The Bombay High Court dismissed an arbitration petition challenging an award under Section 34 of the Arbitration and Conciliation Act, 1996. The court held that the Tribunal correctly denied compensation for delays and interest contrary to contract clauses.
Arbitration petition dismissed. Parties to bear arbitration costs equally.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
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I N THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
jmi
ARBITRATION PETITION NO. 813 OF 2011.
M/s. Bombay Railway Engineering Company. ..Petitioners.
vs.
General Manager, Central Railway, CST, Mumbai. ..Respondent.
Mr. R.P. Pandey, for Petitioners.
Mr. Suresh Kumar, for Respondent.
CORAM : S.J. KATHAWALLA, J. DATE : 12TH JANUARY 2012.
P.C. :
This Petition is filed by the Petitioners under Section 34 of the Arbitration and Conciliation Act, 1996 impugning the Award dated 12th August 2011 passed by the Arbitral Tribunal.
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for resolution of disputes by Arbitration, the Petitioners invoked the arbitration clause. The Arbitral Tribunal after hearing the parties passed its Award dated 12th August 2011 which is impugned herein by the Petitioners.
“ In the event of any failure or delay by the Railway to hand over to the Contractor possession of the lands necessary for the execution of the works or to give the necessary notice to commence the works or to provide the necessary drawings or instructions or any other delay caused by the Railway due to any other cause whatsoever, then such failure or delay shall in no way affect or vitiate the contract or alter the character thereof or entitle the Contractor to damages or compensation therefor but in any such case, the Railway may grant such extension or extensions of the completion date as may be considered reasonable.”
Since the Respondent had granted extension to the Petitioners to complete the contract, the Arbitrators are correct in rejecting Claim Nos. 1, 10 and 11 of the Petitioners which are in the nature of
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damages/ compensation. Rejection of the said claims by the Arbitral Tribunal therefore cannot be faulted.
“ No interest will be payable upon the earnest money or the security deposit or amounts payable to the Contractor under the contract, but Government Securities deposited in terms of Sub-Clause (1) of this clause will be repayable with interest accrued thereon.”
The Learned Advocate for the Respondent has pointed out that the Petitioners are not entitled to any interest on delayed payments in view of clause 16(2) of the General Conditions of Contract, 1956 and clause 65(5) of the General Conditions of Contract, 1999. It is submitted that in fact the Respondent ought to have impugned the Award to the extent of the Arbitral Tribunal granting Rs.50,000/- to the Petitioners towards interest/ compensation. It is submitted that this Court has upheld the above submission of the RespondentRailways in a similar challenge by the Railways in Arbitration Petition No. 165 of 2007 in the case of the Union of India vs. M/s. Saloja and Sons, dated 6th December 2010. It is submitted that the Hon’ble Supreme Court in Sree Kamatchi Amman Constructions vs. The Divisional Railway Manager (Works), Palghat and Others, decided on 20th August 2010 has inter alia held that the Arbitral Tribunal could not have awarded interest contrary to clause 16(2) of
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the General Conditions of Contract, 1956. It is submitted that the Arbitral Tribunal could not also have granted the amount of Rs. 50,000/- to the Petitioners in the nature of compensation, since the same is not allowed as set out hereinabove under clause 17(3) of the General Conditions of Contract, 1956, if extension is granted to a party to complete the contract.
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3 issues framed by the court
Whether the High Court should interfere with the Arbitral Tribunal's rejection of compensation claims for delay and underutilization.
Whether the Petitioners are entitled to interest on delayed payments contrary to the General Conditions of Contract.
Whether the Arbitral Tribunal correctly allocated arbitration costs equally between the parties.
Colour shows how this judgement treated each authority
Union of India vs. M/s. Saloja and SonsReferred¶26
Union of India vs. M/s. Saloja and Sons, dated 6th December 2010
Sree Kamatchi Amman Constructions vs. The Divisional Railway Manager (Works), Palghat and OthersReferred¶26
Sree Kamatchi Amman Constructions vs. The Divisional Railway Manager (Works), Palghat and Others, decided on 20th August 2010
4 provisions across 3 enactments
M/s. Bombay Railway Engineering Company
General Manager, Central Railway, CST, Mumbai
S.J. Kathawalla
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
