Dismissed

State of Kerala v. Mathew Korah

Kerala HC30 May 2022Arb.A/48/2013

Case brief

AI extract

What is this about?

The High Court at Ernakulam dismissed an arbitration appeal challenging a judgment ordering a government department to pay contractors additional amounts for excavation and earth re-handling. The court held that new contentions could not be raised for the first time on appeal and upheld the lower court's reliance on the arbitral tribunal's factual findings.

What did the court decide?

Appellants are not entitled to raise new contentions for the first time in the appeal and the impugned orders in favor of the respondent are affirmed.

State of Kerala Vs Mathew Korah — 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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MONDAY, THE 30^TH DAY OF MAY 2022 / 9TH JYAISHTA, 1944

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ARB.A NO. 48 OF 2013

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AGAINST THE JUDGMENT AND DECREE DATED 11.08.2010 IN O.P(ARB) 35/1992 OF SUB COURT, KOTTARAKKARA APPELLANTS/RESPONDENTS IN O.P.(ARB):

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

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2 THE SUPERINTENDING ENGINEER KIP CIRCLE, KOLLAM

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BY SR.GOVERNMENT PLEADER SRI.T.K.VIPINDAS

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RESPONDENT/CLAIMANT IN O.P(ARB):

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MATHEW KORAH, GOVERNMENT CONTRACTOR, PARAKUDIYIL HOUSE, NALLADU P O, MAVATTUPUZHA, PIN-686721

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BY ADV SRI.M.C.JOHN

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THIS ARBITRATION APPEAL HAVING BEEN FINALLY HEARD ON

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30.05.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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

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Arbitration Appeal No.48 of 2013

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Dated this the 30^th day of May, 2022

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JUDGMENT

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P.B.Suresh Kumar, J.

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This appeal is directed against the judgment dated 11.8.2010 in O.P. (Arb) No.35 of 1992 on the files of the Court of the Subordinate Judge, Kottarakkara. The appellants were the respondents and the respondent was the petitioner in the said proceedings.

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The dispute relates to a canal formation work namely “KIP Formation of L.B. Main Canal from Ch.40516m to 31700m excluding Aqueduct Part I from Ch.40516m to 31000m” executed by the respondent as contractor in connection with the Kallada Irrigation Project of the State Government. The agreement in this regard was executed between the parties on 05.05.1983. The agreement provides for recourse to arbitration for resolution of the disputes in

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connection with the execution of the work. 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 disputes have been referred to the Arbitral Tribunal for adjudication.

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Before the Arbitral Tribunal, the respondent raised several claims, of which the Arbitral Tribunal considered claims (a), (c) and (d) collectively and the remaining claims individually and passed an award in favour of the respondent directing the appellants to pay a sum of Rs.1,05,294/- on claims (a) and (d), a sum of Rs.2,26,485/- on claim (f) and a sum of Rs.2,80,000/- on claim (g). The remaining claims have, however, been rejected. The respondent thereupon filed a petition before the court below under Section 17 of the Arbitration Act, 1940 (the Act) for pronouncing a judgment in terms of the award. In the said proceedings, the appellants filed I.A.No.238 of 1993 seeking orders to set aside the arbitral award. The court below found that the arbitral award on claims (a) and (d) traversed beyond the scope of the contract and that the same is liable to be set aside. Consequently, the court disposed of the petition directing the appellants to pay to the

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respondent the amounts covered by the award on claims (f) and (g) with interest at the rate of 12% per annum from the date of the award till the date of the decree and interest at the rate of 6% per annum thereafter, till realisation. The appellants are aggrieved by the said decision of the court below.

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In the absence of any appeal by the respondent against the decision of the court below, the only question arises for consideration is whether the award, insofar as claims (f) and (g) are concerned, is sustainable in law.

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Heard the learned Government Pleader as

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also the learned counsel for the respondent.

