Full Judgment Text
2016:BHC-OS:3446-DB
suresh 9-APPL-31.2016.odt
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
APPEAL {L} NO.31 OF 2016
IN
ARBITRATION PETITION NO.408 OF 2005
Indian Oil Corporation Ltd.,
A Company Incorporated under the
provisions of the Companies Act, 1956
having office at Gujarat Refinery,
P.O. Javaharnagar, Vadodra391320. .... Appellant
Versus
Artson Engineering Ltd.,
Plot No.426, M.L. Agarwal Building,
st
1 Floor, Waman Tukaram Patil
Marg, Opp: Satabdi Hospital,
Chembur, Mumbai400 071. .... Respondent
Mr. Manish Bhatt, Senior Advocate i/by Mr. Kalpesh
Joshi Associates for the Appellant.
Mr. Sharan Jagtiani with Mr. Mutahhar Khan i/by
M/s. Mulla & Mulla & CB & Caroe for the Respondent.
CORAM: ANOOP V. MOHTA AND
S.C. GUPTE, JJ.
DATED: MARCH 14, 2016
ORAL JUDGMENT (Per ANOOP V. MOHTA, J):
1. Admit. The parties have filed short synopsis and
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written notes of submissions. The appeal is taken up for final
hearing, by consent.
2. The appellant/original respondent has preferred this
appeal under Section 37 of the Arbitration and Conciliation Act,
1996 (for short, “the Act”) against Judgment and Order
pronounced by a learned single Judge of this Court on
30102015, whereby the Arbitration Petition under Section 34
of the Act is partly allowed and maintained the other claims in
the following words:
“ 133. I, therefore, pass the following order:
th
(a) The impugned award dated 30 June, 2005 is set
aside insofar as claim nos.(d) and (g) are concerned.
(b) Interest awarded on the security deposit is set
aside.
(c) Interest at the rate of 18% per annum awarded
by the learned arbitrator is reduced to 12% per annum
which shall be payable for the period as awarded by the
learned arbitrator.
(d) Interest awarded on claim nos.(d) and (g) is set
aside.
(e) Rest of the award is upheld.”
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3. The basic events are as under:
The contract between the appellantIndian Oil
Corporation Limited (IOCL) and the respondentArtson
Engineering Limited was executed on 1141998 after accepting
the bid submitted for Crude Distribution System Project. The
contract was governed by the General Conditions of Contract
(GCC) and Special Conditions of Contract (SCC). Time was the
essence of the contract. Various meetings took place between
the parties as the work was constantly changing for want of
complete information to the respondent/claimant/contractor.
Monthly progress reports were submitted. There were delays in
providing various information as well as instructions. Delay was
also caused even while approving various drawings. The
respondent/claimant requested for release of payments from
time to time. Request was also made for extension of time to
complete the contract for the reasons attributable to the IOCL
and M/s. Daelim. No timely payments were made, including
towards increased quantities in the electrical, civil and structural
works. The respondent/claimant even addressed letters
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recording nonavailability of various items and materials which
were necessary to complete the work. The IOCL conveyed about
the change in the scheme and installation of the work to be done
in respect of the pipelines. The revised details were provided to
the respondent/claimant on 971999. The respondent/claimant
completed the work under the two Crude Distribution Systems
on 692000. The IOCL issued its completion certificate
accordingly. On 3102000 the respondent/claimant submitted
the final bill. The Bank Guarantee was extended accordingly
from time to time. As the final bill payment was not received,
the respondent/claimant made representations again and again,
apart from holding regular meetings. Request was also made by
IOCL to Artson to depute an officer for negotiations and
finalisation of the final bill on 12112001. The
respondent/claimant refused to accept the lowest rate, as
suggested.
4. A petition under Section 9 was filed on 1012002 by
the respondent/claimant for preventing encashment of the Bank
Guarantee by IOCL. Ultimately, on 142002 Artson and IOCL
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filed Consent Terms to resolve the disputes within eight months
and accordingly an Arbitrator was appointed. The matter
proceeded before the Arbitral Tribunal. Extension was also
sought to complete the arbitration. Another Arbitrator was
appointed on 772003. Ultimately, the learned Arbitrator
passed the Award on 3062005, allowing the claims under
heads “A” to “D” and “G”. The Arbitrator rejected the claim
under heads “E” and “F”, and also rejected the counterclaims.
