Partly allowed

State of Punjab and Ors. v. M/S S.S. Construction

Punjab & Haryana HC18 Jan 2010CR/5773/2009

Case brief

AI extract

What is this about?

This High Court revision allowed partly, modifying decrees to reduce the award amount for slush removal and weep holes, and directing future interest only on the principal without compounding, citing the agreement's interest clause.

What did the court decide?

Award reduced to Rs.2,10,615 for slush; Rs.39,572 for weep holes set aside; future interest only on principal at 15%; other claims affirmed.

State of Punjab and Ors. Vs M/S S.S. Construction — Arbitration | Punjab & Haryana HC (2010)

¶1

C. R. No. 5773 of 2009

¶2

¶3

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH.

¶4

Case No. : C. R. No. 5773 of 2009

¶5

Date of Decision : January 18, 2010

¶6

State of Punjab and another .... Petitioners

¶7

Vs.

¶8

M/s S. S. Construction Engineers and Contractors, S.A.S. Nagar (Mohali) .... Respondent

¶9

CORAM : HON'BLE MR. JUSTICE L. N. MITTAL

¶10

¶11

Present : Mr. Vivek Chauhan, AAG, Punjab for the petitioners.

¶12

Mr. Kamal Sehgal, Advocate for the respondent.

¶13

¶14

L. N. MITTAL, J. (Oral) :

¶15

This is revision petition under Article 227 of the Constitution of India filed by State of Punjab and Superintending Engineer.

¶16

Respondent-Contractor executed some work of the petitioners. There was dispute between the parties regarding payment of work executed by the Contractor. As per arbitration clause in the agreement, Arbitrator was appointed. Arbitrator made Award dated 29.09.1998 (Annexure P-1) awarding Rs.29,38,914/- along with interest thereon @ 15% per annum w.e.f. 02.06.1990 (being the last date of payment made to the contractor) till date of Award and also future interest at the same rate on the awarded amount as well as on the interest amount accrued till the date of Award.

¶17

C. R. No. 5773 of 2009

¶18

¶19

Petitioners herein filed objections under Section 30 and 33 of the Arbitration Act, 1940 (in short – the Act). The Contractor, by filing reply, repudiated the said objections. Rejoinder was filed by the petitioners herein.

¶20

Learned Civil Judge (Senior Division), Rupnagar, vide impugned judgment dated 02.03.2000 (Annexure P-2) dismissed the objections filed by the petitioners and made the Award (Annexure P-1) to be rule of the Court and decree was accordingly passed. The Contractor was held entitled to recover the awarded amount with interest @ 15% per annum from the date of Award till recovery. First appeal preferred by the petitioners herein has been dismissed by learned District Judge, Ropar vide impugned judgment and decree dated 11.04.2009 (Annexure P-3). Feeling aggrieved, the instant revision petition has been filed under Article 227 of the Constitution of India.

¶21

I have heard learned counsel for the parties and perused the case file.

¶22

One of the objections raised on behalf of the petitioners to the Award was that interest of the pre-reference period could not have been awarded. However, in view of judgment of Hon'ble Apex Court in the case of Executive Engineer, Dhenkanal Minor Irrigation Division vs. N. C. Budhraj (Deceased) by LRs reported as 2001 (1) RCR (Civil) 613 (SC) , as followed by Hon'ble Supreme Court in the case of Bhagawati Oxygen Ltd. vs. Hindustan Copper Ltd. reported as 2005 (2) RCR (Civil) 559 , Arbitrator has power to grant interest for pre-reference period provided there is no prohibition in the arbitration agreement excluding the same. In view thereof, learned State counsel for the petitioners does not press the said objection on behalf of the petitioners.

¶23

Learned counsel for the petitioners vehemently contended that claim no.9 has been awarded by the Arbitrator in contravention of clause

¶24

¶25

C. R. No. 5773 of 2009

¶26

no.19 of the agreement. The said claim pertains to use of diesel operated pumps by the Contractor, as the department did not make available the electric connection and therefore, the Contractor had to spend extra amount. The Arbitrator has awarded Rs.1,71,932/- for this claim. Clause 19 of the agreement is reproduced hereunder :-

¶27

“19. ELECTRIC CONNECTION :

¶28

The electricity shall be supplied on request if available from the nearest supply point. The contractor shall, however, not make any claim on ground of delay in supply of power or subsequent intermitted electric supply for which, he may provide stand-by arrangement at his own cost. ”

¶29

A bare perusal of the aforesaid clause makes it abundantly clear that the Contractor cannot make any claim on ground of delay in supply of power or subsequent intermitted electric supply, for which the Contractor may provide stand-by arrangement at his own cost. Consequently, for not making available electric connection by the department, the Contractor could not claim any additional amount as he had to make his own stand-by arrangement at his own cost. Consequently, the Arbitrator has committed legal misconduct by awarding the aforesaid amount against claim no.9 of the Contractor. The Award, to this extent, is liable to be set aside.

