Disposed

State of Kerala v. P.v.Varghese

Kerala HC2 Jun 2022Arb.A/44/2010

Case brief

AI extract

What is this about?

A canal-work arbitration award was challenged over shoring, spoil conveyance, idling compensation and interest. The court set aside shoring compensation, restored idling compensation, upheld the modified conveyance award and reimbursement award, and reduced interest to 9% per annum from reference to decree.

What did the court decide?

Shoring award set aside; idling award restored; modified conveyance and reimbursement awards upheld; interest reduced to 9% per annum from reference to decree.

State of Kerala Vs P.v.Varghese — Arbitration | Kerala HC (2022)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR. JUSTICE P.B.SURESH KUMAR

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THE HONOURABLE MRS. JUSTICE C.S. SUDHA

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THURSDAY, THE 2^ND DAY OF JUNE 2022 / 12TH JYAISHTA, 1944

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ARB.A NO. 44 OF 2010

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AGAINST THE JUDGMENT IN OP(ARB) 6/1995 OF SUB COURT, KOTTARAKKARA

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APPELLANTS/RESPONDENTS:

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1 STATE OF KERALA REPRESENTED BY THE SECRETARY, IRRIGATION DEPARTMENT, GOVERNMENT SECRETARIAT,, THIRUVANANGTHAPURAM.

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2 THE SUPERINTENDING ENGINEER K.I.P., R.B.CIRCLE, KOTTARAKKARA.

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BY SR. GOVERNMENT PLEADER SRI.V.K.SUNIL

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RESPONDENT/CLAIMANT:

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P.V.VARGHESE

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P.W.D.CONTRACTOR,, PANCHIRAKUZHIYIL VEEDU,, PULINTHANAM P.O., MUVATTUPUZHA, PIN-686 671.

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BY ADV. SRI.P.VIJAYAKUMAR

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THIS ARBITRATION APPEALS HAVING BEEN FINALLY HEARD ON 02.06.2022, ALONG WITH Arb.A.49/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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Arb. Appeal Nos.44 and 49 of 2010

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR. JUSTICE P.B.SURESH KUMAR

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THE HONOURABLE MRS. JUSTICE C.S. SUDHA

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THURSDAY, THE 2^ND DAY OF JUNE 2022 / 12TH JYAISHTA, 1944

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ARB.A NO. 49 OF 2010

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AGAINST THE JUDGMENT IN OP(ARB) 6/1995 OF SUB COURT,

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KOTTARAKKARA

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APPELLANT/PETITIONER/CLAIMANT:

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P.V.VARGHESE, P.W.D CONTRACTOR, PANACHIRAKUZHIYIL VEEDU, PULINTHANAM PO,, MUVATTUPUZHA.

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BY ADVS. SRI.P.VIJAYAKUMAR SRI.M.V.ASHIM SRI.B.HARRYLAL SRI.C.R.REGHUNATHAN

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RESPONDENTS/RESPONDENTS:

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1 STATE OF KERALA, REP.BY THE SECRETARY, IRRIGATION DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM.

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2 THE SUPERINTENDING ENGINEER K.I.P., R.B. CIRCLE, KOTTARAKARA.

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BY SR. GOVERNMENT PLEADER SRI.V.K.SUNIL

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THIS ARBITRATION APPEALS HAVING BEEN FINALLY HEARD ON 02.06.2022, ALONG WITH Arb.A.44/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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Arb. Appeal Nos.44 and 49 of 2010

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P.B.SURESH KUMAR & C.S.SUDHA, JJ.

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Arbitration Appeal Nos.44 and 49 of 2010

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Dated this the 2^nd day of June, 2022

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JUDGMENT

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P.B.Suresh Kumar, J.

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These appeals arise from O.P.(Arbitration) No.6 of 1995 on the files of the Court of the Subordinate Judge, Kottarakkara. Among the appeals, Arbitration Appeal No.44 of 2010 is by the respondents in the said proceedings and Arbitration Appeal No.49 of 2010 is by the petitioner. Parties are referred to in this judgment, as they appear in Arbitration Appeal No.44 of 2010.