5. Heard learned counsel appearing for the parties.
The learned Arbitrator has passed the Award after taking note of
rival contentions as well as the documents so placed on record
and after appreciating the submissions made by the counsel for
the parties and recorded as under:
“ 150. Respondent will has to pay to the claimant in respect
of various claims set out in the claim statements below with
interest at 18% per annum from the dates mentioned against
in the respective heads.
Claim A – Rs.82,19,114/ with effect from 01.11.2000
Claim B – Rs.1,40,00,000/ with effect from 01.11.2000
Claim C – Rs.16,58,574/ with effect from 01.11.2000
Claim D – Rs.13,96,756/ with effect from 01.12.2000
Claim E – Nil as claim is rejected
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Claim F – Nil as claim is rejected
Claim G – Rs.61,00,000/ with effect from 01.11.2000
On the claims A, B, C, D, and G, to the extent of claim
awarded respondent will have to pay interest at 18% per
annum with effect from 1.11.2000 till the date of award and
at the same rate of 18% per annum till realization of award at
the same rate of 18% per annum and from the date of award
on the principle amount of Rs.13,96,756/. The respondent
will also pay cost of Rs.10 lacs to the claimant and bear the
entire costs as incurred for the arbitration proceedings. Hence
the final award. No interest is awarded on costs of
Rs.10,00,000/ (Rupees ten lacs).
AWARD
The Respondent do pay Rs.3,12,74,444/ (Rupees
Three Crores Twelve Lacs Seventy Four Thousand Four
Hundred Forty Four Only) with interest to the claimant. The
respondent do pay simple interest @ 18% per annum on
Rs.2,99,77,688/ (Rupees Two Crores Ninety Nine Lacs
Seventy Seven Thousand Six Hundred Eighty Eight only) with
effect from 1.11.2000 till realization. Respondent do pay
simple interest @ 18% per annum on Rs.13,96,756/ (Rupees
Thirteen Lacs Ninety Six Thousand Seven Hundred Fifty Six
st
only) with effect from 1 February 2002 till realization.
Respondent do pay Rs.10,00,000/ (Rupees ten lacs
only) as arbitration costs to the claimant and bear its own
costs as incurred. ”
6. The appellant filed an arbitration petition under
Section 34 of the Act for setting aside the said Award on
9112006. The said petition was allowed by the High Court and
the entire Award was set aside. The appellant, therefore,
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preferred an appeal. On 912015 the appeal came to be allowed
on the ground that the Award was severable and need not be set
aside in toto and Claim “D” was arbitrable.
7. Ultimately, the learned single Judge on 792015
allowed Claims “A”, “B” and “C”, as recorded above, and
awarded interest at the rate of 12% per annum, and
Rs.10,00,000/ towards the arbitration costs.
8. Claims “A” to “D” and “G”, allowed by the learned
Arbitrator are reproduced below:
“ (A) Claim on account of items in SOR amount to
Rs.82,19,114/ with interest of 18% per annum with
effect from 3102000.
(B) Claim for Rs.1.40 crore withheld on account of
liquidated damages with interest at 18% per annum with
effect from 3102000.
(C) Claim on account of amounts appropriated on the
ground of other recoveries amounting to Rs.16,58,574/
with interest at 18% per annum from 3102000.
(D) Claim of Rs.26,97,759/ being the cost incurred in
keeping the Bank Guarantees in force beyond the period
required in contract with interest at 18% per annum till
the date of payment.
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…...
(G) Claim of Rs.61,00,000/ on account of extra work
with interest thereon. ”
9. The appellant is basically aggrieved by the order
passed by the learned Judge referring to Claims “A”, “B” and “C”
and also by rejection of the counterclaims (Claims “E” and “F”).
The respondent has not raised challenge insofar as rejection of
Claims “D” and “G” are concerned.
10. Heard the learned counsel appearing for the parties
and also gone through the written submissions as well as the
documents so referred and relied upon with regard to the
respective claims, specifically Claims A, B and C and the interest
so awarded.