¶30

Learned counsel for the petitioners also contended that the Award of Rs.1,28,329/- by the Arbitrator against claim no.1 of the Contractor is illegal because the Contractor did not lead any evidence before the Arbitrator that his machinery and work force remained idle for delayed commencement of the work. This contention is untenable. The petitioners issued notice dated 16.01.1986 to the Contractor to proceed with the work, but the land was made available to the Contractor on 26.03.1986 i.e. after delay of 02 months 10 days. The Arbitrator has awarded the amount after

¶31

C. R. No. 5773 of 2009

¶32

¶33

appreciating the admitted facts and the oral evidence of the Contractor. Merely because documentary evidence to depict that machinery and work force remained idle was allegedly not led by the Contractor, the Arbitrator's Award is not vitiated. Moreover, the Arbitrator has not awarded amount under this claim for the machinery and work force remaining idle, but has awarded half the amount of anticipated profit. Consequently, Award of the Arbitrator under claim no.1 is not vitiated.

¶34

Learned counsel for the petitioners next assailed the Arbitrator's Award under claim nos.10, 13, 15 and 22. The Arbitrator has awarded amount under these heads for extra work done by the Contractor on account of change in design made by the department. Learned counsel for the petitioners contended that the petitioners had already paid the Contractor for the additional work. However, this is a contention on merits of the claim, which is not to be gone into by the Civil Court. The Civil Court does not sit as a Court of appeal over the Award of the Arbitrator. The Arbitrator's Award under these claims is not vitiated by any misconduct, nor the same is in contravention of any clause of the agreement. The Award, under these claims, is based on finding of fact regarding additional work done by the Contractor, as arrived at by the Arbitrator. So, the said finding cannot be challenged on merits by filing objections under Sections 30 and 33 of the Act.

¶35

Next attack on behalf of the petitioners to the Arbitrator's Award is regarding claim nos.14, 22 (partly) and 27. Under these claims, the Arbitrator has awarded amount @ Rs.70/- per cubic meter for removal of slush as against the agreed rate of Rs.23/- per cubic meter for ordinary earth work excavation. The Arbitrator has observed that removal of slush is difficult to handle and requires more input than removal or excavation of ordinary earth. Learned counsel for the petitioners, however, contended that the Arbitrator has awarded exorbitant amount @ Rs.70/- per cubic meter for removal of slush as against the agreed rate of Rs.23/- per cubic meter for

¶36

C. R. No. 5773 of 2009

¶37

¶38

ordinary earth work excavation. There is considerable force in the contention. However, in the absence of any expert evidence, thumb rule may be applied and accordingly, under these claims, the Contractorrespondent is awarded rate of Rs.45/- per cubic meter for removal of slush. The amount would thus come to Rs.2,10,615/- i.e. [9573.42 x (45-23)], instead of Rs.4,49,950/- awarded by the Arbitrator for the same. However, the amount of Rs.47,528/- for lining work, as awarded by the Arbitrator under these claims, is upheld.

¶39

The Arbitrator has also awarded Rs.39,572/- under claim no.17 for weep holes provided by the Contractor. Learned counsel for the petitioners, however, contended that no amount for the same could be awarded because weep holes are included in the drawing issued for lining work and therefore, weep holes form part of lining work. There is considerable force in the contention. The Arbitrator could not have awarded any amount under this head. The awarded amount of Rs.39,572/- under claim no.17 is accordingly set aside.

¶40

Learned counsel for the petitioners next challenged the award of interest under claim no.21. The challenge thereto is two-fold.

¶41

First challenge is regarding rate of interest awarded @ 15% per annum allegedly being excessive. However, this contention cannot be accepted because under clause 8 of the agreement, it was agreed that the Contractor would also pay interest at the same rate of 15% per annum to the petitioners on the amount advanced by the petitioners to the Contractor for mobilization and machinery. Consequently, interest awarded by the Arbitrator at the same rate, taking hint from clause 8 of the agreement, cannot be said to be excessive.

¶42

Second challenge to the award of interest by the Arbitrator is that future interest from the date of Award till recovery has been awarded even on the amount of interest accrued for pre-reference period and for reference period, which could not have been allowed. There is considerable

¶43

C. R. No. 5773 of 2009

¶44

¶45

force in the argument. The Arbitrator could not have allowed compound interest. It appears that even the trial court has not allowed compound interest because the trial court has held the Contractor entitled to recover the amount mentioned in the Award with interest @ 15% per annum from the date of Award till recovery. However, even if there is confusion regarding interpretation thereof, it has to be made clear that compound interest could not be awarded by the Arbitrator. The Contractor, therefore, would be entitled to future interest only on the principal amount of Award and not on the interest amount, which accrued till the date of Award.

¶46

For the reasons recorded herein above, the instant revision petition is allowed partly and the impugned judgments and decrees dated 02.03.2000 (Annexure P-2) passed by the trial court and dated 11.04.2009 (Annexure P-3) passed by the Lower Appellate Court are modified and Award (Annexure P-1) passed by the Arbitrator is set aside to the extent indicated herein above, whereas the Award for the remaining amount is affirmed and made rule of the Court.

¶47

January 18, 2010 ( L. N. MITTAL ) monika JUDGE

State of Punjab and Ors. v. M/S S.S. Construction

Case brief

What is this about?

What did the court decide?

State of Punjab and Ors. v. M/S S.S. Construction

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Daljit Singh Vs Shashi Kumar and Ors.

M/S Garg Construction Co. Vs State of Punjab and Anr.

P S I D C Ltd. Vs M/S Vee Kay Oils P Ltd. and Ors.

Patram Vs State of Haryana and Ors.

M/S Ferrous Infrastructure Pvt. Ltd. Vs Ram Pal and Ors.

Vidhya Devi Vs Raj Pal and Ors.