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Claim (f) is one made by the respondent for compensation for the additional expenditure stated to have been incurred by him for carrying out the work from Ch.40820m to Ch.41000m, the alignment of which was shifted in the course of execution of the work. The case set out by the respondent in this regard was that the alignment was shifted to a higher terrain to adjust the required curve in order to facilitate smooth transition of the aqueduct; that the shifting of the alignment resulted in increasing the cutting depth involved

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in the removal of hard narrickal for formation of the canal and that since the scope and nature of the excavation on the changed alignment was not as contemplated by the parties at the time of entering into the contract, the excavation done on the changed alignment should have been treated as extra work and that the payment should have been effected for the same on that basis on mutually agreed terms. According to the respondent, he was paid only Rs.22/m³ for the excavation work on the changed alignment and he is entitled to at least an enhanced amount of Rs.45/m³ for the said work.

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Claim (g) is one for compensation made by the respondent for the loss caused to him on account of the rehandling of certain quantity of earth cut and removed while forming the canal. The case set out by the respondent in this regard is that the agreement contemplates cutting of earth and simultaneous filling of the cut earth for formation of the canal; that although earth cutting work could be carried out, the filling work could not be carried out by him at a particular place owing to the delay on the part of the respondents in constructing a rock toe; that direction was issued for construction of the rock toe only at a time when the earth

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cutting work was almost over; that he had to consequently rehandle cut earth, the quantity of which is approximately 10,000 m³ , after the construction of the rock toe and that he has incurred additional expenditure at the rate of Rs.30/m³ for the said work.

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After perusing the agreement and conducting a site inspection, the Arbitral Tribunal found as regards claim (f) that the site of the changed alignment was an elevated one; that the nature and scope of excavation on the changed alignment were not as contemplated by the parties at the time of entering into the agreement; that there should have been a revision of estimate for carrying out the work on the changed alignment and that the excavation work carried out by the respondent on the changed alignment is therefore liable to be treated as extra work, requiring fixation of a different rate. Having regard to the materials on record, the Arbitral Tribunal also held that the respondent is entitled to be paid Rs.43/m³ for the excavation work carried out on the changed alignment and the additional amount payable by the appellants to the respondent in this regard was fixed on that basis accordingly at Rs.2,26,485/-. The Arbitral Tribunal also found as regards claim

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(g) that the earth cutting work was completed by the respondent before June, 1984; that the construction of the rock toe was completed only after March, 1985; that the respondent could not complete the filling work at the area where the rock toe was constructed simultaneous to the earth cutting work; that the earth filling work could be carried out by the respondent at the area where the rock toe was constructed only after March, 1985 by re-handling the cut earth and that the respondent is therefore entitled to be paid for re-handling of 10000 m³ of cut earth used for filling. Having regard to the materials on record, the Arbitral Tribunal also held that the respondent is entitled to be paid Rs.28/m³ for the re-handling work of cut earth and the additional amount payable by the appellants to the respondent in this regard was fixed on that basis at Rs.2,80,000/-.

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The learned Government Pleader took us

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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 (f) is concerned, the learned Government Pleader submitted that it was open to the appellants to vary

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the alignment of the work in terms of the provisions of the agreement, if it is found desirable during the progress of the work and the contractor is not entitled to any extra payment on account of the same on the ground that there was increase in the quantity of earth to be removed. The learned Government Pleader placed reliance on clause 13 of the Specification for Canal Works as also clause 11 of the General Conditions of Contract in support of the said submission. Placing reliance on clause 9(1)(c)(i) of the Canal Specifications, it was also submitted by the learned Government Pleader that presence of hard narikkal in the changed alignment is also not a ground to treat the work on the changed alignment as an extra work, for presence of hard narikkal at the site is an aspect that was contemplated by the parties at the time of entering into the contract. According to the learned Government Pleader, the award of the Arbitral Tribunal as also the order of the court insofar as the same are rendered without taking note of the said terms in the agreement is bad in law and liable to be set aside on that ground. As far as the award on claim (g) is concerned, the learned Government Pleader submitted that there is nothing on record to indicate that there

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was any impediment for the respondent to make use of the cut earth for filling work simultaneously and the case that he has re-handled 10000 m³ of cut earth is incorrect. According to the learned Government Pleader, the award on claim (g) also, in the circumstances, is liable to be set aside.

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We have examined the submissions made by

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the learned Government Pleader carefully.