11. Learned counsel appearing for the respondent, at the
outset, submitted proposal dated 2622016, the relevant
portion whereof is reproduced hereunder:
“As this acceptance to the final amount is based upon the
above clear understanding, and on the basis that prompt
payment being the very essence of this offer, we clarify
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that our offer is valid only in the amount of Rs.498
Lakhs (Rupees Four Hundred Ninety Eight Lakhs only) is
paid & realized in the accounts by AEL within four weeks
st
from today or latest by 31 March 2016 (which is more
than a month from today), the time being of essence.
st
If the payment is delayed beyond 31 March 2016, AEL
would have all rights under the law for recourse to the
next step and this offer shall lapse.
For the above purpose we have no objection to the Award
of the Ld. Sole Arbitrator as partly being upheld by the
Hon'ble Single Judge, being modified to the above extent.
We clarify and state that upon our receiving the above
amount of Rs.498 Lakhs, we shall have no further claim
against IOCL arising out of the above referred contract as
also the subject Award and further proceedings thereto.
We may however clarify that the above proposal is
strictly without prejudice to any of our rights available in
Law.”
12. So far as Claim “A” is concerned, the learned
Arbitrator as well as the learned Judge rightly held that the
present contract was item rate contract. The quantity was
fixed by IOCL. The quantity, however, was fixed on estimate
basis. Correspondence exchanged between the parties was
referred by the learned Arbitrator while allowing the claim for
increase in quantity. The payments were asked accordingly
from time to time. The oral evidence of Mr. Chopde, witness of
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the claimant, was recorded to determine the extent of quantity.
The learned Arbitrator rightly held that the respondent cannot
complain regarding rates which have already been settled
through several negotiations and specifically when the case is
not one of escalation. The application of IOCL to pay the dues
under the contract and failure to make the payment, is rightly
held to be a breach of the terms of the contract. The learned
Judge has also upheld the said finding by further noting that
additional quantities executed by the respondent/claimant were
to the extent of 400%, 500% and 12500%. There was no
objection of any kind by the appellant during the progress of the
work. The issue was never finalized. Reliance, therefore, on the
internal note by the learned Arbitrator could not be faulted with.
The supporting evidence of the claimant proves the quantity.
The learned Arbitrator as well as the learned Judge considered
the evidence and the material, including the correspondence
exchanged between the parties and therefore awarded the claim
with interest at 18% on items purchased in excess of the
quantities described in the Work Order.
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13. So far as Claim “B” is concerned, the amount was
wrongly withheld though IOCL failed to perform their part of
reciprocal obligation in time. The claimant's contractual
obligations were depending upon the fulfilment of the IOCL's
obligations. They failed to provide the information or data in
time, including the designs and drawings. The essential
certificate was not issued in time in providing approval for
drawings submitted by the claimant in time. Various issues
relating to work front where the other contractor M/s. Daelim
was operating were not resolved at the relevant time. They even
failed to supply various material for the work. The IOCL
substantially altered and changed the scope of the work,
including the Electrical Heat Tracer (EHT).
14. There was no clarification issued, though asked for
from time to time, including about the laying of cables. No
progress schedule was approved and/or agreed upon at the
relevant time. The learned Arbitrator and the learned Judge also
took note of the various clauses of the GCC, whereby reciprocal
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obligations are provided, including timely performance and
action by the IOCL, as time was the essence. Various documents,
including meetings, discussions and exchange of correspondence
between the parties for the above purposes were noted but
which also shows inaction and/or delay on the part of the IOCL.