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The dispute relates to a canal formation work namely “KI & TCDP-RBC-Formation of Kulasekharapuram Distributory from Ch.0m to 1000m including CD works” executed by the respondent as a contractor in connection with

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the Kallada Irrigation Project of the State Government. The agreement in this regard was executed between the parties on

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19.08.1987. The agreement provides for resolution of disputes in connection with the execution of the work by recourse to arbitration. In the course of execution of the work, disputes arose between the parties, and in the light of the aforesaid provision in the agreement, the same have been referred to the Arbitral Tribunal for adjudication.

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Before the Arbitral Tribunal, the respondent raised several claims namely, claims (I) to (IX), and the Arbitral Tribunal passed an award in favour of the respondent directing the appellants to pay a sum of Rs.7,87,500/- on claim (I), a sum of Rs.90,300/- on claim (IV), a sum of Rs.5,91,745/- on claim (V) and a sum of Rs.2,39,742/- on claim (VI). Claim (VIII) was one raised for interest and the said claim was disposed of by the Tribunal directing the appellants to pay to the respondent interest for the various amounts found due at the rate of 18% per annum from 08.05.1992, the date of entering into the reference for arbitration till the date of decree or date of payment, whichever is earlier. The remaining claims have however been rejected.

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The respondent thereupon filed a petition before the court below under Section 17 of the Arbitration Act,

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1940 (the Act) for pronouncing a judgment in terms of the award. In the said proceedings, the appellants filed I.A.No.1002 of 1995 seeking orders to set aside the arbitral award. The court below set aside the arbitral award on claim (V), affirmed the arbitral award on Claim (VI) and modified the arbitral award on claim (I) and (IV), in terms of the judgment impugned in these appeals. As noted, the respondent is aggrieved by the said decision insofar as the court below interfered with the award on claims (I), (IV) and (V) and the appellants are aggrieved by the said decision insofar as the court below affirmed the award on claims (I), (IV), (VI) and (VIII) subject of course to the modification made on claims (I) and (IV).

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The question arises for consideration is as to whether the award of the Arbitral Tribunal modified by the court below is sustainable in law.

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Heard the learned Government Pleader as also the learned counsel for the respondent.

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Claim (I) is one made by the respondent for compensation for the extra expenditure incurred by him for the shoring work undertaken by him while carrying out the excavation work. It was alleged by the respondent that

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shoring was necessitated on account of the instructions issued by the officers in charge of the work to do vertical earth cutting with a view to minimize the use of the acquired land and owing to the reason that the soil was sandy with profused springs from the subsoil. According to the respondent, he was paid for the shoring work only upto a particular reach and he is entitled to be paid for the shoring work done for additional 450 metres also at the rate of Rs.2500/rm.

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Claim (IV) is one made by the respondent for compensation towards conveyance charges incurred by him for conveying the cut spoil to a place called Musaliyarpadom. It was alleged by the respondent that there was no space at the site of the work for depositing cut spoil and the cut spoil of approximately 2100m³ had to be consequently transported to Musaliyarpadom incurring an expenditure of Rs.45/m³ .

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Claim (V) is one for compensation for loss occasioned to the respondent due to idling of the establishment, men and machinery. It was the case of the respondent that his establishment, men and machinery had to be idled for considerably long periods in the course of execution of the work for want of instructions to commence

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and continue the work as also for the delay occasioned in the matter of supplying the essentials namely, steel and cement by the appellants. According to the respondent, the loss incurred by him in this regard is Rs.14,39,750/-.

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Claim (VI) is one raised by the respondent for reimbursement of Rs.2,39,742/- recovered from the amounts payable to him incorrectly as excess payment.

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On an appraisal of the materials on record, the Arbitral Tribunal found that having regard to the soil conditions at the site, shoring had to be done by the respondent; that the fact that shoring has been done by the respondent is not disputed by the appellants; that there is no provision for shoring in the agreement and that therefore, the respondent is entitled to be compensated for carrying out the shoring work. Having regard to the materials on record, the Arbitral Tribunal also held that the respondent is entitled to be paid for having conducted the shoring work at Rs.1750/m³ for 450 metres more as claimed by him and that the additional amount payable by the appellants to the respondent in this regard was fixed accordingly at Rs.7,87,500/-. As regards claim (IV), the Arbitral Tribunal found that lack of space for dumping of cut

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spoil was a fact that was taken note of by the officers in charge of the work; that the appellants have not disputed the fact that the respondent has transported the cut spoil from the site of the work to Musaliyarpadom and that the respondent is therefore entitled to compensation for conveying the cut spoil as claimed. Having regard to the materials on record, the Arbitral Tribunal also held that the respondent is entitled to Rs.43/m³ towards conveyance charges for 2100 m³ of cut spoil and the amount payable by the appellants to the respondent in this regard was fixed accordingly at Rs.90,300/-.

