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2023 DIGILAW 1237 (MAD)

Bharat Sanchar Nigam Limited, Rep. by its Chief General Manager, Chennai v. RITES Ltd, (A Government of India Enterprise - Ministry of Railways), Rep. by its Senior Deputy General Manager, Chennai

2023-03-20

D.BHARATHA CHAKRAVARTHY, T.RAJA

body2023
JUDGMENT (Prayer : Original Side Appeal - Commercial Appellate Division filed under Order XXXVI Rule 11 of the O.S. Rules read with Clause 15 of the Letter Patent to allow the appeal and set aside the judgment and decree passed in Arb.O.P (Com.Div) No.523 of 2022, dated 10.10.2022.) D. Bharatha Chakravarthy, J. 1. Challenge made in this intra-Court appeal is to the order of the learned Single Judge, dated 10.10.2022 in Arb.O.P (Com.Div) No.523 of 2022, whereby, the learned Single Judge rejected the prayer under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to ''A&C Act'') to set aside the award passed by the learned Arbitrator, dated 13.06.2022. 2. The brief facts leading to the present appeal are that under a tender floated by the appellants for laying distribution points, cables, upgrade pillars etc., the respondent was the successful bidder and was awarded the contract. Even though the contract was executed and certain bill amounts were settled, as far as the claim made by the respondent in respect of filling the trenches with sea sand and also removal of excess earth laid after closure of the trenches, the bills were not settled. As a matter of fact, the appellants as well as the respondent, being Government of India Enterprises, since similar claims were made with regard to many of the contracts executed by the respondent, a Committee was set up by the appellants by its communication, dated 24.03.2004 and the said Committee also submitted its report recommending the release of such claims. Even thereafter, the amounts were not released. Therefore, the respondent raised a dispute and the same was referred to the sole Arbitrator, appointed by the appellants herein and who passed the award giving 50% of the claim amount. When the said award was put to the challenge, a learned Single Judge of this Court set aside the said award on the ground that it was patently illegal and once again, de novo proceedings were undertaken and a learned Retired Judge of this Court was appointed as a learned Arbitrator. 3. The respondent filed a Claim Petition seeking to pass an award in terms of the amounts claimed by it under Annexure-A to the claim statement. A counter statement is filed by the appellants to the claim statement. 3. The respondent filed a Claim Petition seeking to pass an award in terms of the amounts claimed by it under Annexure-A to the claim statement. A counter statement is filed by the appellants to the claim statement. In the counter statement, no categorical stand is taken by the appellants as to whether or not, the respondent filled the trenches with sea sand and whether or not, excess earth was removed by them. On the other hand, took a plea that bills etc., were not produced for procurement of sea sand and further, took a stand that as per the contract, materials have to be supplied only by the appellants. It is also the contention of the respondent that the claim is belated. 4. On the strength of the pleadings, the parties went in for trial and on behalf of the claimant, C.Ws.1 to 4 were examined and Exs.C-1 to C-118 were marked. On behalf of the appellants, no oral evidence was let in, however, Exs.R-1 to R-12 were marked. The learned Arbitrator, after considering the pleadings of the parties and evidence on record, passed an award, dated 13.06.2022 awarding a sum of Rs.58,61,984/- along with 12% interest from the date of filing of the claim till the date of award and from the date of award till the date of realisation. The claimant was also awarded costs. Aggrieved by the same, the appellants herein filed an Application under Section 34 of the A&C Act to set aside the award, inter alia, raising grounds (a) the procurement of sea sand could not have been made by the respondent; (b) there is no clause for payment of interest; and (c) the suit claim is also barred by limitation. After considering the submissions made on either side, by the order, dated 10.10.2022, the learned Single Judge found that the instant case is a turnkey contract and the actual quantity of the work executed is measured jointly by the parties. That, when the learned Arbitrator has perused M-Book and other evidence on record to conclude that the work was executed and the amount was due, therefore, the learned Single Judge held that the arbitral award is passed on a reasonable construction of the relevant contract. That, when the learned Arbitrator has perused M-Book and other evidence on record to conclude that the work was executed and the amount was due, therefore, the learned Single Judge held that the arbitral award is passed on a reasonable construction of the relevant contract. It is also further held that since there is no prohibition in the contract for award of interest, the claimant was awarded pendente lite and post award interest at the rate of 12% per annum on the principal sum of Rs.58,61,984/- by the learned Arbitrator, which does not call for any interference. Aggrieved by the same, the present appeal is filed before this Court. 5. Heard Mr.S.Udhayakumar, learned Counsel for the appellants and Mr.Amalraj S.Penikilapatti, learned Counsel for the respondent. 