The learned Arbitrator as well as the learned Judge after
considering the above gave a clear finding with regard to the
delay on the part of the IOCL. The learned Arbitrator, therefore,
based upon the same including the conditions and clauses which
were agreed upon by and between the parties concluded that
IOCL was responsible for the various delays. The work also
could not be proceeded by the respondent/claimant for want of
knowledge of engineering from M/s. Daelim. The learned
Arbitrator has also considered the delay on account of EHT,
which is also a subject of Claim “G”. The learned Arbitrator even
considered the delay on account of nonsupply of materials prior
to and after the Contract Completion Date. The learned
Arbitrator by recording reasons considered the above
background and passed the Award. The learned single Judge
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also confirmed the said decision by a reasoned order and
therefore the finding given for want of no specific clause of
liquidated damage by the appellant/IOCL and as the delay is
attributable to the appellant, there was no reason for the IOCL
to deduct the said amount as price reduction. Therefore, the
deduction so made after one year from the preparation of the
final bill is recorded to be an afterthought and therefore was
not accepted. We see no case is made out by the appellant in this
regard and there is no perversity in the findings recorded by the
learned Arbitrator as well as by the learned Judge.
15. So far as Claim “C” is concerned, after going through
the submissions and the documents so placed on record, we also
noted that for want of particulars and no evidence, the two
deductions of 10% with 18% interest from 3102000 were
wrong. There was no justification for such recoveries. The IOCL
failed to discharge its obligation by not leading even the
evidence in support of its claim. The amount, therefore, so
deducted wrongly was rightly deprecated by the learned
Arbitrator as well as by the learned Judge. The finding given
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therefore by both the learned Arbitrator as well as by the
learned Judge, in no way can be said to be perverse and/or bad
in law.
16. The learned counsel appearing for the appellant has
made submissions revolving around the rejection of their
counterclaims with regard to the awarding of costs of
Rs.10,00,000/. Considering the reasons so recorded by the
learned Arbitrator and the learned Judge and for the reasons so
recorded, in our view, no case is made out for interference with
the awarding of costs so fixed.
17. The Apex Court in the case of M/s. Chebrolu
Enterprises Vs. Andhra Pradesh Backward Class Cooperative
Finance Corporation Ltd. , reported in 2015 (12) Scale 207,
recently reiterated and reinforced the principle that unless case
of perversity and/or error on the face of the record and/or any
issue of jurisdiction is raised which goes to the root of the matter
and/or any Award and/or order is contrary to the agreed terms
and conditions, no interference is called for by the learned Judge
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as well as the Appellate Court in the finding of facts. In para 20
of the Judgment, the Apex Court has observed thus:
“20. …. This Court or even the Appellate Court would
not look into the finding of facts unless they are perverse.”
18. The rejection of the counterclaims on the ground of
limitation and the counterclaims not being arbitrable as no
claim was raised immediately after receipt, as it was never even
quantified at appropriate time to make the claim of amount,
calls for no interference. The learned Judge has also upheld the
said Award. There was no counterclaim raised before the earlier
Arbitrator. The correspondences in the case, cannot read to
mean extension of limitation specifically when it was in the
nature of damages. The work was completed on 692000. The
counterclaims were filed on 6112003. The arbitration clause
invoked for the same was in time. The observations of the
learned Judge in paragraphs 120 to 124 need no interference.
19. Insofar as the interest is concerned, the learned
Arbitrator has awarded 18% per annum, as recorded above,
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from the respective dates so mentioned. The learned Judge
considering the rival contentions has restricted the same to 12%
per annum instead of 18% per annum and the same shall be
payable for the period as awarded by the learned Arbitrator. The
Award and the interest on Claims “D” and “G” are set aside. Rest
of the Award is upheld. Therefore, for the reasons so recorded
above, we see no case is made out by the appellant to interfere
with the said reasons, the Award as well as the modified order
passed by the learned single Judge, so also the awarding of
costs.
20. However, even at the conclusion of the hearing,
learned counsel for the respondent resubmitted that the
proposal submitted by the respondent on 2622016 should be
treated as a with prejudice offer of the respondent so that if the
amount of Rs.4,98,00,000/ is paid by the appellant, latest by
3132016, such payment shall be treated as full and final
settlement of the respondent's claim under the Award on the
aforesaid modified terms. If the amount of Rs.4,98,00,000/ is
not paid by 3132016, the impugned Award as modified by the
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impugned order passed by the learned single Judge shall be
executable. However, if the amount of Rs.4,98,00,000/ is paid
by 3132016, the Award shall stand modified and satisfied.
21. For the reasons so recorded above, we dismiss the
the appeal accordingly. No costs.
