Union of India, Through HQ Chief Engineer, Military Engineering Service, Jodhpur Zone v. Maheshwari Enterprises, Through Its Authorised Signatory
2023-02-03
REKHA BORANA, SANDEEP MEHTA
body2023
DigiLaw.ai
JUDGMENT : Rekha Borana, J. 1. The present appeal has been preferred against the order dated 12.05.2022 passed by the Commercial Court No.1, Jodhpur (hereinafter referred to as 'the learned Court below') whereby the objections under Section 34 of the Arbitration and Conciliation Act, 1996 (for short 'the Act of 1996') preferred by the appellant-Union of India against the arbitral award dated 29.04.2019 have been rejected. 2. The facts of the case are that some disputes arose between the parties, out of the contract executed between them for the work CA NO CEJZ/JODH/25/2004-05: PROVN OF DEF OTM ACCN FOR 12 CORPS ARMY AVN BASE OF RALAWAS AT JODHPUR. For resolution of the disputes as arisen, the sole Arbitrator was appointed who entered into reference vide his letter dated 24.11.2017. Vide the award dated 29.04.2019, the learned Arbitrator proceeded on to allow four claims and reject four claims out of the eleven claims raised by the claimant. Three claims were withdrawn by the claimant. Therefore, objections qua the allowed four claims were filed by the Union of India before the learned Court below. The learned Court below proceeded on to reject all the objections as preferred by the appellant-Union of India against which the present appeal has been preferred. 3. Only two grounds have been raised in the present appeal, firstly that the learned Arbitrator has erred in entertaining the total time barred claims and in rejecting the objections of the Union on the said issue. Secondly, that the award qua Claim No.2 had been wrongly allowed by the learned Arbitrator in favour of the claimant totally in contravention of Condition No.7 of the contract. 4. First ground raised by learned counsel for the appellant is that the claims regarding escalation amount (Claim No.1) as well as the losses due to delay in payment of final bill (Claim No.10) were grossly time barred and therefore, could not have been entertained by the learned Arbitrator. 5. A perusal of the order impugned reveals that the learned Court below has specifically observed that the final bill was paid to the claimant by the respondent-Union on 15.10.2014 and subsequently, during pendency of the arbitral proceedings, the amount of Rs.5,94,564/- was paid on 22.02.2019. Prior to 22.02.2019, the amount as claimed by the claimant was never denied to be paid by the respondent-Union.
Prior to 22.02.2019, the amount as claimed by the claimant was never denied to be paid by the respondent-Union. It is only on 22.02.2019 that a part payment of Rs.5,94,564/- was made and the payment of remaining amount as claimed was denied. Prior to this payment, the same was never denied rather proceedings for computation of the amount payable were being undertaken by the Department. Therefore, the limitation, if any, would commence only on/after 22.02.2019 when the remaining claim of the claimant was denied by the respondent-Union. 6. Further, learned Court below has observed that the ground of the claims being time barred was never raised by the Union before the learned Arbitrator but still the question of limitation being a ground based on public policy, the same was being entertained and adjudicated. After a thorough analysis of the fact, the learned Court below held that the claims of the claimant were within the limitation as provided in terms of law. 7. A perusal of the record shows that the stipulated dates of commencement of work in question were 18.02.2005 (Phase I) and 18.02.2005 (Phase II) respectively. The stipulated dates of completion of work were 17.11.2005 (Phase I) and 17.11.2006 (Phase II) respectively. However, the work of Phase II could not be completed in stipulated time and the same was extended four times by the Union. Ultimately, the work was completed on 17.11.2005 (Phase I) and 05.02.2009 (Phase II) respectively. The final bill qua the work was submitted by the claimant on 25.12.2010 which remained under consideration and kept on travelling from one officer of the Department to another for a period of more than 4 years. The final bill as passed by the Department was accepted by the contractor 'under protest' and the same was ultimately paid on 15.10.2014. Thereafter, the question as to -'whether the escalation amount as claimed by the contractor was to be deducted or not' remained under consideration with the Department and in the meanwhile, the dispute was referred to the Sole Arbitrator. The claim was preferred by the claimant on 22.07.2017 and that by the Union was filed on 04.07.2017. The learned Arbitrator entered into reference on 24.11.2017. 8.
