The High Court dismissed an appeal under Section 37 of the Arbitration and Conciliation Act challenging a lower court's refusal to set aside an arbitral award on a construction dispute. The Court held it could not re-appreciate evidence or factual findings.
Civil Miscellaneous Appeal dismissed; connected Miscellaneous Petition closed; no costs.
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.
C.M.A.No.2861 of 2015
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on : 21.09.2022
Delivered on : 06.12.2022
CORAM
THE HONOURABLE Ms. JUSTICE P.T. ASHA
C.M.A.No.2861 of 2015 & M.P.No.1 of 2015
1.The Secretary Pondicherry Housing Board, Anna Nagar, Puducherry.
2.The Executive Engineer, Pondicherry Housing Board, Anna Nagar, Puducherry. ...Appellants
Vs
1.K.Raju
2.The Chairman, Pondicherry Housing Board, Anna Nagar, Puducherry ...Respondents
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PRAYER: Civil Miscellaneous Appeal is filed under Section 96 of CPC r/w Section 37 (1) of the Arbitration and Conciliation Act, 1996, against the order dated 24.10.2014 made in Arbitration O.P.No.10 of 2012 on the file of the Court of the Principal district Judge, Puducherry.
For Appellants : Mr.T.P.Manoharan, Senior Counsel for Mr.K.P.Jotheeswaran For Respondent 1: Mr.N.Thiagarajan For Respondent 2: No Appearance
JUDGEMENT
The Pondicherry Housing Board, Puducherry is the appellant before this Court challenging the order passed by the Principal District Judge, Puducherry in Arb.O.P.No.10 of 2012. The said Arbitration
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Original Petition was filed seeking to set aside the award dated 19.05.2011 passed by the sole Arbitrator in respect of the claim Nos.I, IV, V and VI and to allow the counter claim of the appellant herein. The parties are referred to in the same status as before the learned Arbitrator.
flats at Lawspet, Puducherry to the claimant on 19.02.1991. However, due to administrative reasons in the respondent Board the contract was foreclosed on 03.03.1998. Thereafter, the respondent had initiated the proposal for entrusting the balance work that had been foreclosed to the claimant himself on a nomination basis for a sum of Rs.19,85,013/-, in excess of 14.58% of the estimated cost of a sum of Rs.17,32,425/-. This amount was arrived at with concurrence of the claimant and final
work order was issued on 31.03.1998.
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10.02.1999. However, the same could be completed only on 09.06.1999 with a delay of 4 months. The final extension was granted by the Chairman of the respondent Board on 24.07.2001 levying compensation of Rs.5,230/- and the period of delay was notified as 14 days. Thereafter, the Chairman of the respondent Board had superseded the extension of time on 12.07.2002 with a levy of compensation of Rs.5,230/- and the period of delay was changed and notified from 10.02.1999 to 09.06.1999. The claimant had therefore raised a dispute and after a great delay, the sole Arbitrator was nominated by the Appointing Authority.
(a ) Out of 79 numbers of item listed in the agreement,
25 items were not permitted to be executed.
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(b)There was a large scale variation in almost all the
items and the claimant was asked to execute 47 extra items
and substituted items.
(c)The agreement provided that the cement / steel
would be supplied at the fixed rate but however the supply was erratic and issued only on Thursdays and Fridays.
(d)In view of variations issue with reference to
cement and steel the contractor was always in a state of preparedness.
(e)The weight of the steel road issued by the respondent had not been regularised properly thereby effecting huge loss.
(f)The building was executed as per the respondent's
plan and extra rates which were admissible for the items
executed in the curved portion had not been considered.
(g)The respondent Board has not measured and
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recorded for certain items, namely, (a)Disposal of surplus earth, (b)Wax polishing and (c) Furnishing the walls damaged by the Electrical contractor.
(h) Cost was not fully paid.
(i)The rate for the substituted items for steel,
windows were not properly arrived at.
(j)On account of the unusual delay, extra expenditure
had been met by the claimant as also over head charges.
(k)The levy of compensation was illegal as the
respondent Board had not taken note of the above.
allegations contained in the claim statement. The main contention put forward by the respondent is that the final bill had not been presented
by the claimant. The respondent Board had further contended that the
entire amount due to the claimant had been cleared.
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five issues, which are herein below set out:
“Issues:I
(a)Whether the Balance work of construction of MIG
Flats at Lawspet — Phase Ill, Block VIII was commenced
and completed within the scheduled period?
(b)If not as in (A) above, what are the reasons for such delay?