(S.C. GUPTE, J.) (ANOOP V. MOHTA, J.)
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
APPEAL {L} NO.31 OF 2016
IN
ARBITRATION PETITION NO.408 OF 2005
Indian Oil Corporation Ltd.,
A Company Incorporated under the
provisions of the Companies Act, 1956
having office at Gujarat Refinery,
P.O. Javaharnagar, Vadodra391320. .... Appellant
Versus
Artson Engineering Ltd.,
Plot No.426, M.L. Agarwal Building,
st
1 Floor, Waman Tukaram Patil
Marg, Opp: Satabdi Hospital,
Chembur, Mumbai400 071. .... Respondent
Mr. Manish Bhatt, Senior Advocate i/by Mr. Kalpesh
Joshi Associates for the Appellant.
Mr. Sharan Jagtiani with Mr. Mutahhar Khan i/by
M/s. Mulla & Mulla & CB & Caroe for the Respondent.
CORAM: ANOOP V. MOHTA AND
S.C. GUPTE, JJ.
DATED: MARCH 14, 2016
ORAL JUDGMENT (Per ANOOP V. MOHTA, J):
1. Admit. The parties have filed short synopsis and
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written notes of submissions. The appeal is taken up for final
hearing, by consent.
2. The appellant/original respondent has preferred this
appeal under Section 37 of the Arbitration and Conciliation Act,
1996 (for short, “the Act”) against Judgment and Order
pronounced by a learned single Judge of this Court on
30102015, whereby the Arbitration Petition under Section 34
of the Act is partly allowed and maintained the other claims in
the following words:
“ 133. I, therefore, pass the following order:
th
(a) The impugned award dated 30 June, 2005 is set
aside insofar as claim nos.(d) and (g) are concerned.
(b) Interest awarded on the security deposit is set
aside.
(c) Interest at the rate of 18% per annum awarded
by the learned arbitrator is reduced to 12% per annum
which shall be payable for the period as awarded by the
learned arbitrator.
(d) Interest awarded on claim nos.(d) and (g) is set
aside.
(e) Rest of the award is upheld.”
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3. The basic events are as under:
The contract between the appellantIndian Oil
Corporation Limited (IOCL) and the respondentArtson
Engineering Limited was executed on 1141998 after accepting
the bid submitted for Crude Distribution System Project. The
contract was governed by the General Conditions of Contract
(GCC) and Special Conditions of Contract (SCC). Time was the
essence of the contract. Various meetings took place between
the parties as the work was constantly changing for want of
complete information to the respondent/claimant/contractor.
Monthly progress reports were submitted. There were delays in
providing various information as well as instructions. Delay was
also caused even while approving various drawings. The
respondent/claimant requested for release of payments from
time to time. Request was also made for extension of time to
complete the contract for the reasons attributable to the IOCL
and M/s. Daelim. No timely payments were made, including
towards increased quantities in the electrical, civil and structural
works. The respondent/claimant even addressed letters
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recording nonavailability of various items and materials which
were necessary to complete the work. The IOCL conveyed about
the change in the scheme and installation of the work to be done
in respect of the pipelines. The revised details were provided to
the respondent/claimant on 971999. The respondent/claimant
completed the work under the two Crude Distribution Systems
on 692000. The IOCL issued its completion certificate
accordingly. On 3102000 the respondent/claimant submitted
the final bill. The Bank Guarantee was extended accordingly
from time to time. As the final bill payment was not received,
the respondent/claimant made representations again and again,
apart from holding regular meetings. Request was also made by
IOCL to Artson to depute an officer for negotiations and
finalisation of the final bill on 12112001. The
respondent/claimant refused to accept the lowest rate, as
suggested.
4. A petition under Section 9 was filed on 1012002 by
the respondent/claimant for preventing encashment of the Bank
Guarantee by IOCL. Ultimately, on 142002 Artson and IOCL
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filed Consent Terms to resolve the disputes within eight months
and accordingly an Arbitrator was appointed. The matter
proceeded before the Arbitral Tribunal. Extension was also
sought to complete the arbitration. Another Arbitrator was
appointed on 772003. Ultimately, the learned Arbitrator
passed the Award on 3062005, allowing the claims under
heads “A” to “D” and “G”. The Arbitrator rejected the claim
under heads “E” and “F”, and also rejected the counterclaims.