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As far as claim (f) is concerned, the stand taken by the appellants in the defence statement before the Arbitral Tribunal was only that the change of alignment was trivial and the respondent is not entitled to any additional payment on that ground, merely for the reason that there was variation in the quantity of the earth to be removed. The relevant portion of the defence statement reads thus:

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“For smooth connection of the canal alignment with C.D. works some slight variations in the alignment of canal was necessitated. This was not a major change. As the shift in the canal alignment was limited to within the originally acquired land itself. No extra land was acquired for this change. So there was no possibility of any kind of delay in execution and if there were any quantity changes there was provision in the agreement for dealing with such situation and this could have been negotiated under clause 32 of LCB Specifications. Hence

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the claim is against agreement provision and may be rejected.” The contentions now advanced by the learned Government

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Pleader are not contentions urged before the Arbitral Tribunal. That apart, the impugned order indicates that the award on claims (f) and (g) were not seriously challenged in I.A.No.238 of 1993 preferred by the appellants for setting aside the arbitral award. The relevant portion of the order reads thus:

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“But in the present case in the affidavit attached to I.A.No.238 of 1993 there is no specific allegation at all that the Arbitrator had conducted any legal misconduct apparent on the face of the award or committed any personal misconduct while passing award under claim (f) and (g).”

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On a query from the court as to whether the appellants are entitled to raise the contentions aforesaid for the first time in an appeal filed under Section 39 of the Act, the learned Government Pleader submitted that the appellants are not precluded from raising contentions in the nature of one referred to above for the first time in an appeal under Section 39 of the Act. The learned Government Pleader relied on the decisions of the Apex Court in K.P.Poulose v. State of Kerala, (1975) 2 SCC 236, M/s.Sudarsan Trading Co. v. Government of Kerala, AIR 1989 SC 890, State of Rajasthan v. Puri Construction Co.Ltd., (1994) 6 SCC 485, State of Kerala v. E.A.Cheriyan Kunju, AIR 1997 Ker 1 and Bharat Coking Coal Ltd. v. M/s.Annapurna Construction,

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AIR 2003 SC 3660, in support of the said submission.

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In State of Maharashtra v. Hindustan

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Construction Co. Ltd., (2010) 4 SCC 518, the Apex Court held that the grounds which are urged in an appeal filed under the Arbitration and Conciliation Act, 1996 shall be grounds which have a foundation in the application for setting aside the arbitral award and that grounds involving new materials/facts which were not originally raised in the application to set aside the award, cannot later be raised for the first time in an appeal under the said statute. The provision for appeal under the Act as also the provision for appeal under the Arbitration and Conciliation Act, 1996 being pari-materia , we are of the view that a party who has not urged a ground in the application to set aside an arbitral award cannot raise the same for the first time in an appeal. We have perused the judgments cited by the learned Government Pleader, and we do not find that the said judgements express a view contrary to what is stated in Hindustan Construction Co. Ltd. .

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Even otherwise, we do not find any merit in the submission made by the learned Government Pleader as regards the award on claim (g). Clause 11 of the General

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Conditions of Contract relied on by the learned Government Pleader reads thus:

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“11.MODIFICATIONS :

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The Executive Engineer may order modifications at any time before the completion of the work. No modification shall be made unless so ordered.

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For all modifications, the Executive Engineer will issue revised plans, or written instructions or both.”

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Clause 9(1)(c)(i) and clause 13 of the Specification for Canal

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Works read thus:

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“9. CLASSIFICATION OF EXCAVATION : Materials to be excavated will be classified as soil and rock.

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Soil will consist of following:

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x x x x x

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(c) Ordinary Rock: Generally any material which can be quarried or split with ordinary application of crowbars or wedges, such as

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(i) lime stone, hard laterite, narikkal, hard conglomerate or other soft or disintegrated rock.