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As regards claim (V), the Arbitral Tribunal found that even though work order was issued on 29.10.1987, permission to commence the work was given only during the first week of January, 1988. Placing reliance on Exts.C7 and C11, it was also found by the Arbitral Tribunal that work had to be stopped by the respondent on 12.05.1988 for want of cement and the work could be resumed thereafter only on 02.07.1988. Similarly, placing reliance on Ext.C8, the Arbitral Tribunal found that the work had to be stopped again on 14.07.1988 for want of cement. Placing reliance on Ext.C18, the Arbitral Tribunal also found that the work had to be stopped

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again on 22.01.1990 for want of cement. Similarly, the Arbitral Tribunal found based on Ext.C19 that the work had to be stopped again on 28.03.1990 for the very same reason. Ext.C22 was relied on by the Arbitral Tribunal to hold that the work could not be carried out for almost four months prior to 20.08.1990 for want of 16mm steel. The Arbitral Tribunal, in the circumstances, came to the conclusion that the case of the respondent that he had to idle the establishment, men and machinery on various occasions for reasons not attributable to him, is to be accepted and found that the respondent is entitled to Rs.5,91,745/- by way of compensation having regard to the number of days on which work had to be stopped for reasons not attributable to him. As regards claim (VI), the Arbitral Tribunal found that the amount recovered from the amounts payable to the respondent namely Rs.2,39,742/- is the amount which the respondent is entitled to in terms of a supplementary agreement executed between the parties on 01.06.1990 and it is not at all an excess payment effected. It is on the aforesaid findings that the Arbitral Tribunal passed the award.

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The learned Government Pleader took us through the relevant provisions of the General Conditions of Contract as also the Specification for Canal Works prescribed by the Government which are part of the agreement. As far as the award on claim (I) is concerned, the learned Government Pleader submitted that in the matter of passing an award on the said claim, the Arbitral Tribunal was proceeding as if the shoring work was not contemplated by the parties at the time of entering into the contract. Placing reliance on the relevant provisions in the General Conditions of Contract as also the Specification for Canal Works, the learned Government Pleader submitted that the shoring work is one contemplated by the parties at the time of entering into the contract and the provision is made in the contract to the effect that the rate to be quoted shall be inclusive of the shoring work and therefore the Arbitral Tribunal was not right at all in holding that the respondent is entitled to compensation for having carried out the shoring work. As regards the award on claim (IV), the submission made by the learned Government Pleader was that in terms of the provisions of the contract, the respondent was not entitled to conveyance charges for removing the cut spoil.

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As regards the award on claim (V), the submission made by the learned Government Pleader was that the said claim was found to be unsustainable by the court below and there is no reason to interfere with the decision of the court below. As regards the award on claim (VIII), the submission made by the learned Government Pleader was that the pendente lite interest awarded by the Arbitral Tribunal and affirmed by the court is excessive.

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Per contra, the learned counsel for the respondent supported the decision of the court below on claim (VI) and attacked the decision on the remaining claims. According to the learned counsel, the awards on claims (I) and (IV) by the Arbitral Tribunal are supported by reasons and there was absolutely no justification for the court to modify the same. It was also the submission of the learned counsel that the reason stated by the court below to set aside the award on claim (V) viz, that there is no provision in the agreement for claiming compensation for idling the establishment, men and machinery, is unsustainable in law.

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We have examined the submissions made by the learned Government Pleader as also the learned counsel

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for the respondent carefully.