5. Heard learned counsel appearing for the parties.
The learned Arbitrator has passed the Award after taking note of
rival contentions as well as the documents so placed on record
and after appreciating the submissions made by the counsel for
the parties and recorded as under:
“ 150. Respondent will has to pay to the claimant in respect
of various claims set out in the claim statements below with
interest at 18% per annum from the dates mentioned against
in the respective heads.
Claim A – Rs.82,19,114/ with effect from 01.11.2000
Claim B – Rs.1,40,00,000/ with effect from 01.11.2000
Claim C – Rs.16,58,574/ with effect from 01.11.2000
Claim D – Rs.13,96,756/ with effect from 01.12.2000
Claim E – Nil as claim is rejected
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Claim F – Nil as claim is rejected
Claim G – Rs.61,00,000/ with effect from 01.11.2000
On the claims A, B, C, D, and G, to the extent of claim
awarded respondent will have to pay interest at 18% per
annum with effect from 1.11.2000 till the date of award and
at the same rate of 18% per annum till realization of award at
the same rate of 18% per annum and from the date of award
on the principle amount of Rs.13,96,756/. The respondent
will also pay cost of Rs.10 lacs to the claimant and bear the
entire costs as incurred for the arbitration proceedings. Hence
the final award. No interest is awarded on costs of
Rs.10,00,000/ (Rupees ten lacs).
AWARD
The Respondent do pay Rs.3,12,74,444/ (Rupees
Three Crores Twelve Lacs Seventy Four Thousand Four
Hundred Forty Four Only) with interest to the claimant. The
respondent do pay simple interest @ 18% per annum on
Rs.2,99,77,688/ (Rupees Two Crores Ninety Nine Lacs
Seventy Seven Thousand Six Hundred Eighty Eight only) with
effect from 1.11.2000 till realization. Respondent do pay
simple interest @ 18% per annum on Rs.13,96,756/ (Rupees
Thirteen Lacs Ninety Six Thousand Seven Hundred Fifty Six
st
only) with effect from 1 February 2002 till realization.
Respondent do pay Rs.10,00,000/ (Rupees ten lacs
only) as arbitration costs to the claimant and bear its own
costs as incurred. ”
6. The appellant filed an arbitration petition under
Section 34 of the Act for setting aside the said Award on
9112006. The said petition was allowed by the High Court and
the entire Award was set aside. The appellant, therefore,
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preferred an appeal. On 912015 the appeal came to be allowed
on the ground that the Award was severable and need not be set
aside in toto and Claim “D” was arbitrable.
7. Ultimately, the learned single Judge on 792015
allowed Claims “A”, “B” and “C”, as recorded above, and
awarded interest at the rate of 12% per annum, and
Rs.10,00,000/ towards the arbitration costs.
8. Claims “A” to “D” and “G”, allowed by the learned
Arbitrator are reproduced below:
“ (A) Claim on account of items in SOR amount to
Rs.82,19,114/ with interest of 18% per annum with
effect from 3102000.
(B) Claim for Rs.1.40 crore withheld on account of
liquidated damages with interest at 18% per annum with
effect from 3102000.
(C) Claim on account of amounts appropriated on the
ground of other recoveries amounting to Rs.16,58,574/
with interest at 18% per annum from 3102000.
(D) Claim of Rs.26,97,759/ being the cost incurred in
keeping the Bank Guarantees in force beyond the period
required in contract with interest at 18% per annum till
the date of payment.
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…...
(G) Claim of Rs.61,00,000/ on account of extra work
with interest thereon. ”
9. The appellant is basically aggrieved by the order
passed by the learned Judge referring to Claims “A”, “B” and “C”
and also by rejection of the counterclaims (Claims “E” and “F”).
The respondent has not raised challenge insofar as rejection of
Claims “D” and “G” are concerned.
10. Heard the learned counsel appearing for the parties
and also gone through the written submissions as well as the
documents so referred and relied upon with regard to the
respective claims, specifically Claims A, B and C and the interest
so awarded.
