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IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD
T.V. NALAWADE, J.
Executive Director, Godawari Marathawada Irrigation Development Corporation - Appellant
Versus
M/s. Y.R. Reddy Engineers and Builders – Respondent
Arbitraton Appeal Nos. 6 & 5 of 2016 With Civil Application Nos. 8990, 14314 & 14313 of 2016
Decided On : 17-04-2017
In the case reported as AIR 1985 SC 607, Hyderabad Municipal Corporation v. M. Krishnaswami Mudaliar. In this case decided by two Hon`ble Judges of the Apex Court, the work was abandoned and in view of the claim made by the Contractor under the Interest Act, in that case, the Apex Court held that granting of interest was possible. The facts were different and further, there is the case cited supra viz., 2016 (3) Mh LJ 1, Union of India v. Bright Power Projects (India) Pvt. Ltd., decided by the three Judges of the Hon`ble Apex Court showing that Arbitrator is not expected to give award which will be against the terms and conditions of the agreement. In the present matter, relevant facts are considered by this Court and relevant portion of the agreement is already quoted and so, the finding is given that the contractor is not entitled to get interest on the bank guarantee.
Arbitration & Conciliation Act, 1996 - Section 34-Civil Procedure Code, 1908, Section 11-Arbitral award.- Decision of Board of Arbitrators granting revised rates to contractor being final operates as res judicata for granting compensation by sole Arbitrator.
The decision of the Arbitrator of granting claims under issue No. 3-A, 3-B, 4-A and 4-B viz. revised rates for entire quantities of work executed after 20.1.1993 and for quantities which were less than 70% of the tender quantity show that there was virtually non-application of mind. It is already mentioned that the Board of Arbitrators had given revised rates to the Contractor by presuming that delay was caused to the employer, but the Arbitrator has again given compensation under this head. Even if, the Board of Arbitrators had not given such compensation, in that case also, the decision of the Board of Arbitrators had become final on that point as this point was raised before the Board of Arbitrators and so, there was bar of principle of res judicata for granting these claims. From this angle, the Arbitrator has not considered these claims. Thus, the award on such claims cannot sustain in law.
Arbitration & Conciliation Act, 1996 - Section 34-Contract Act, 1872, Section 217-Arbitral award.- Period of limitation starts running after completion of 180 days from date of acceptance of final bill by contractor without protest.
It can be said that the contractor took steps first time in the year 2002 by filing proceeding under Section 11 of the Act. He filed the claim before Arbitrator appointed by the Court in the year 2003. Due to these circumstances, the Court has no hesitation to hold that all the claims decided by the Arbitrator in the present matter were time barred.
Arbitration & Conciliation Act, 1996 - Sections 34 and 37-Commercial Courts, Commercial Division and Commercial Appellate Division of High Court Act, 2015, Sections 3, 13 and 15-Jurisdiction of commercial appellate division of High Court.- Since on date of order under Section 34 of Act, commercial Courts was not in existence hence commercial appellate division of High Court has no jurisdiction to entertain appeal.
On the date of decision of the matter filed under Section 34 of the Act, Commercial Court was not in existence and similarly, Commercial Appellate Division was also not in existence when the present appeals were filed in this Court. The provision of Section 15 takes care of the pending matters and this provision shows that only the matters which are filed or were filed under Section 34 of the Act and which were still pending can be transferred under the provision of Section 15 and they are required to be transferred either to Commercial Court or Commercial Division. Neither in Section 15 nor in any other provision of the special Enactment, there is provision for transferring the appeals, which are filed against the decisions given by the Courts as mentioned in Section 34 of the Act to Commercial Appellate Division of this Court. In view of this position of law, it needs to be held that present appeals need to be decided by this Court as appeals filed under Section 37 of the Act and not by commercial Appellate Division of the High Court.
1. Both the appeals are admitted. Notice after admission is made returnable forthwith. By consent, heard both the sides for final disposal.
2. Arbitration Appeal No. 5/2016 is filed by the Contractor, at whose instance Arbitrator was appointed by this Court under section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act' for short). The other appeal is filed by the Employer, which is State Government, Corporation. Arbitrator had allowed all the claims of the Contractor and this decision was challenged by filing Misc. Application (RJE) No. 77/2011 by the Employer in the Court of Principal District Judge, (hereinafter referred to as 'P.D.J.' for short) Parbhani under the Act. By the decision dated 31.12.2015, the proceeding filed under section 34 of the Act by the Employer is partly allowed and the award given in respect of few claims is set aside. In view of these circumstances, both the sides have challenged the decision given by the District Court, Parbhani.
3. For deciding the challenges raised by both the sides in the appeals, the nature of work and also the history of previous arbitration proceedings in respect of the same work needs to be mentioned.
4. The work of Majalgaon Right Bank Canal was a part of Jaikwaid Project. This project was in respect of construction of dam on river Godavari at Paithan, District Aurangabad and at various places, the canals were to be constructed. Tender notice of the work of Majalgaon Right Bank Canal from k.m. 72 to 87 and k.m. 88 to 99, which included earthwork (excluding earthwork at k.m. 78 to 87) lining structure, tunnel at k.m. 90 and enroute reservoir at k.m. 91 was published by the Corporation. The work was allotted to the appellant from Arbitration Appeal No. 5/2016.
5. The cost of the work as per the tender was Rs.700.84 lakh. The work order was issued on 20.1.1990 and the period of work was fixed as 36 months from the date of work order. From time to time, the Contractor applied for extension of the period and extensions were granted by the Employer. The total extension of 47 months was granted, which expired in December 1996. Prior to that the Contractor abandoned the remaining work. Initially pre-final bill was prepared and it was finalised on 14.3.1998. The amount mentioned in the final bill was accepted by the Contractor without raising any protest.
6. During the execution of the work, the Contractor had raised disputes as provided by General Conditions of Contract (hereinafter referred to as 'G.C.C.' for short) and particularly, as per the Clause No. 56. These disputes were raised in the year 1995. On most of the disputes, the incharge Engineer gave the decision and it was communicated to the Contractor on 15.7.1995.
7. The Contractor was not satisfied with the decision given by the incharge Chief Engineer and he referred the dispute to Board of Arbitrators which was constituted as per Clause No. 57 of the G.C.C. As per the agreement, the Board was expected to deliver reasoned award. The Contractor made claims under eleven heads before Board of Arbitrators and all the claims were contested by the Employer. In all 13 claims were made by the Contractor before the department, but he prosecuted 11 claims before the Board of Arbitrators. It is the case of Contractor that the decision on claim Nos. 12 and 13 was likely to be taken departmentally as per the terms and conditions of the contract and so, he had preferred not to take decision on these claims from Board of Arbitrators. The Board of Arbitrators gave award in respect of 11 claims on 27.5.1998.
8. The reference was made to Board of Arbitrators as per the procedure given in the agreement between the parties and the provisions of Indian Arbitration Act, 1940 were applicable. The award was filed as per the old provisions in the Court and rule was made by the Court on the award. The award and the decision of the Court have become final. The award of amount of Rs.2,61,14,396/- was given in
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