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As far as claim (I) is concerned, as noted, the case of the respondent is that he is entitled to be paid, by way of compensation, the expenditure incurred by him for carrying out the shoring work for an additional reach of 450 metres also. The fact that the respondent has carried out the shoring work is not disputed. The dispute is as to whether the respondent is entitled to any payment for the same. It is seen that it was specifically contended by the appellants in the defence statement filed before the Arbitral Tribunal that, in terms of clause 19 of the General Conditions of Contract and Clauses 10 to 12 of the Specification for Canal Works, it was obligatory for the respondent to acquaint himself with the site conditions and must assume all responsibility of the difficulties of making and maintaining the required excavation and of doing other work affected by the geology of the sites and bound to take all protective measures for the purpose of executing the work including the shoring work at his own costs. The relevant portion of the defence statement reads thus:

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“In the tender documents, namely, L.C.B General conditions of contract and canal specification (clause 19 of L.C.B. and 10 to 12 of Canal specification) the Respondents had intimated the

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Claimant that he should acquaint himself with the site condition. It was also clearly specified that the Claimant should assume full responsibility of the making and maintenance of the required excavation due to the geology of the sites. The protective measures that are to be done during earth work excavation including shoring are to be done at the Claimants cost. Despite these facts the Respondents had treated shoring from ch.0 to 267m. as extra items, since it was found that the protective measures, necessitated at this reach was abnormal. The claimants claim for 450m. is unrealistic and against the facts. The rate of Rs.2500/Rm. is not based on any facts. Therefore the claim may be rejected.” Clause 19 of the General Conditions of Contract referred to in

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the defence statement reads thus:

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19. INFORMATION AND DATA

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The information and data furnished herein relative to the works and site conditions are general. It shall be the responsibility of the Contractor to fully acquaint himself with the nature and the location of works, quarries, local conditions and other aspects which are relevant to the works.

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(underline supplied)

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Clauses 10 to 12 of the Specifications for Canal Works referred to in the defence statement read thus:

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10. RECORDS OF TEST PITS

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The drawings included in these specification show the available records of the test pits dug along the alignment of the canal and the drill holes taken at the aqueduct sites. The department does not represent that the available records show completely the existing conditions and does not guarantee any interpretation of the records or the correctness of any information shown on the drawings relative to

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geological conditions. The contractor must assume all responsibility for deductions and conclusions as to the nature of the rock and other materials to be excavated, the difficulties of making and maintaining the required excavations and of doing other work affected by the geology of the sites of the work and for the final preparation of the foundation for the various structures.

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11. QUANTITIES UNDER THE VARIOUS CLASSIFICATIONS

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The quantities given under the various classification for excavations or advance estimates based on the available records of the test pits and the actual quantities under the various classifications may vary widely there from during actual execution. No claim shall be made against the government for differences in the percentages of different classification assumed for arriving at the estimate rate.

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12. DEWATERING

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The Contractor shall construct and maintain all necessary bunds and other protective works, shall furnish all materials required, and shall furnish, install, maintain and operate all necessary pumping and other equipment for dewatering the site of aqueducts and other structures and for maintaining the foundations and other parts, of the work free from water as required for constructing each part of the work. After having served these purposes all bunds and all other temporary protective works shall be removed by the Contractor. The cost of all works required for dewatering shall be included in the rate quoted for excavation or other relevant item unless specifically defined otherwise.

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(underline supplied)

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It is beyond dispute that in terms of the provisions of the

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agreement, the respondent was bound to carry out the work as per the instructions of the engineer-in-charge of the work. As such, the respondent cannot find fault with the appellants for the instruction given by the engineer-in-charge of the work to form the flume by vertical cutting. It is also beyond dispute that the shoring is a protective work which is carried on in similar construction works to prevent sliding of soil. A conjoint reading of the extracted provisions in the agreement especially the underlined portions would indicate beyond doubt, as contended by the appellants in the defence statement, that it was obligatory for the respondent to acquaint himself with the site conditions and to take all protective measures for the purpose of executing the work including shoring at his own costs. As rightly pointed out by the learned Government Pleader, in the matter of considering the said claim, the Arbitral Tribunal was proceeding as if there is no provision in the agreement for carrying out the protective works like shoring; that the respondent was not obliged therefore to carry out the said work in terms of the agreement and it is on that basis the award impugned is passed on claim (I). In other words, the award of the Arbitral Tribunal, insofar as claim (I) is

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concerned, is contrary to the specific provision contained in the contract. It is now settled that if an award is passed by an arbitral tribunal ignoring the express terms of the contract by wandering outside the scope of the contract, the award suffers from the vice of jurisdictional error and such cases are liable to be treated as cases where the arbitral tribunal has misconducted itself, thereby acting ultra fines compromissi.