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x x x x x

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13. CANAL SECTIONS

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The Canal sections are shown on the drawings but the undetermined stability or porosity of the material in which these sections will be constructed and which will form the canal banks or other causes may make it desirable during the progress of

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the work to vary the slopes of the excavation or the slopes of embankments and the dimensions dependent thereon. Any increase or decrease of quantities excavated as a result of such changes will be covered by the estimates of the quantities and the contractor is not eligible for any extra payment over agreed rates in the schedule for the item on this account. In unlined sections the canal shall be excavated to the full depth and width required and shall be finished to the prescribed lines and grades in a workman-like manner. Where the canal is to be lined with concrete or masonry the canal shall be excavated to a sub grade and section as shown on the drawings or as prescribed by the Engineer-in-charge to allow for the thickness of the concrete lining or masonry lining. Unless otherwise directed or approved by the Engineer-in-charge the excavation for a turn out bridge abutment or footing, or other structure lying largely outside of canal prism shall follow the excavation of the canal and the canal prism at the structure site shall be completely excavated as provided in this paragraph. Runways or foot paths shall not be cut into canal slopes below the proposed water level. Earth slopes shall be finished nearly with scrapers or other means approved by the Engineer-in-charge. Where the original ground surface is below the grade of the canal, the bottom of the canal shall be filed to grade in the manner prescribed for the construction of canal embankments. Insofar as practicable, the finishing operation required in canal sections shall be performed by the contractor simultaneously with the canal excavation.”

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True, the parties to the contract had contemplated removal of

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narikkal also while executing the excavation work. Similarly, there cannot be an ounce of doubt in the fact that the Executive Engineer of the work was empowered to modify the work, if found desirable during the progress of the work, and

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the contractor is bound to carry out the work in the modified form, even if the work involves variation in the quantities. As noted, the finding rendered by the Arbitral Tribunal, in the context of considering claim (f), is that the nature and scope of excavation on the changed alignment were not as contemplated by the parties at the time of entering into the agreement. It is on the basis of the said finding that the Arbitral Tribunal held that there should have been a revision of estimate for carrying out the work on the changed alignment. The aforesaid being findings on factual aspects, the correctness of the same cannot be examined on reappraisal of the materials by this Court. Going by various reasons stated by the Arbitral Tribunal, it cannot be said that the view taken is not a plausible one. In the circumstances, according to us, the various clauses of the contract referred to above have no relevance in the context of the said claim which was upheld by the Arbitral Tribunal and affirmed by the court below.

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As far as claim (g) is concerned, as noted, the stand taken by the appellants in the defence statement before the Arbitral Tribunal was only that there was no delay in taking a decision with respect to the construction of rock toe and that

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there was no hurdle for simultaneous filling and cutting and further that the claimant has not re-handled the cut earth. The relevant portion of the defence statement reads thus:

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“The statement of the claimant that the inordinate delay in taking decision with respect to construction of rock toe is not true. Timely decision was taken in this regard. The averments are baseless. There was no hurdle for simultaneous filling and cutting. The claimant has not re-handled the cut spoils and no delay or financial loss occurred on account of this. Hence the claim may be rejected”.

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There is no dispute between the parties to the fact that the works of earth cutting and earth filling are works that should have been simultaneously executed by the contractor in terms of the contract. The specific case of the respondent was that he could not execute the earth filling work simultaneous to the execution of the earth cutting work on account of the delay in the construction of rock toe and therefore, he had to rehandle the cut earth. The appellants dispute the said case of the respondent. The question whether there was any impediment at all for the respondent in carrying out the works aforesaid simultaneously and the question whether the respondent had re-handled the cut earth are pure questions of facts which have been answered by the Arbitral Tribunal in

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favour of the respondent. As noted in paragraph 11 above, there was no serious challenge to the said factual finding in the application preferred by the appellants before the court below to set aside the arbitral award. In the circumstances, we do not find any merit in the argument advanced by the learned Government Pleader on claim (f) as well.

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The appeal, in the circumstances, is devoid of merits and the same is accordingly dismissed.

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Sd/P.B.SURESH KUMAR, JUDGE.

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Sd/C.S.SUDHA, JUDGE.

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ds 20.05.2022

State of Kerala v. Mathew Korah

Case brief

What is this about?

What did the court decide?

State of Kerala v. Mathew Korah

Case brief

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What did the court decide?

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