Back
Calcutta High Court
MONORANJAN MALLICK, J.
Calcutta Metropolitan Development Authority - Appellant
Versus
Gouranga Lal Chatterjee - Respondents
Award Case 617 and 618 of 1989
Decided On : 29 May 1991
ARBITRATION - Misconduct of Arbitrator - Escalation Costs - Extra Work Claims - Accord and Satisfaction - Pendente Lite Interest.
Fact of the Case:
C.M.D.A. challenged two awards made by Joint Arbitrators in favor of the Contractor for additional work done, idle labor, and escalation of prices. C.M.D.A. alleged misconduct by one of the Arbitrators, Shri B. C. Mitra, who had previously rejected the claims as Director of C.M.D.A. The Contractor contested, arguing that C.M.D.A. was estopped from raising the issue as they had participated in the arbitration without raising any objections and that Shri Mitra's involvement did not amount to misconduct. The Contractor also argued that the claims were not barred by the General Conditions of the Contract and that the payments of final bills did not constitute accord and satisfaction.
Finding of the Court:
The Court held that Shri Mitra's participation as an Arbitrator did not amount to misconduct as there was no evidence that he had given any decision on the claims as Director of C.M.D.A. The Court also held that the Arbitrators had the jurisdiction to consider the claims as the terms of the contract did not absolutely prohibit escalation costs or extra work claims. The Court further held that the payments of final bills did not constitute accord and satisfaction as the Contractor had clearly indicated that the payments were received under duress.
Issues: 1. Whether the participation of Shri B. C. Mitra as an Arbitrator amounted to misconduct. 2. Whether the claims were barred by the General Conditions of the Contract. 3. Whether the payments of final bills constituted accord and satisfaction. 4. Whether the Arbitrators had the jurisdiction to award pendente lite interest.
Ratio Decidendi: 1. The Court held that Shri Mitra's participation as an Arbitrator did not amount to misconduct as there was no evidence that he had given any decision on the claims as Director of C.M.D.A. The Court also held that C.M.D.A. was estopped from raising the issue as they had participated in the arbitration without raising any objections. 2. The Court held that the Arbitrators had the jurisdiction to consider the claims as the terms of the contract did not absolutely prohibit escalation costs or extra work claims. The Court found that the interpretation of the contract terms by the Arbitrators was reasonable and could not be interfered with. 3. The Court held that the payments of final bills did not constitute accord and satisfaction as the Contractor had clearly indicated that the payments were received under duress. 4. The Court held that the Arbitrators did not have the jurisdiction to award pendente lite interest as per the Supreme Court decision in AIR 1989 SC 973.
Final Decision: The Court allowed the petitions in part, deleting the awards of pendente lite interest and interest from the date of the award to the date of the decree. The Court affirmed the remaining portions of the awards.
ORDER :- In each of the above Award Cases the Calcutta Metropolitan Development Authority hereinafter referred as "C.M.D.A." has filed this application for setting aside the two Awards both dated 24-5-89 made and published by Shri B. C. Mitra and Shri J. K. Dasgupta, the Joint Arbitrators. The Award in the matter of Award Case No. 617 of 1989 relates to a contract for construction of Eastern Metropolitan Bye-pass and that of Award Case No. 618 of 1989 relates to a contract for construction of Barrackpore-Kalyani Express High Way. For the contract in connection with Eastern Metropolitan Bye-Pass and Park Circus Connectors the claim of the Contractor-respondent was Rs. 55,80,895.78 in respect of the items of the claim which are mainly for alleged additional work done, loss for idle labours and escalation of prices of diesel, lubricant and petrol during the execution of the works.
2. In the matter of contract for construction of Barrackpore-Kalyani Express High Way an additional amount of Rs. 39,65,472.98 on different counts which are also for alleged extra work done for loss of idle labours and for extra costs for the escalation of prices of diesel, lubricating oil etc. have been claimed.
3. The Joint Arbitrators for the extra claim in connection with the contract for construction of Eastern Metropolitan Bye-pass and Park Circus Connectors awarded Rs. 35,36,395/- to the claimant interest of Rs. 9,42,096/- till the date of entering upon reference and pendente lite interest of Rs. 16,59,277/- from the date of entering upon reference to the date of making and publishing the Award. It has also been directed that if the Award money be not paid within ninety days from the date of the Award, the respondent-claimant shall be entitled to interest @ 10% per annum on the sum due from the date of the Award till the payment or the decree upon the Award whichever is earlier. In connection with the claim for contract for construction of Barrackpore-Kalyani Express High Way the Joint Arbitrators awarded a claim of Rs. 28,94,052/- and also interest of Rs. 8,16,123/- till the date of entering upon the reference and also pendente lite interest of Rs. 3,12,742/- from the date of entering upon the reference to the date of making and publishing the Award. It has also been directed that if the payment be not made within ninety days from the date of the Award then the claimant shall be entitled to interest @ 10% per annum on the sum due as aforesaid from the date of this Award till the payment of decree by the Court upon the Award whichever is earlier.
4. The petitioner C.M.D.A. in both the petitions have raised the common questions of law challenging both the Awards on the same grounds. The following are the main grounds on which the Award have been challenged -
(a) Shri B. C. Mitra, one of the Joint Arbitrators is an Ex-Director of C.M.D.A. and in his capacity as the Director he had occasion to deal with the work in question and had given decision relating to such work. As the Director of the C.M.D.A. he rejected the self came claim and has now as one of the Arbitrators awarded it and has, therefore, become a Judge of his own cause. When Shri B. C. Mitra was nominated as an Arbitrator then the Officers of the C.M.D.A. were not aware of this position. But Shri Mitra who was fully aware of the position ought not to have acted as Arbitrator and the Awards made by him jointly with Shri Dasgupta is, therefore, vitiated by misconduct.
(b) The Awards have been made in disregard of the express provision of the contract. Claims on account of Escalation ought to have been rejected as Clause 70 of the General Condition of the Contract is a bar against such escalation cost. The claims regarding the extra work ought to have been rejected as the same is also hit by the express provision of the General Condition of the Contract.
(c) The Contractor has received payment under the final bills without any protest and cannot, therefore, make any further cl
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
