Thavam Constructions, Rep. by its Managing Partner R. Subramani v. Union of India, Represented by General Manager, Southern Railway
2025-01-10
P.B.BALAJI
body2025
DigiLaw.ai
ORDER : 1. This Original Petition has been filed to set aside the Award of the Arbitral Tribunal under Section 34 of the Arbitration and Conciliation Act, 1996 (in short 'Act'). 2. I have heard Mr.Amalaraj S. Penikilapatti, learned counsel for the Petitioner and Mr. P.T. Ramkumar, learned Standing Counsel for the Respondent Railways. 3. The learned counsel for the Petitioner, Mr.Amalaraj, would contend that the contract awarded to the Petitioner was for construction of a Road Over Bridge, in lieu of Level Crossing No. 64 at Km. 154/12-14 between Gudiyatham and Melalathur Railway stations in Katpadi- Jolarpettai Section. The contract came to be awarded in favour of the Petitioner on 28.01.2005. On 28.02.2005, an agreement was executed between the parties for a total value of Rs.67,40,883/-. According to the learned counsel for the Petitioner, the Petitioner commenced the work in right earnest and completed the entire substructure of the bridge before the second week of June 2005, well within the time contemplated under the agreement dated 28.02.2005. The learned counsel also admitted that the Petitioner had received Rs.22,11,637/- until the third and part bill dated 05.07.2005 by the Railway administration. 4. The learned counsel for the Petitioner would assail the findings of the Arbitral Tribunal on the ground that the Tribunal has not rightly assessed the reasons for non-execution of the work which was only because of the delay on the part of the Respondent Railways in failing to approve and furnish detailed designs and staging drawings for the superstructure. According to learned counsel for the Petitioner, the Railways went back on specific terms agreed upon regarding transportation of staging materials free of cost. The learned counsel would also refer to the termination notice issued by the railways on 12.12.2005 giving merely 48 hours’ notice after issuance of 7 days notice and proceeding to issue the final termination order on 21.12.2005 within a span of two days thereafter. He would also further submit that 14 months after the termination, the Railways had awarded the contract for remaining works to another contractor, which was also in violation of the terms and conditions of the contract which stipulated 6 months’ time to appoint another contractor. 5. Finally, the learned counsel for the Petitioner would strongly rely on a dispute arising in a similar contract, where the very same Arbitrator has passed a totally contrasting Award.
5. Finally, the learned counsel for the Petitioner would strongly rely on a dispute arising in a similar contract, where the very same Arbitrator has passed a totally contrasting Award. Taking me through the similarity in the two cases, facts therein, and the findings of the Arbitrator, the learned counsel for the Petitioner would submit that when the very same Arbitrator has taken a definite and particular stand in the earlier case, he had no justification or logic for taking a totally contradictory view when it came to the case on hand. Therefore, according to the learned counsel for the Petitioner, the Award is in conflict with the public policy of India and he would therefore pray for the Award to be set aside, placing reliance on the following decisions: i. Associate Builders v. Delhi Development Authority, (2015) 3 SCC 49 ii. National Highway Authority India v. M/s. Ssanyong Engineering and Construction Co. Limited,(2024) SCC Online Del 2767 iii. Harji Engg. Works (P) Ltd. v. Bharat Heavy Electricals Ltd. ILR (2009) II Delhi 286 6. Per contra, the learned counsel for the Respondents 1 to 3 (hereinafter referred to as 'Respondents') Mr.P.T. Ramkumar, would submit that the facts of the case in the other Arbitration matter decided by the same Arbitrator were entirely on a different footing, and in this regard he took me through the said Award and also compared the same with the present Award to fortify his contention that the facts were not similar or identical as projected by the learned counsel for the Petitioner. He would also submit that Petitioner had completed only 30% of the work and the delay in completing the project was causing serious prejudice to the Railways and the Respondents had no other option but to terminate the agreement and engage a new contractor and complete the work through the new contractor. He would also submit that such exercise had already been duly undertaken and the construction has been completed through a new contractor. The learned counsel would also take me through the conditions in the contract and also some of the letters sent by the Respondents to the Petitioner. In and by letter dated 04.02.2005, the Respondents had called upon the Petitioner to submit a detailed programme of work to be executed. It was also reiterated in the subsequent letter dated 08.02.2005.