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[See Bharat Coking Coal Ltd. v Annapurna Construction , (2003) 8 SCC 154]. The relevant portion of the judgment reads thus:

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28. In Associated Engg. [(1991) 4 SCC 93] it has been held: (SCC pp. 104-05, paras 27-29)

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“ 27 . If the arbitrator commits an error in the construction of the contract, that is an error within his jurisdiction. But if he wanders outside the contract and deals with matters not allotted to him, he commits a jurisdictional error.

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x x x x

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28.In the instant case, the umpire decided matters strikingly outside his jurisdiction. He outstepped the confines of the contract. He wandered far outside the designated area. He digressed far away from the allotted task. His error arose not by misreading or misconstruing or misunderstanding the contract, but by acting in excess of what was agreed.

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x x x x In awarding claims which are totally opposed to the provisions of the contract to which he made specific reference in allowing them, he has misdirected and misconducted himself by manifestly disregarding the limits of his jurisdiction and the bounds of the contract from which he derived his authority thereby acting ultra fines compromissi .”

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We, therefore hold that the court below acted illegally in passing the impugned judgment on the basis of the said award on claim (I), although the court modified the same trivially in favour of the appellants on a different ground.

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As far as claim (IV) is concerned, the contention of the appellants in the defence statement filed before the Arbitral Tribunal was that the non-availability of space for dumping the cut spoil and the decision taken by the respondent to convey the same to Musaliyarpadom were not facts that were brought to the notice of the appellants; that the cut spoil in terms of the agreement are to be dumped at the place directed by the Engineer-in-Charge and that the respondent cannot, therefore, claim the expenditure incurred for the same by way of compensation. The relevant portion reads thus:

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“The claim for extra conveyance for dumping cut earth is against the actual facts. This has been detailed in paras 10 and

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14 of this statement of defence. The “Alleged” non availability of land for dumping the cut earth was never noticed by the Claimant, when the earth work excavation was actually carried out. Nor did he bring to the notice of the Respondents about the fact that he is conveying the cut earth to Musaliyarpadom despite the fact that the agreement specification clearly stipulates that the cut earth should be dumped at places as per the directions of the “Engineer-in-charge”. The claim raised is against the facts and is to be rejected.”

¶117

As noted, the Arbitral Tribunal found on facts that lack of space for dumping of cut spoil was a fact that was taken note of by the officers in charge of the work and that the appellants have not disputed the fact that the respondent has transported the cut spoil from the site of the work to Musaliyarpadom. True, orders have not been issued by the engineer-in-charge of the work permitting dumping of the cut spoil at Musaliyarpadom. But, it has come out that the appellants have effected a payment of Rs.21,274/- for the same. Merely for the reason that permission was not obtained, it cannot be said that the respondent is not entitled to the said amount by way of compensation for the expenditure incurred by him for conveying the cut spoil, especially when the appellants themselves have effected payment to the respondent for the said work by treating it as an extra work. The Arbitral Tribunal

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cannot also be found fault with for having granted an award as claimed by the respondent under this head as the appellants have not disputed in the defence statement, the quantum of compensation claimed by the respondent in this regard.

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Be that as it may, the impugned order indicates that the court below found that the payment already effected by the appellants for the work namely Rs.21,274/- is liable to be deducted from the amounts payable in terms of the award and it is on that basis that the award in this regard was modified to Rs.69,026/- in exercise of the power of the court under Section 15(b) of the Act. The respondent does not dispute the fact that he has been paid a sum of Rs.21,274/under the said head. Though the learned counsel attempted to argue that the claim made under this head is over and above the said payment, there is no pleading to that effect in the claim statement. The claim statement proceeds as if no amount was given for conveying the cut spoil to Musaliyarpadom. The relevant portion of the claim statement reads thus:

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“Is the claimant entitled to compensation towards conveyance charges incurred for conveying cut earth from site to Musaliyarpadom as alleged, if so what is the relief?

