Dismissed

The State of Maharashtra v. M/S. Gupta Construction Co.

Bombay HC2 Apr 2013ARA/29/2007

Case brief

AI extract

What is this about?

In this arbitration appeal, the appellant challenged an order upholding an arbitral award regarding construction claims. The court held that the finding on limitation was based on document interpretation and was not perverse. Interest was held to be within the tribunal's statutory power.

What did the court decide?

Arbitration Appeal is dismissed. Interim order, if any is vacated.

The State of Maharashtra Vs M/S. Gupta Construction Co. — Arbitration | Bombay HC (2013)

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902-ARA-29.2007

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

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CIVIL APPELLATE JURISDICTION

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ARBITRATION APPEAL NO. 29 OF 2007 IN

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CIVIL MISC. APPLICATION NO. 716 OF 2004

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The State of Maharashtra, Ministry of P.W.D. Of Govt of Maharashtra, (Through the Executive Engineer, Pune (P.W.), Division, (Bldgs), Govt Milk Supply Scheme Compound, Datye Bungalow, Kirkee, Pune 411 003

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… Appellant

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Versus

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M/s. Gupta Construction Co. Akashay, 2, Gulmohar Society, Pune 411 006

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M. Shrivananda, Engineer-in-chief (Retd), P.W.D. Karnataka

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Shri. V.D. Chhatre, Secretary (Retd) P.W.D. Maharashtra.

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Shri. M.G. Dharap, Secretary (Retd), PWD Maharashtra

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… Respondents

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Mr. S.M. Gorwadkar alnog with Mr. A.R. Patil, A.G.P. for the appellant.

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Ms. Sheetal Kumar along with Ms. Nupur Mukherjee i/by M/s.N.N. Vaishnawa and Co. for respondents.

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CORAM : R.D. DHANUKA, J. DATED : 2^nd APRIL, 2013

ORAL JUDGMENT

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902-ARA-29.2007

By this petition filed under section 37 of the Arbitration & Conciliation Act, the appellant seeks to challenge the order and judgment dated 5^th July, 2007 passed by the learned District Judge-9, Pune rejecting the application filed by the appellant under section 34 of the Arbitration & Conciliation Act, 1996 by which the appellant has impugned the arbitral award dated 30^th June, 2004 passed by the arbitral tribunal allowing some of the claims made by the respondent contractor.

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Some of the relevant facts for the purpose of deciding this appeal are as under :

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The respondent was awarded contract for the work of construction of the building for the institute of Hotel Management and Catering Technology at Pune. The dispute arose between the parties and was referred to arbitral tribunal in accordance with clause 67 of the agreement entered into between the parties. By the impugned award dated 30th June, 2004 made by the arbitral tribunal, some of the claims made by the respondents have been allowed.

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Being aggrieved by the said award, the appellant filed an application under section 34 before the learned District Judge. By order dated 5^th July, 2007 the learned District Judge has rejected the said application filed by the Appellants. Hence, this appeal under section 37 by the appellant.

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902-ARA-29.2007

Mr. Gorwadkar, the learned counsel, appearing for the appellant has canvassed for consideration of this court three submissions as under :

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(1)The arbitral tribunal has decided contrary to clause 52(5) of the agreement. It

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is submitted that under the said clause, the contractor was under an obligation to submit every month, accounts giving particulars of all claims for any additional payment to which he may consider himself entitled to and of all extra or additional work ordered by the Engineer. Clause 52(5) of the agreement is extracted as under :

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“5. The contractor shall send to the Engineer's Representative once in every month an account giving particulars as full and detailed as possible, of all claims for any additional payment to which the contractor may consider himself entitled and of all extra or additional work ordered by th Engineer which he has executed during the preceding month.

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No final or interim claim for payment for any such work or expense will be considered which has not been included in such particulars. Provided always that the Engineer shall be entitled to authorized payment to be made for any such work or expense, notwithstanding the Contractor's failure to comply with this condition, if the Contractor has, at the earliest practicable opportunity, notified the Engineer in writing that he intends to make a claims for such work.”

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(2) Relying upon the said clause, the learned counsel submits that as the respondent failed to claim additional amount every month which the

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contractor considered himself entitled to, no such claims could have been made subsequently after the expiry of one month and the same was barred under the said clause.

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(3) The learned counsel submits that under clause 67 of the agreement, both the parties had agreed that the dispute, differences of any kind whatsoever between the employer and the contractor or the engineer and the contractor shall be first referred to and settled by the Engineer who shall within the period of ninety days give his decision and if within ninety days of such decision, no claim to arbitration is communicated, decision of the engineer shall be final. The learned counsel submits that the procedure agreed upon between the parties under section 67 is mandatory and unless said procedure was followed, the contractor could not have invoked arbitration clause recorded in the second part of the said clause 67. It is submitted that the arbitral tribunal has completely overlooked the mandatory provisions recorded under section 67 and thus the award being not in accordance with the contract and being de hors the contract was in conflict with public policy.