6. Mr.S.Udhayakumar, learned Counsel for the appellants would contend that in view of Clause-10.4 of the contract, no procurement could have been made by the respondents by themselves and this factor is omitted to be considered by the learned Arbitrator. He would contend that when there is no express provision in the contract to award interest, the learned learned Arbitrator erred in awarding the same. He would further submit that when the contract work was concluded and the bills were submitted as early as in the year 2003, the claim made in the year 2008 is barred by limitation and the said question has been completely overlooked by the learned Arbitrator. In support of his submissions, the learned Counsel relied upon a judgment of the Hon''ble Supreme Court of India in Sree Kamatchi Amman Constructions Vs. Divisional Railway Manager (Works), Palghat and Ors. ( (2010) 8 SCC 767 ), more particularly on paragraph No.19, to contend that unless the parties have agreed that interest shall be paid, no interest can be awarded by the learned Arbitrator. Learned Counsel also relied upon a judgment of the Bombay High Court in Anmol Steel Processors Private Limited, through its Director Amar D.Shah Vs. Colour Roof (India) Limited (2022 SCC OnLine Bom 116), referring to paragraph No.53 to contend that the instant claim is barred by limitation. He would further place reliance on a judgment of the Hon''ble Supreme Court of India in Union of India Vs. Manraj Enterprises ( (2022) 2 SCC 331 ) to contend that certain concessions made by the counsel during the arguments shall not bind the parties. 7. He would further place reliance on a judgment of the Hon''ble Supreme Court of India in Union of India Vs. Manraj Enterprises ( (2022) 2 SCC 331 ) to contend that certain concessions made by the counsel during the arguments shall not bind the parties. 7. Per contra, Mr.Amalraj S.Penikilapatti, learned Counsel for the respondent would submit that in all these contracts, admittedly, there is a mandatory condition by the local authority-Corporation to fill up the trenches only with sea sand. Once the trenches are filled up to a particular level by the sea sand, certainly, excess earth is liable to be there and the same has to be removed. The works in respect thereof have been charged as per the rates available. The works performed in respect thereof are duly entered in the M-Book and the concerned Supervising Officer of the appellants have duly signed the same. The M-Book has been duly marked before the learned Arbitrator. 8. As a matter of fact, immediately after the bills were submitted, the appellants were not sure as to whether those amounts had to be paid or not. Therefore, they referred the matter to the Committee by their communication, dated 24.03.2004 and the said Committee has submitted its report only on 26.03.2004 and thereafter the bills were unpaid, a dispute is raised and arbitration is invoked. Therefore, there is no delay whatsoever on the part of the respondent and the claim is very much within the period of limitation. The learned Arbitrator has power to award pendente lite as there is no prohibition in the contract. Both the pendente lite and post award interest has been granted at the rate of 12% which is very much reasonable. He would submit that absolutely, no ground whatsoever has been made to interfere with the award under Section 34 of the A&C Act. 9. We have considered the rival submissions made on either side and perused the material records of the case. Firstly, it can be seen that the points which are raised namely, whether the procurement can be done by the appellants or the respondent, as per Clause-10.4 of the contract? and whether it was mandatory on the part of the respondent to fill the trenches with sea sand and to remove excess earth, all relate to the construction of the clauses of the contract and the working and the execution of the contract. and whether it was mandatory on the part of the respondent to fill the trenches with sea sand and to remove excess earth, all relate to the construction of the clauses of the contract and the working and the execution of the contract. When the learned Arbitrator passed an award duly considering the evidence on record and by construing the clauses of the contract, there is no question of re-appreciation of evidence by this Court in exercise of the powers under Section 34 or 37 of the A&C Act and the same will not fall within the realm of any of the grounds under Section 34 of the Act. 10. Secondly, even on a careful perusal of the said Clause-10.4, it would only relate to the materials supplied by the appellants, like that of the cables etc., and it is highly illogical to contend that the said clause would include the procurement of sand to fill up the trenches. Thirdly, it can be seen that the appellants and the respondent, both being Government of India institutions, had set up a Committee and referred the issue, by a report, dated 26.03.2004, which is also marked as a document before the learned Arbitrator, have recommended for releasing of the said pending bill amounts. Fourthly, we see from the counter affidavit that only an evasive stand is taken by the appellants and no categorical stand as to (i) whether the respondent filled up the trenches upto a level by filling it with sea sand; (ii) whether they removed excess earth or not; and (iii) the plea regarding limitation, was taken before the learned Arbitrator. In that view of the matter, we find that absolutely no grounds are made out to interfere with the award of the learned Arbitrator and therefore, the learned Single Judge has rightly rejected the contentions of the appellants. 11. Similarly, the question regarding interest is no longer res integra. The Hon''ble Supreme Court of India has categorically held in its judgment in Sree Kamatchi Amman Constructions Vs. Divisional Railway Manager (Works), Palghat and Ors. (cited supra), more particularly paragraph Nos.13 to 19 that only if the agreement between the parties expressly prohibits the award of interest, the same would be a bar for the learned Arbitrator to award pendente lite interest. Divisional Railway Manager (Works), Palghat and Ors. (cited supra), more particularly paragraph Nos.13 to 19 that only if the agreement between the parties expressly prohibits the award of interest, the same would be a bar for the learned Arbitrator to award pendente lite interest. But, in this case, there is absolutely no clause whatsoever prohibiting the award of the interest and accordingly, no exception can be taken for the award of interest by the learned Arbitrator. 12. Therefore, we find that the order of the learned Single Judge, in rejecting the challenge to the award, is in order and therefore, this Original Side Appeal fails and is accordingly dismissed. There shall be no order as to costs. Consequently, the connected miscellaneous petition is closed.