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No dumping yard was provided for depositing the cut spoil, even though there was no space on banks. The land acquired was the minimum required for forming the canal, since the cost of land in the area was very high. The matter was known to all concerned including the 2^nd respondent. In the interest of progressing the work; since the claimant had invested huge amounts, the cut spoil was conveyed to Musaliyarpadom near Bharanicavu Junction which was owned by the first respondent. Such sort of conveyance was not anticipated in the agreement as stated in para 14 above. The work could not be progressed without conveying the cut spoil as the cut earth could not be accommodated at available places on banks due to apprehension of further sliding of sides during foundation excavation for forming the canal. The quantity that was conveyed to the dumping yard at Musaliyarpadom excluding that deposited for back filling and at available places up to and including CC-VIII and part was 2100m3 as per claimant's assessment. The extra expenditure incurred for conveying 1m3 of the cut earth to the said dumping yard was Rs.45/m3. The claimant is entitled to a compensation of Rs.94500/-(Rupees Ninety four thousand five hundred only) in the above account. It is prayed that the learned arbitrator may be pleased to award the said amount to the claimant to be paid by the respondents under this claim.”

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In the absence of any specific case for the respondent that the amount claimed under the head is over and above the amount already disbursed, we do not find any infirmity in the decision of the court below in modifying the award passed on the said claim in exercise of the power under Section 15(b) of the Act.

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In other words, there is no infirmity in the award on claim (IV) which was modified by the court below.

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As far as claim (V) is concerned, as noted, the

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stand of the appellants is that the establishment, men and machinery of the respondent were not idled at any point of time due to reasons attributable to the appellants. The relevant portion of the defence statement reads thus:

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“A scrutiny of the measurements recorded in the Measurement Books duly accepted by the Claimant will reveal the fact that the earth work cutting was started by the Claimant during the First week of December 1987. As already detailed under para 11, 12 and 13 of this statement it is clear that the Claimant had dragged the work unnecessarily. Departmental materials were issued to the Claimant as per necessity at the site. The Claimant had the option to carry out works which did involve the usage of cement during the period from 17.12.1989 to April 1990. In fact none of his labourers and machineries were idling during the said period. As already detailed in the previous sub paras the Claimant did not fulfil his contractual obligations stipulated in clause 15 and 17 of L.C.B General conditions of contract. The amount of loss stated in the claim is not based on any facts or data. Hence it may be rejected.”

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As noted, the Arbitral Tribunal found, based on the materials made available on record, that even though the work order was issued on 29.10.1987, permission to commence the work

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was given only during the first week of January, 1988. Placing

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reliance on Exts.C7 and C11, it was also found by the Arbitral Tribunal that work had to be stopped by the respondent on 12.05.1988 for want of cement to be supplied by the appellants and the work could be resumed thereafter only on 02.07.1988. Similarly, placing reliance on Ext.C8, the Arbitral Tribunal found that the work had to be stopped again on 14.07.1988 for want of cement. Placing reliance on Ext.C18, the Arbitral Tribunal also found that the work had to be stopped yet again, on 22.01.1990 for want of cement. Similarly, the Arbitral Tribunal found based on Ext.C19 that the work had to be stopped again on 28.03.1990 for the very same reason. Ext.C20 shows that the progress of the work was affected due to shortage of steel items. Ext.C22 was relied on by the Ar bitral Tribunal to hold that the work could not be carried out for almost four months prior to 20.08.1990 for want of 16mm steel. It is on the basis of the said findings that the Arbitral Tribunal accepted the case of the respondent that he had to idle the establishment, men and machinery on various occasions for reasons not attributable to him. It is also seen from the award that it is having regard to the number of days on which work had to be stopped for reasons not attributable

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to the respondent, the Arbitral Tribunal found that the respondent is entitled to Rs.5,91,745/- by way of compensation under this head. The questions namely wh ether there were interruptions in the flow of works, whether the interruptions in the flow of works were due to reasons attributable to the appellants, whether the respondent had to idle his establishment, men and machinery on account of the interruptions of the work, the l oss, if any, sustained by the respondent on account of the idling of the establishment, men and machinery etc. are pure questions of facts. It is now trite that the findings on questions of facts in the aforesaid nature cannot be interfered with in an appeal preferred under Section 39 of the Act, when the same do not suffer from any jurisdictional error [See Sudarsan Trading Co. v. Government of Kerala, (1989) 2 SCC 38]. The relevant portion of the judgment of the Apex Court in Sudarsan Trading Co. reads thus:

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“But, in the instant case the court had examined the different claims not to find out whether these claims were within the disputes referable to the arbitrator, but to find out whether in arriving at the decision, the arbitrator had acted correctly or incorrectly. This, in our opinion, the court had no jurisdiction to do, namely, substitution of its own evaluation of the

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conclusion of law or fact to come to the conclusion that the arbitrator had acted contrary to the bargain between the parties.”