(c)Whether the above period of delay is attributable
to the claimant or the respondent?
ISSUE:II
A. Whether there were disputes during the period of
execution, involving Final Bill left out measurement and
difference in weight of steel issued by PHB and whether
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the said issues were resolved?
B. If not as in (A) above, what is the relief there to
with regard to the following claims.
1.Pending final Bill.
2. Items of work left out in measurement.
3. Difference in weight of PHB rods issued to the
contractor.
4. Recovery of stolen steel.
ISSUE: III
Whether the contractor is entitled for cost escalation under 10CC and if so what is the relief there on?
ISSUE: IV
A. Whether the contractor is entitled to uncovered
field Establishment and over head charges during the extended period?
B. Whether the levy of compensation is proper?
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ISSUE:V
Whether the counter claim of the Respondent is
maintainable? If so, what is the relief there on.
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was not carried which is mandatory under the CPWD manual both by the Assistant Engineer / Executive Engineer and further the objections raised by the claimant had not been dealt with properly. The Arbitrator went on to hold that the procedure adopted by the Board was not justified and the amount recovered for item No.15 - V and 17 of the agreement has to be refunded.
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Claim
Claim 1
| Claim | Description | Amounts |
|---|---|---|
| Claim 1 (a) |
(a)Amount due as per recorded measurements. i. Tender Excess para 17: Rs.9,370/- ii. Minus Payment to be refunded. Agreement 15 V & 17 – para 18 Rs.1,476/- iii. Difference in rate for SIS No.5 to Agt. Item 40 para 18 Rs.5,263/- iv. Refund for Recovery made for rectification Work para 18 Rs.1,108/- v. Cheque amount as per memorandum of payment vide para 19 Rs.30,160/- |
Rs.47,377/- |
| Claim (1b) |
Items of Works left out in measurements para 22 Rs.28,185/- |
Rs.28,185/- |
| Claim (1c) |
Difference in PHB rods and cost involved para 18 Rs.20,399/- |
Rs.20,399/- |
| Total | Rs.95,961/- | |
| 11 | . With reference to Issue No.II (B) (4) relating t | o the recovery |
of stolen steel, the same was rejected since no evidence had been let in by the claimant to prove the same. Issue No.III, relating to cost
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escalation was also rejected by the learned Arbitrator stating that there
was no merits in the claim.
as follows:
over head charges for the extended period;
belated settlement of the final bill, the learned Arbitrator had held that the claim was on the higher side and therefore 50% of the claim was accepted at Rs.39,000/-. The Arbitrator had also allowed interest at a sum of Rs.1,31,779/-.
filed by the respondent and the relief they were entitled has been
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rejected by the learned Arbitrator.
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award was not in consonance with terms of the contract.
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levied. The learned senior counsel would submit that the learned Arbitrator and the Principal District Judge have just glossed over this defense.
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p.a, on the net value of Rs.25,65,636/- to HUDCO. By reason of the same, the reputation of the respondent Board has been severely dented. Therefore, the respondent had claimed a total sum of Rs.25,65,636/-. That apart, a sum of Rs.30,160/- was over paid to the claimant, which was to be adjusted from out of his final bill. However, under the final bill for Block II, a sum of Rs.30,164/- was directed to be remitted to the respondent for finalising the final bills. This has not been paid by the claimant despite being intimated about the same. A sum of Rs.63,873/is due thereunder. Therefore, the respondent submitted that the rejection of the counter claim was without any basis.
(i) (2003) 4 SCC 80 – Food Corporation of India Vs.
Surendra, Devendra & Mahendra Transport Co.
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(ii) (2001) 4 SCC 241 – Ramachandra Reddy & Co.,
Vs. State of A.P. & Others.
(iii) (2009) 12 SCC 1 – State of Rajasthan & Another
Vs. Ferro Concrete Construction Pvt. Ltd.,
(iv) (2015) 3 SCC 49 – Associate Builders Vs. Delhi
Development Authority.
(v) (2014) 9 SCC 263 – ONGC Ltd., Vs. Western
Geco International Limited.
India Vs. Surendra, Devendra & Mahendra Transport Co was relied upon in support of the proposition that the Arbitrator exceeded his jurisdiction by entering upon the dispute and making an award in respect of a claim which was not referred to him.
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Ramachandra Reddy & Co., Vs. State of A.P. & Others, the Hon'ble Supreme Court had once again held that the Arbitrator cannot exceed the scope of his reference.