The learned counsel would also take me through the conditions in the contract and also some of the letters sent by the Respondents to the Petitioner. In and by letter dated 04.02.2005, the Respondents had called upon the Petitioner to submit a detailed programme of work to be executed. It was also reiterated in the subsequent letter dated 08.02.2005. According to the learned counsel for the Respondents, the Petitioner never submitted his detailed programme of work to the Respondents as required under the contract, and only after a lapse of two months, in April 2005 alone, the Petitioner commenced the work which is evidenced by the Petitioner’s letter dated 25.04.2005, submitting the temporary staging arrangements along with design drawings. 7. With regard to the contention of the learned counsel for the petitioner that transportation had to be effected at the cost of the Railways, the learned Counsel would refer to the letter of the Petitioner dated 27.06.2005, where the petitioner has himself admitted that he would be bearing the rental charges for the actual usage of the steel grids and railway temporary steel girders on track span. He would therefore submit that having agreed to bear the charges, the petitioner cannot now claim that the charges would have to be borne by the Respondent Railways. The learned counsel for the Respondents would therefore submit that the Arbitral Tribunal has passed a reasoned Award finding that the General Conditions of Contract had been followed and also finding that the Petitioner had completed only 30% of the work. The learned counsel would therefore submit that there is no perversity in the approach of the Arbitrator and would pray for the Award being sustained. 8. I have carefully considered the arguments advanced by the learned counsel on either side and I have also gone through the records filed by way of voluminous typed-sets, the decisions relied on by the learned counsel on either side, as well as the impugned Award. 9. The learned counsel for the Petitioner would submit that the impugned Award would be liable to be set aside for being in conflict with the public policy of India, placing reliance on the three-pronged test set out by the Hon’ble Supreme Court in Associate Builders (referred herein supra) namely, Judicial Approach, Principles of Natural Justice, and Irrationality/Perversity. 10.
9. The learned counsel for the Petitioner would submit that the impugned Award would be liable to be set aside for being in conflict with the public policy of India, placing reliance on the three-pronged test set out by the Hon’ble Supreme Court in Associate Builders (referred herein supra) namely, Judicial Approach, Principles of Natural Justice, and Irrationality/Perversity. 10. With regard to the test of fidelity of judicial approach, a feeble attempt was made on the part Petitioner that there had been a delay in passing the Award. Referring to Harji Engg. Works (P) Ltd.'s case (referred herein supra), the learned counsel for the Petitioner would submit that even on the ground of delay, the Award is liable to be set aside. 11. However, meeting the said submission regarding delay, the learned counsel for the Respondents, Mr.P.T.Ramkumar would refer to the declaration dated 05.03.2014, which evidences that the final hearing of the Arbitration proceedings was attended by the Petitioner as well as the Deputy Chief Engineer of the Respondent Railways, and the Attendance Register has also been signed by the Petitioner evidencing the said fact. Subsequently the Award has been passed on 22.03.2014, and hence, there is no question of any delay as contended by the learned counsel for the Petitioner. Therefore, I am unable to accept the contention of the learned counsel for the petitioner that there has been a delay in passing the Award and on that ground, the Award is liable to be set aside. 12. The learned counsel for the Petitioner would rely on the decision of the Hon’ble Supreme Court in Associate Builders' case (referred herein supra), contending that the impugned Award was in conflict with the principal of natural justice, audi alteram partem and on the ground of it being opposed to public policy for disregard of vital evidence. The learned counsel would also rely on National Highway Authority India's case (referred herein supra) where the Hon’ble Supreme Court held that although following the 2015 Amendment to the Arbitration and Conciliation Act, 1996, the Award may not amount to a violation of public policy, it could be interfered with if it was hit by patent illegality. 13.
