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2017 Supreme(Kar) 1126

IN THE HIGH COURT OF KARNATAKA BENCH AT DHARWAD
S. SUJATHA, J.
Sri S.V. Samudram - Appellant
Vs.
The State of Karnataka, Rep. By Chief Engineer, C&B (PWD North), Dharwad & Ors. - Respondents
M.F.A. No. 24507 of 2010
Decided On : 07-02-2017

Advocates:
Advocate Appeared:
For the Appellant : Sri. Vijay Kumar Horatti, Sri Ravi G. Sabhahit
For the Respondents: Smt. Veena Hegde, Sri Ajay U. Patil

Headnote:ARBITRATION AND CONCILIATION ACT, 1996 – Section 34 – Setting aside of Arbitral award – Tender for construction of Office of Conservator of Forest and quarters – Work not completed within stipulated time – Contractor alleging that work delayed due to relocation of site, absence of water supply, escalation of prices – Relocation of site, only in respect of residential building, not putting up for excavation of site for laying down foundation of office building resulting in delay in completion of work – Keeping labours idle without commencing work for construction of office amounting to default on part of contractor – Delay caused attributable to contractor – Arbitral award modified by awarding 25% of tender amount with 9% interest p.a.

       ARBITRATION AND CONCILIATION ACT, 1996 – Section 34 – Arbitral award – Post decree interest – Interest awarded by arbitrator 18% – Considering long lapse of time, State would be required to pay huge sum of money by way of interest – Awarding interest by 9% is proper.

JUDGMENT :

This appeal is directed against the Judgment and Order passed by the Senior Civil Judge, Sirsi, in Civil Misc.No.08/2003.

2. Appellant is a Civil Engineer/Contractor entrusted with construction of Office of Conservator of Forest and quarters at Sirsi during 1989 for a total amount of Rs.14.86 lakhs with time limit of 18 months excluding monsoon period. As per the contract agreement, the appellant/contractor was required to complete the work within a stipulated period i.e., on or before 6.5.1992. The details of estimation are as follows:

“1.

Estimated costs

Rs.22.60 lakhs

2.

Amount put to tender

Rs.13.64 lakhs

3.

Agreement amount

Rs.14.86 lakhs

9% above for 1988-89 [EST rate 2% below for CSR 1989-90

 

Office building

Rs.9.98 lakhs

Residential quarters

Rs.4.06 lakhs

Total

Rs.14.04 lakhs

4.

Time limit

18 months

Date of commencement

7.3.1990

Date of completion

6.5.1992

5.

E.M.D.

Rs.20,500.00

[Bank guarantee-Syndicate Bank]

6.

S.D.

Rs.1,02,285.00

7.

Work done

Rs.9.44 lakhs

 

 

[6th R.A. Bill]”

Since the contractor had not completed the work within the stipulated period, notice was issued by the respondents and finally action was taken to rescind the work at the risk and cost of the contractor as per the tender condition. The appellant/contractor in his letter dated 6.3.1992 brought to the notice of the respondents that the Department is responsible for the delay in not executing the work within the stipulated period. It was contended that change of site, exchange of plan of floor, slab beams and failure to provide water facilities were the major cause for the delay in completing the work. Accordingly, demanded the damages. Denying the same, the department rejected the contractor’s demand.

3. The Arbitrator was appointed to solve the disputes and differences on the contract work. The Arbitration Award was passed by the sole Arbitrator Sri S.K. Angadi, Chief Engineer [Rtd.,], K.P.W.D. Basaveshwarnagar, Gokul Road, Hubli on 8.2.2003 awarding Rs.14,68,239/- with interest at 18% p.a. awarded from 9.3.1994 till the date of payment along with cost of arbitration of Rs.50,000/-. Aggrieved by the same, the respondents preferred Civil Misc. No.08/2003 before the Senior Civil Judge, Sirsi, under section 34 of the Arbitration & Conciliation Act, 1996 [‘Act’, for short] whereby the award passed by the Arbitrator was modified to Rs.3,71,564/- along with interest at 9% per annum from the date of award till the date of payment with the arbitration cost at Rs.10,000/-. Aggrieved by the same, the contractor is in appeal.

4. Learned Counsel appearing for the appellant assailing the impugned Judgment and Order would contend that the Court below failed to appreciate the Award passed by the Arbitrator in a right perspective. The Award of the Arbitrator can be interfered by the Court only if it is violative of section 34 of the Act and the Court below cannot sit as an appellate court to re-appreciate the case. It is submitted that the court below grossly erred in holding that there was no delay caused by the respondents and fault was on the appellant in not executing the work in time. It was submitted that the delay was caused mainly due to the change of the site, the original site handed over for the construction of Office of Conservator of Forest and quarters at College Road, Sirsi, Karwar on 7.3.1990 and six months later, the site was shifted to Yellapur Road, Sirsi, Karwar. The Court below failed to appreciate that the appellant excavated the foundation and dumped the machinery, materials at the original site after handing over the site and subsequently site was shifted by the respondents which caused loss to the appellant. It was further submitted that the court below failed to appreciate that the drawing of the site was prepared by respondents No.3, approved by c









































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