the claimant had to bear the hiring charges. Be that as it may according to the terms of the agreement, the claimant had to arrange his own machineries. Thus, the respondents are not liable to pay the hiring charges. In the case in hand, however, it appears that for some period the machineries remained idle and the claimant had to bear the hiring charges. After a cumulative assessment of the evidence both oral and documentary, I am of the view that the claimant shall be entitled to the hiring charges of the machineries, i.e., three concrete mixtures, six vibrators, three water pumps, one truck and one dumper at best for two months and not for 24 months, as no receipt is produced with regard to the hiring charges, I feel a consolidated amount of Rs.10,00,000/- (rupees Ten Lakhs) would be just and equitable." Going through the discussions involving claims nos.11, 14 & 15, this Court finds, even though there is no material satisfying the exact amount involved therein but however looking to the claim made and the compensation granted against all these three heads, this Court observes, it is not a case for there was absolutely no material for the oral evidence available and for establishing of the same by the claimant therein, this Court finds, the compensation has been awarded by the Arbitrator on the basis of a fair assessment process. In such view of the matter and keeping in view the settled position of law on the scope of interference by a High Court involving a proceeding under Section 37 of the Act, 1996, this Court finds, there is no infirmity in the grant of compensation against these three heads. This aspect having been well appreciated by the District Judge, this Court does not find any strength in the submission of Sri S.D.Das, learned senior for the M.C.L. requiring interference in the award or judgment involving claim nos.11, 14 & 15. 10. Now coming to claim no.17 involving award of interest, this Court finds, there is no written agreement on this issue in the agreement entered into between the parties as to what rate of interest will be applicable to the parties to the arbitration. 10. Now coming to claim no.17 involving award of interest, this Court finds, there is no written agreement on this issue in the agreement entered into between the parties as to what rate of interest will be applicable to the parties to the arbitration. However, going through the decisions of the Hon'ble apex Court in Susaka Pvt. Ltd., Jaiprakash Associates Ltd (Jal) and K.Marappan (Dead) Through Sole L.R. Balasubramanian (supra) and considering the rival contentions of the parties, this Court finds, reduction of interest to 9% may not be appropriate and further keeping in view that there is substantial loss of time and the nature of contract being a commercial contract, interfering in the matter of reduction in the grant of interest by the District Judge, this Court modifies the judgment involved herein and directs that the claimant-appellant involving Arbitration Appeal No.22/2015 shall be entitled interest @ 10% . It is also observed that the modified amount shall be calculated, deposited and paid to the claimant involved here within a period of two months, failing which the claimant will be entitled to interest @ 15% all through. 11. The judgment of the District Judge in Arbitration Petition No.39/2014 and the award of the Arbitrator in Arbitration Case No.3/2010 are interfered with to the extent indicated herein above. Both the Arbitration Appeals are disposed of accordingly. No cost.