The learned counsel would also rely on National Highway Authority India's case (referred herein supra) where the Hon’ble Supreme Court held that although following the 2015 Amendment to the Arbitration and Conciliation Act, 1996, the Award may not amount to a violation of public policy, it could be interfered with if it was hit by patent illegality. 13. With regard to the contention that after terminating, the Respondent Railways has to engage a fresh contractor within six months, which admittedly has not been done in the present case, the learned counsel for the Petitioner placed reliance on the proceedings in No: SA/CR/CN/MS/97-98, dated 03.02.1998 of the Principal Director of Audit, Southern Railway Chennai, where it has been stated that the Risk Tender should be finalised within a period of six months. This particular Clause is relied on by the learned counsel for the Petitioner to point out the violation of the same by the Respondent Railways. However, the guidelines referred to by the learned counsel for the Petitioner were merely draft guidelines and the same has not been approved. Therefore, no reliance can be placed on the same by the learned counsel for the Petitioner to contend that the Risk Tender had not been finalised within a period of six months. 14. Finally, on the question of irrationality/perversity of the Award, with reference to the Wednesbury principle of ‘unreasonableness’, the learned counsel for the Petitioner would highlight the contrast between the impugned Award, and a previous Award on similar circumstances, passed by the very same Arbitrator where he had taken a definite and particular stand, contending that the Arbitrator had no justification for taking a totally different view with regard to the case on hand. 15. I have gone through both the Awards, viz., the Award impugned in the present proceedings and the Award passed in a similar matter by the same Arbitrator. It can be seen in the previous Award dated 16.05.2012 that the scope of the work while calling the Risk & Cost tender had changed. However, in the present impugned Award, Clause 9.4 of the Special Conditions of Contract permitted the deletion of items while calling Risk and Cost, and therefore the tender could not have said to be changed on the deletion of certain items.
However, in the present impugned Award, Clause 9.4 of the Special Conditions of Contract permitted the deletion of items while calling Risk and Cost, and therefore the tender could not have said to be changed on the deletion of certain items. Furthermore, unlike in the present case where the Claimant/Petitioner had participated in the tenders on both occasions having been advised of the calling of Risk and Cost tender at his own risk and cost, the circumstances of the previous Award revealed that the Claimant had not been advised of the same. Also, in addition to non-indication of the same, the learned Arbitrator had found that the mode of execution had also been changed to modify the tender schedule, merely indicating that the Risk and Cost tender was not contemplated to be the tender for completion of balance works, leading the Arbitrator to arrive at a logical conclusion that the enforcement of Risk and Cost by the Railways on the Claimant was in violation of the accepted procedure and hence illegal, and subsequently, conclude that the Risk and Cost action could not be enforced by the Respondent on the Claimant. However, the same cannot be said for the present impugned Award, and therefore, I find that the Arbitrator rightly concluded that procedure was followed and the Risk and Cost action could be enforced on the Claimant/Petitioner, and allowing the Respondent Railways to finalise the contract for executing the balance of works with Risk of Cost of the Claimant/Petitioner. 16. As rightly pointed out by the learned counsel for the Respondents, Mr.P.T.Ramkumar, even though the Arbitrator happens to be the same and facts were quite similar in both the cases, there were clear distinguishing factors which necessitated and entitled the Arbitrator to take opposite views when it came to both these matters. On a reading of both the Awards, I find that the Arbitrator has assigned reasons for taking a particular line of view in the earlier case, and a different view in the present case. The same is based on available material evidence on record and therefore, the findings of the Arbitrator cannot be said to be illegal or perverse. I am also unable to accept the argument of the learned counsel for the Petitioner that the same Arbitrator has passed contradictory Awards in two matters where the facts were almost identical.
The same is based on available material evidence on record and therefore, the findings of the Arbitrator cannot be said to be illegal or perverse. I am also unable to accept the argument of the learned counsel for the Petitioner that the same Arbitrator has passed contradictory Awards in two matters where the facts were almost identical. Therefore, the said argument of the learned counsel for the Petitioner that the Award opposed to public policy cannot be countenanced. 17. In view of the foregoing discussion and also finding that the Arbitrator has rightly applied the terms and conditions of contract and has also considered the evidence adduced by the parties and rendered a possible finding in the given facts and circumstances, I am unable to hold that the Award is perverse, or patently illegal, or that it is opposed to public policy. I do not find any justifiable grounds to interfere with the Award under Section 34 of the Arbitration and Conciliation Act, 1996. 18. For all the above reasons, this Original Petition is dismissed and consequently, Original Application is also closed.