11. Learned counsel appearing for the respondent, at the
outset, submitted proposal dated 2622016, the relevant
portion whereof is reproduced hereunder:
“As this acceptance to the final amount is based upon the
above clear understanding, and on the basis that prompt
payment being the very essence of this offer, we clarify
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that our offer is valid only in the amount of Rs.498
Lakhs (Rupees Four Hundred Ninety Eight Lakhs only) is
paid & realized in the accounts by AEL within four weeks
st
from today or latest by 31 March 2016 (which is more
than a month from today), the time being of essence.
st
If the payment is delayed beyond 31 March 2016, AEL
would have all rights under the law for recourse to the
next step and this offer shall lapse.
For the above purpose we have no objection to the Award
of the Ld. Sole Arbitrator as partly being upheld by the
Hon'ble Single Judge, being modified to the above extent.
We clarify and state that upon our receiving the above
amount of Rs.498 Lakhs, we shall have no further claim
against IOCL arising out of the above referred contract as
also the subject Award and further proceedings thereto.
We may however clarify that the above proposal is
strictly without prejudice to any of our rights available in
Law.”
12. So far as Claim “A” is concerned, the learned
Arbitrator as well as the learned Judge rightly held that the
present contract was item rate contract. The quantity was
fixed by IOCL. The quantity, however, was fixed on estimate
basis. Correspondence exchanged between the parties was
referred by the learned Arbitrator while allowing the claim for
increase in quantity. The payments were asked accordingly
from time to time. The oral evidence of Mr. Chopde, witness of
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the claimant, was recorded to determine the extent of quantity.
The learned Arbitrator rightly held that the respondent cannot
complain regarding rates which have already been settled
through several negotiations and specifically when the case is
not one of escalation. The application of IOCL to pay the dues
under the contract and failure to make the payment, is rightly
held to be a breach of the terms of the contract. The learned
Judge has also upheld the said finding by further noting that
additional quantities executed by the respondent/claimant were
to the extent of 400%, 500% and 12500%. There was no
objection of any kind by the appellant during the progress of the
work. The issue was never finalized. Reliance, therefore, on the
internal note by the learned Arbitrator could not be faulted with.
The supporting evidence of the claimant proves the quantity.
The learned Arbitrator as well as the learned Judge considered
the evidence and the material, including the correspondence
exchanged between the parties and therefore awarded the claim
with interest at 18% on items purchased in excess of the
quantities described in the Work Order.
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13. So far as Claim “B” is concerned, the amount was
wrongly withheld though IOCL failed to perform their part of
reciprocal obligation in time. The claimant's contractual
obligations were depending upon the fulfilment of the IOCL's
obligations. They failed to provide the information or data in
time, including the designs and drawings. The essential
certificate was not issued in time in providing approval for
drawings submitted by the claimant in time. Various issues
relating to work front where the other contractor M/s. Daelim
was operating were not resolved at the relevant time. They even
failed to supply various material for the work. The IOCL
substantially altered and changed the scope of the work,
including the Electrical Heat Tracer (EHT).
14. There was no clarification issued, though asked for
from time to time, including about the laying of cables. No
progress schedule was approved and/or agreed upon at the
relevant time. The learned Arbitrator and the learned Judge also
took note of the various clauses of the GCC, whereby reciprocal
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obligations are provided, including timely performance and
action by the IOCL, as time was the essence. Various documents,
including meetings, discussions and exchange of correspondence
between the parties for the above purposes were noted but
which also shows inaction and/or delay on the part of the IOCL.
The learned Arbitrator as well as the learned Judge after
considering the above gave a clear finding with regard to the
delay on the part of the IOCL. The learned Arbitrator, therefore,
based upon the same including the conditions and clauses which
were agreed upon by and between the parties concluded that
IOCL was responsible for the various delays. The work also
could not be proceeded by the respondent/claimant for want of
knowledge of engineering from M/s. Daelim. The learned
Arbitrator has also considered the delay on account of EHT,
which is also a subject of Claim “G”. The learned Arbitrator even
considered the delay on account of nonsupply of materials prior
to and after the Contract Completion Date. The learned
Arbitrator by recording reasons considered the above
background and passed the Award. The learned single Judge
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also confirmed the said decision by a reasoned order and
therefore the finding given for want of no specific clause of
liquidated damage by the appellant/IOCL and as the delay is
attributable to the appellant, there was no reason for the IOCL
to deduct the said amount as price reduction. Therefore, the
deduction so made after one year from the preparation of the
final bill is recorded to be an afterthought and therefore was
not accepted. We see no case is made out by the appellant in this
regard and there is no perversity in the findings recorded by the
learned Arbitrator as well as by the learned Judge.