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(4) The next submission of Mr. Gorwadkar is that though some of the claims were rejected prior to three years of the respondents invoking arbitration clause under clause 67 and such claims were barred by the law of

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902-ARA-29.2007

limitation, arbitral tribunal has allowed such time barred claims. It is submitted that though there was no specific plea of limitation raised by the appellants before the arbitral tribunal specifically pointing out as to how each of such claim was barred by law of limitation, it was the duty of the arbitral tribunal to ascertain itself whether the claim was time barred or not and ought to have rejected the said claims which were found to be time barred as per provisions of section 3 of the Limitation Act, 1963.

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(5) The next submission of Mr. Gorwadkar is that there was no provision

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for payment of interest in the contract entered into between the parties and thus the award of interest by the arbitral tribunal on the claims awarded is beyond the powers of the arbitral tribunal.

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The learned counsel for the respondent on the other hand supports the finding of fact recorded by the arbitral tribunal as also by the learned District Judge and submits that the arbitral tribunal has after considering the documents as well as pleadings filed by both the parties and after considering the provisions of the Contract have interpreted the terms of the contract and have recorded finding of fact which are not perverse and thus the learned District Judge was right in not interfering with the said finding of facts rendered by the arbitral tribunal, under section 34 of the Arbitration & Conciliation Act, 1996. It is submitted that the

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902-ARA-29.2007

scope of interference by this court under section 37 of the Arbitration Act is limited.

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As far as plea of Mr. Gorwadkar that the arbitral tribunal has decided contrary to the terms of the contract and in particular clause 52(5) is concerned, perusal of the impugned award indicates that the arbitral tribunal has considered the fact that though as per clause 52(5) of the agreement, the contractor was required to submit its claims every month, documents produced by the parties before the arbitral tribunal would indicate that all such interim bills as well as final bills were prepared by the appellants themselves. The Appellants had insisted that all such bills including final bill would be prepared by the Appellant only. Considering this crucial fact, the arbitral tribunal in my view rightly took a view that by consent and/or by conduct of parties, the procedure under clause 52(5) of the agreement was waived. Inspite of the contractor submitting the bills, the appellant took the responsibility on itself of preparing each and every interim bill as well as final bill. It is thus clear that unless and until all such bills were prepared and scrutinized by the appellant itself, the question of commencing of any cause of action for the purposes of limitation did not arise till such bills were prepared by the appellant. It is not in dispute that within ninety days from the date of final certification of the bill by the Engineer of the appellant, the

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arbitration clause had been invoked by the respondent contractor.

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902-ARA-29.2007

Considering these facts, the arbitral tribunal rendered finding of fact that the claims were not barred by law of limitation. The arbitral tribunal while doing so has also interpreted the terms of the contract and the documents placed on record by both the parties. On perusal of the record, it is seen that there was no material placed by the appellant before the arbitral tribunal in respect of each claim in support of the plea of limitation as to how each of such claim was affected by alleged non compliance of clause 52(5) of the agreement and as to whether the procedure under clause 67 was followed or not or was time barred. In view of this position, the arbitral tribunal rendered finding of fact based not on any specific averment advanced by the appellant but on consideration of the documents and on interpretation of the provisions of the contract Act. In my view findings rendered by the arbitral tribunal is not perverse and thus the learned District Judge was right in not interfering with such finding of fact rendered by the arbitral tribunal under section 34 of the Arbitration & Conciliation Act, 1996. In my view no case is made out for interference with the order of the arbitral tribunal as well as the learned District Judge in this proceedings under section 37 of the Arbitration Act.

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In so far as the plea of interest raised by Mr. Gorwadkar, the learned counsel

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for the appellant is concerned, it is not in dispute that there is no provision in the

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contract prohibiting the payment of interest.

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The arbitral tribunal is empowered to award interest under section 31(7)(a) of the Arbitration and Conciliation Act, 1996 for such period and at such rates as the Arbitral Tribunal deems fit. In my view, there is no substance in the submission of Mr. Gorwadkar that the claim for interest is beyond the powers of the arbitral tribunal.

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I, therefore, pass the following order :

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Arbitration Appeal is dismissed. Interim order, if any is vacated.

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No order as to costs.

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[R.D. DHANUKA, J.]

The State of Maharashtra v. M/S. Gupta Construction Co.

Case brief

What is this about?

What did the court decide?

The State of Maharashtra v. M/S. Gupta Construction Co.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

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