Builders Vs. Delhi Development Authority, has been referred to by the learned senior counsel in support of his argument that the award should
be fair, reasonable and objective, whereas, in the instant case, the Tribunal as well as the District Judge have not given sufficient opportunity to the respondent to put across their case.
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Arbitrator in the instant case has taken into consideration claims not referred to him.
(a) (2018) 1 SCC 718 – Sutlej Construction Limited
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Vs. Union Territory of Chandigarh.
(b) 2015 (1) CTC 797 – Navodaya Mass
Entertainment Ltd., Vs. J.M.Combines.
order has been passed after considering the evidence in great detail and therefore this Court ought not to interfere with the well considered award passed by the learned Arbitrator which has been confirmed by the learned Principal District Judge, after perusing the records submitted before him.
Conciliation Act. Section 37 of the Arbitration and Conciliation Act reads as follows:
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“37. Appealable orders.—
(1) An appeal shall lie from the following orders (and from no others) to the Court authorised by law to hear appeals from original decrees of the Court passing the order, namely:— (a) granting or refusing to grant any measure under section 9; (b) setting aside or refusing to set aside an arbitral award under section 34.
(2) An appeal shall also lie to a Court from an order granting of the arbitral tribunal.— (a) accepting the plea referred in sub-section (2) or sub-
section (3) of section 16; or (b) granting or refusing to grant an interim measure under section 17.
(3) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court
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variations and extra work without giving an adequate time to the claimant contrary to the terms of the contract but have also failed to pay them for the same in time. The said works does not form part of the original agreement. Therefore, in fairness to the contractor interest has been awarded. That apart, the Arbitrator has granted 10% interest taking note of the fact that the contract is a commercial one. The learned Arbitrator has given cogent and justifiable reasons for the grant of interest and there is no patent illegality.
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(2015) 3 SCC 49 – Associate Builders Vs. Delhi Development Authority has held that the Courts sitting under Section 34 is the final
Courts of facts and has a very limited scope for interference.
Section 37 appeal against an order from a Section 34 application by
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stating that the Court sitting in Section 37 cannot re-appreciate the facts and act like an Appellate Court.
06.12.2022
kan Index: Yes/No Speaking order/non-speaking order
To
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The Principal district Judge, Puducherry
P.T.ASHA, J.,
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kan
Pre-delivery order in C.M.A.No.2861 of 2015
06.12.2022
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3 issues framed by the court
Whether the Civil Miscellaneous Appeal under Section 37 of the Arbitration and Conciliation Act against the refusal to set aside the award is maintainable considering the limited scope of appellate in
Whether the Arbitrator exceeded its jurisdiction by granting interest despite the absence of an express agreement for it.
Whether the Court sitting under Section 37 can re-appreciate evidence or revisit factual findings of the Arbitrator.
Colour shows how this judgement treated each authority
Food Corporation of India Vs. SurendraReferred¶25
(2003) 4 SCC 80 – Food Corporation of India Vs. Surendra, Devendra & Mahendra Transport Co. · Who else cites this
Ramachandra Reddy & Co.Referred¶26
(2001) 4 SCC 241 – Ramachandra Reddy & Co., Vs. State of A.P. & Others. · Who else cites this
State of Rajasthan Vs. Ferro Concrete ConstructionReferred¶24
(2009) 12 SCC 1 – State of Rajasthan & Another Vs. Ferro Concrete Construction Pvt. Ltd. · Who else cites this
Associate Builders Vs. Delhi Development AuthorityReferred¶27
(2015) 3 SCC 49 – Associate Builders Vs. Delhi Development Authority. · Who else cites this
ONGC Ltd. Vs. Western Geco InternationalReferred¶28
(2014) 9 SCC 263 – ONGC Ltd., Vs. Western Geco International Limited. · Who else cites this
Sutlej Construction Limited Vs. Union Territory of ChandigarhRelied on¶39
(2018) 1 SCC 718 – Sutlej Construction Limited Vs. Union Territory of Chandigarh. · Who else cites this
2 provisions across 2 enactments
THE SECRETARY PONDICHERRY HOUSING BOARD, ANNA NAGAR, PUDUCHERRY
THE EXECUTIVE ENGINEER, PONDICHERRY HOUSING BOARD, ANNA NAGAR, PUDUCHERRY
K.RAJU
THE CHAIRMAN, PONDICHERRY HOUSING BOARD, ANNA NAGAR, PUDUCHERRY
P.T. ASHA
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
P.T. ASHA
Parties & counsel