15. So far as Claim “C” is concerned, after going through
the submissions and the documents so placed on record, we also
noted that for want of particulars and no evidence, the two
deductions of 10% with 18% interest from 3102000 were
wrong. There was no justification for such recoveries. The IOCL
failed to discharge its obligation by not leading even the
evidence in support of its claim. The amount, therefore, so
deducted wrongly was rightly deprecated by the learned
Arbitrator as well as by the learned Judge. The finding given
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therefore by both the learned Arbitrator as well as by the
learned Judge, in no way can be said to be perverse and/or bad
in law.
16. The learned counsel appearing for the appellant has
made submissions revolving around the rejection of their
counterclaims with regard to the awarding of costs of
Rs.10,00,000/. Considering the reasons so recorded by the
learned Arbitrator and the learned Judge and for the reasons so
recorded, in our view, no case is made out for interference with
the awarding of costs so fixed.
17. The Apex Court in the case of M/s. Chebrolu
Enterprises Vs. Andhra Pradesh Backward Class Cooperative
Finance Corporation Ltd. , reported in 2015 (12) Scale 207,
recently reiterated and reinforced the principle that unless case
of perversity and/or error on the face of the record and/or any
issue of jurisdiction is raised which goes to the root of the matter
and/or any Award and/or order is contrary to the agreed terms
and conditions, no interference is called for by the learned Judge
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as well as the Appellate Court in the finding of facts. In para 20
of the Judgment, the Apex Court has observed thus:
“20. …. This Court or even the Appellate Court would
not look into the finding of facts unless they are perverse.”
18. The rejection of the counterclaims on the ground of
limitation and the counterclaims not being arbitrable as no
claim was raised immediately after receipt, as it was never even
quantified at appropriate time to make the claim of amount,
calls for no interference. The learned Judge has also upheld the
said Award. There was no counterclaim raised before the earlier
Arbitrator. The correspondences in the case, cannot read to
mean extension of limitation specifically when it was in the
nature of damages. The work was completed on 692000. The
counterclaims were filed on 6112003. The arbitration clause
invoked for the same was in time. The observations of the
learned Judge in paragraphs 120 to 124 need no interference.
19. Insofar as the interest is concerned, the learned
Arbitrator has awarded 18% per annum, as recorded above,
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from the respective dates so mentioned. The learned Judge
considering the rival contentions has restricted the same to 12%
per annum instead of 18% per annum and the same shall be
payable for the period as awarded by the learned Arbitrator. The
Award and the interest on Claims “D” and “G” are set aside. Rest
of the Award is upheld. Therefore, for the reasons so recorded
above, we see no case is made out by the appellant to interfere
with the said reasons, the Award as well as the modified order
passed by the learned single Judge, so also the awarding of
costs.
20. However, even at the conclusion of the hearing,
learned counsel for the respondent resubmitted that the
proposal submitted by the respondent on 2622016 should be
treated as a with prejudice offer of the respondent so that if the
amount of Rs.4,98,00,000/ is paid by the appellant, latest by
3132016, such payment shall be treated as full and final
settlement of the respondent's claim under the Award on the
aforesaid modified terms. If the amount of Rs.4,98,00,000/ is
not paid by 3132016, the impugned Award as modified by the
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impugned order passed by the learned single Judge shall be
executable. However, if the amount of Rs.4,98,00,000/ is paid
by 3132016, the Award shall stand modified and satisfied.
21. For the reasons so recorded above, we dismiss the
the appeal accordingly. No costs.
(S.C. GUPTE, J.) (ANOOP V. MOHTA, J.)
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