The claim was preferred by the claimant on 22.07.2017 and that by the Union was filed on 04.07.2017. The learned Arbitrator entered into reference on 24.11.2017. 8. From an analysis of the overall facts, it is clear that by any angle, the cause of action, if any, for the claims arose to the claimant on 15.10.2014 when the payment of final bill was made to him. As per the record, the claims were raised by the claimant on 22.07.2017 i.e. within a period of 3 years of 15.10.2014. It is clear that the dispute, if any, arose between the parties only after the payment of final bill to the contractor i.e. on 15.10.2014. The claims had been raised by the contractor clearly within a period of 3 years of the said date and the same were specifically within the limitation. So far as the payment of Rs.5,94,564/- on 22.02.2019 during the arbitral proceedings is concerned, the same is clearly a further acknowledgment of the claim of the claimant and therefore, the same definitely gave further period of limitation to the claimant to raise its claim qua the unpaid amount regarding the said claim. By all means, the claim of the claimant cannot be termed to be time barred and therefore, the finding of the learned Court below cannot be interfered with. 9. The second ground has been raised regarding Claim No.2 qua the 'losses due to omission of construction of Watch Tower' towards which, an amount of Rs.1,51,200/- with interest @9% has been awarded by the learned Arbitrator. It has been submitted by learned counsel for the appellant that Condition No.7 of the agreement/General Conditions of Contract specified/authorised for variation of the work by the Accepting Officer. Therefore, the claim qua the losses due to omission of construction of Watch Tower could not have been awarded to the claimant. Learned counsel submitted that during the course of execution of the work, it was found by the Authorised Officer that the Watch Tower was not required to be constructed and therefore, the same was directed not to be constructed.
Learned counsel submitted that during the course of execution of the work, it was found by the Authorised Officer that the Watch Tower was not required to be constructed and therefore, the same was directed not to be constructed. The said act was within the power of the Accepting Officer in terms of Condition No.7 of the contract, which provides as under : "The Accepting Officer, or person specifically authorized by him on his behalf, may vary by the way of addition to and/or deduction from the work so described provided that the contract sum be not thereby varied on the whole by more than percentage set out in the tender documents." 10. A perusal of the above condition makes it clear that the Accepting/Authorised Officer could have varied the terms of the contract to the extent permissible under the terms of the contract. The said authorisation or power of the Officer is not disputed but if, in terms of the conditions of the contract, any work is undertaken by a contractor prior to the same being varied, he cannot be denied the amount qua the costs incurred by him for completion of the said amount of work. Admittedly, in the present case, the fabrication of two Watch Towers by using 4400 Kgs steel had already been carried out by the claimant prior to the communication of letter dated 13.10.2008 whereby, he was directed not to execute the work of construction of Watch Towers. Admittedly, the letter dated 13.10.2008 was issued after a lapse of more than 3 years from the date of commencement of the work. So far as the fabrication of two Watch Towers is concerned, the same was recorded in the Measurement Book/Work Diary and has also not been denied by the respondents. In view of the admitted facts, the firm was very much entitled for payment of costs which had already been incurred by it till that date and the same cannot be denied to it on the basis of a letter communicated to it after the completion of the said amount of work. Therefore, the amount as awarded in favour of the claimant by learned Arbitrator qua Claim No.2 after deduction of the amount equal to the scrap value cannot be said to be in contravention of any condition of the contract and the same has therefore, rightly been affirmed by the learned Court below.
Therefore, the amount as awarded in favour of the claimant by learned Arbitrator qua Claim No.2 after deduction of the amount equal to the scrap value cannot be said to be in contravention of any condition of the contract and the same has therefore, rightly been affirmed by the learned Court below. 11. No other ground has been raised in the present appeal. 12. In view of the above observations, this Court is not inclined to interfere with the order dated 12.05.2022 or the arbitral award dated 29.04.2019. 13. The appeal being devoid of merit is therefore, dismissed. 14. The stay petition as well as all pending applications also stand dismissed.