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2023 Supreme(Cal) 1004
IN THE HIGH COURT AT CALCUTTA
KRISHNA RAO, J.
The Kolkata Municipal Corporation – Appellant
Versus
Rajpath Contractors & Engineers Limited - Respondent
AP 1985 of 2014
Decided on : 14-07-2023
Advocate Appeared:
For the Appellant : Mr. Jaydip Kar, Sr. Adv., Mr. A.N Banerjee, Mr. Rudranil De
For the Respondent: Mr. Sakya Sen Mr. Priyankar Saha Mr. Amritam Mondal Mr. Hemant Tiwari Ms. Ananya Chakraborty Ms. Shipra Nashar
The arbitrator had jurisdiction to decide on the claims made by the respondent, as the arbitration agreement covered all disputes arising out of and in connection with the work order and the agreement between the parties.
Headnote:
ARBITRATION - AWARD - CHALLENGE - GROUNDS - JURISDICTION OF ARBITRATOR - CLAIMS OUTSIDE SCOPE OF SUIT - LIMITATION - ESCALATION - SECURITY DEPOSIT - COSTS - VALIDITY OF AWARD.
Fact of the Case:
The petitioner, Kolkata Municipal Corporation Limited (KMC), invited a tender for the renovation of an existing reservoir. The respondent, a contractor, participated in the tender and was awarded the contract. The respondent completed the work and submitted its final bill, but the petitioner did not make any payment. The respondent filed a writ petition seeking payment, and during the pendency of the writ petition, the petitioner blacklisted the respondent. The respondent challenged the blacklisting order and obtained an order setting aside the blacklisting. The petitioner then filed an appeal, which was disposed of with a modification. The writ petition was finally disposed of, with the court setting aside the blacklisting order and excluding the period during which the writ petition was pending from the limitation period under Section 14 of the Limitation Act, 1963. The respondent filed a civil suit seeking payment, and during the pendency of the suit, the parties agreed to resolve their disputes through arbitration. The court referred the dispute to arbitration, and the arbitrator passed an award in favor of the respondent. The petitioner challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996.
Finding of the Court:
The court held that the arbitrator had jurisdiction to decide on the claims made by the respondent, as the arbitration agreement covered all disputes arising out of and in connection with the work order and the agreement between the parties. The court also held that the claims were not barred by limitation, as the period during which the writ petition was pending was excluded from the limitation period. The court further held that the arbitrator had rightly awarded escalation, refund of security deposit, and costs to the respondent.
Issues: 1. Whether the arbitrator had jurisdiction to decide on the claims made by the respondent. 2. Whether the claims were barred by limitation. 3. Whether the arbitrator had rightly awarded escalation, refund of security deposit, and costs to the respondent.
Ratio Decidendi: 1. The arbitration agreement covered all disputes arising out of and in connection with the work order and the agreement between the parties. 2. The period during which the writ petition was pending was excluded from the limitation period under Section 14 of the Limitation Act, 1963. 3. The agreement between the parties provided for escalation, and the arbitrator had rightly adopted the method prescribed in the agreement. 4. The respondent had completed the work to the satisfaction of the petitioner, and the petitioner had not released the security deposit. 5. The petitioner had not released the payment of the respondent despite the completion of the work, and the petitioner had approached the writ court, subsequently, the Civil Court, and also in the arbitration proceeding.
Final Decision: The court dismissed the petition challenging the award passed by the arbitrator.
JUDGMENT :
Krishna Rao, J.
1. This is an application under Section 34 of the Arbitration and Conciliation, Act, 1996 challenging the Award passed by the Learned Sole Arbitrator dated 22.09.2014 wherein the Learned Arbitrator has awarded an amount of Rs. 2,69,05,241/-(Rupees two crores sixty nine lakhs five thousand two forty one) with the direction upon the petitioner herein i.e. Kolkata Municipal Corporation Limited (herein after referred to as “KMP”) to pay the said amount to the respondent within a period of thirty (30)days from the date of Award. In default of payment of the same within the aforesaid time period, the awarded amount shall be paid by the KMC to the respondent along with interest @ 18% per annum for the period from date of the award till the date of payment.
2. The Kolkata Municipal Corporation invited a tender on 17th October, 1996 for renovation of existing 7 M.G. Semi Underground Reservoir at Tallah and the value of the said work was fixed at Rs. 3,53,00,288/-. The respondent had participated in the said tender and the respondent had accepted the tender of the petitioner for a total value of Rs. 3,77,39,537/-and accordingly the respondent had deposited an earnest money of Rs. 1,10,751/-. After receipt of the tender of the petitioner, work order was issued on 24th July, 1997 and as per the work order the work was to be completed within 12 months from the date of the work order. An Article of Agreement was entered between the parties which stipulated all the conditions of the contract as laid down in the tender document.
3. The respondent has completed the work on 31st July, 1999 and after completion of the work the respondent has submitted his 3rd Running Account and Final Bill on 16th September, 1999 which was received by the petitioner on 20th September, 1999. Even on receipt of the Final Bill, no amount was paid by the petitioner to the respondent inspite of several reminders. Accordingly, the respondent had filed writ petition being W.P No. 1925 of 2002 praying for appropriate direction for release of payment and during the pendency of the writ application, by a letter dated 15th May, 2005, the petitioner has blacklisted the respondent.
4. Challenging the order of blacklisting, the respondent had filed another writ application being WP No. 779 of 2005 and by an order dated April 25, 2005, the order of blacklisting was set aside. Being aggrieved with the said order, the petitioner has preferred an appeal and the said appeal was disposed of at the ad interim stage on 17th May, 2007 with the modification by deleting the word ‘set aside’ and incorporating the words ‘operation of the impugned notification till the disposal of the writ petition’. Finally, the writ petition was disposed of on 24th February, 2015 wherein the Hon’ble Court had set aside the said order of blacklisting.
5. This Court by an order dated 26th August, 2009 had disposed of the first writ application filed by the respondent by giving liberty to the respondent to file a civil suit or arbitration seeking appropriate remedy as no relief can be granted in the writ petition. While disposing of the first writ petition, the Hon’ble High Court also observed that the period during which the first writ petition was pending before the Hon’ble High Court shall be excluded for the purpose of limitation under Section 14 of the Limitation Act, 1963.
6. After the disposal of the first writ application, the respondent had initiated a Civil Suit being CS No. 255 of 2009 on 1st September, 2009. In the said suit, the respondent had also filed an application under Chapter XIIIA of the Original Side Rules of this Court and during the pendency of the said application, the parties have decided to enter into an arbitration agreement resolving to settle all disputes and differences between the parties with respect of the work awarded to the respondent.
7. On 5th Apr