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As noted, the court below interfered with the award on claim (V) taking the view that there is no provision in the agreement enabling the respondent to claim compensation for idling the establishment, men and machinery. We are unable to accept the said reasoning of the court below. The said claim is one raised on the premise that the delay on the part of the appellants in fulfilling the obligations in terms of the contract has resulted in loss to the respondent and the appellants are therefore liable to compensate the respondent for the same. It is a claim which the respondent is entitled to raise against the appell ants in the light of Section 55 of the Contract Act [See National Highways Authority of India v. HCC Ltd , 2014 SCC OnLine Del 3507]. Such a claim is legally sustainable, and the view taken by the court below for reversing the arbitral award under that head is erroneous and does not fall within the scope of Section 30 of the Act. Needless to say that the award of the Arbitral Tribunal on this claim is liable to be restored.

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20. It is seen that the award on claim (IV) affirmed

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by the court below is not challenged in the memorandum of

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appeal and it is therefore, unnecessary to deal with the same.

¶149

21. As noted, Claim (VIII) was one raised for interest and the said claim was disposed of by the Arbitral Tribunal directing the appellants to pay to the respondent interest for the various amounts found due at the rate of 18% per annum from 08.05.1992, the date of entering into the reference for arbitration till the date of decree or date of payment, whichever is earlier. In the context of an arbitral award passed in a reference based on the terms of an agreement entered into on 11.1.1989 under the Act, the Apex Court in State of Rajastan v. Ferro Concrete Construction Private Limited, (2009)12 SCC 1, granted pendente lite interest only at the rate of 9% per annum. In the light of the said judgment, we deem it appropriate to modify the pendente lite interest granted by the Arbitral Tribunal to the respondent as affirmed by the court belo w as 9 % per annum.

¶150

22. In the result, the appeals are disposed of setting aside the arbitral award on claim (I), affirming the arbitral award on claims (V) and (VI), affirming the arbitral award on claim (IV) as modified by the court below and modifying the arbitral award on claim (VIII) granting interest to

¶151

Arb. Appeal Nos.44 and 49 of 2010 -: 26 :-

¶152

the respondent for the amount due in terms of the award at the rate of 9% per annum from the date of reference to the date of decree.

¶153

Sd/P.B.SURESH KUMAR, JUDGE.

¶154

Sd/C.S.SUDHA, JUDGE.

¶155

ds 21.05.2022

¶156

Arb. Appeal Nos.44 and 49 of 2010 -: 27 :-

¶157

APPENDIX

¶158

PETITIONERS' ANNEXURES:

¶159

ANNEXURE 1: TRUE COPY OF THE CLAIM STATEMKENT FILED BY THE APPELLANT/CLAIMANT BEFORE THE SOLE ARBITRATOR.

¶160

ANNEXURE 2: THE TRUE COPY OF THE AWARD DATED 29.10.1994 IN ARBITRATION CASE NO.CE/P22/ARB.2/17588/92.

¶161

ANNEXURE 3: THE TRUE COPY OF THE I.A.1002/95 FILED BY THE RESPONDENTS BEFORE THE SUB COURT, KOTTARAKKARA.

¶162

ANNEXURE 4: THE TRUE COPY OF THE COUNTER AFFIDAVIT TO I.A.1002/95 FILED BY THE APPELLANT/ CLAIMANT BEFORE SUB COURT, KOTTARAKKARA. ANNEXURE 5: ATTESTED COPY OF THE JUDGMENT DATED 23.06.2010 IN O.P.(ARBITRATION) 6/1995 OF THE SUB COURT, KOTTARAKKARA. ANNEXURE 6: ATTESTED COPY OF THE DECREE IN O.P.(ARB.) 6/1995 DATED 23.6.2010 ON THE FILE OF THE SUB COURT, KOTTARAKKARA.

State of Kerala v. P.v.Varghese

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State of Kerala v. P.v.Varghese

Case brief

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What did the court decide?

What the court decided

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