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2020 Supreme(Mad) 2297

IN THE HIGH COURT OF MADRAS
R. Subbiah, C. Saravanan, JJ.
Tuticorin Port Trust - Appellant
Versus
Jan De Nul Dredging India Pvt. Ltd. and Ors. – Respondents
O.S.A. No. 101 of 2020 and C.M.P. No. 4650 of 2020
Decided On : 15-03-2020

Advocates:
Advocate Appeared:
For the Appellant : Yashodvardhan, Senior Counsel for S. Yashwanth
For the Respondent: Jose John for King and Partridge

Headnote:

Arbitration and Conciliation Act, 1996-Section 34- Application for setting aside arbitral award- Appellant had awarded a dredging contract to the 1st respondent for deepening of the channel and basin to facilitate passage of 12.80 M drought vessel at Tuticorin Port pursuant to a tender floated by the appellant. A contract was thereafter signed into between the appellant and the 1st respondent which was titled as "License Agreement". The tender conditions were incorporated as part of the said Agreement- The contract value as per the aforesaid License Agreement was for a sum of Rs. 465,47,56,517/- The duration of the contract was for 14 months- Appeal against impugned order –Held, The claim for idling charges for these Dredgers were made by the 1st respondent though the work was completed much ahead of the schedule by citing few clauses in the agreements and the tender documents to which we shall refer in the course of the order- It is noticed that the Arbitral Tribunal while allowing Claim No. 7 of the respondent, has merely relied on the reasoning given by it for awarding Claim Nos. 5 and 6 even though even according to the respondent, it was entitled for compensation for idle time in claim No. 7 in terms of Clause 38, Section III of the License Agreement read with Clause 41.1 and Clause 41.2, Section II of the License Agreement due to "Stoppage of the Works" by the appellant- Claim No. 7 was quantified by the 1st respondent based on "Bill of Quantity" attached to the License Agreement by relying on Clause 51.1 Section III and not to idle time for Stoppage of the Works. We shall also refer to these two clauses in the course of this order- Yet the Arbitral Tribunal proceeded to award Claim No. 7 based on the reasoning given by it for awarding amounts under Claim No. 5 and 6. Thus, the award passed by the Arbitral Tribunal was patently illegal. It also does not bear any proper discussion. This aspect has been missed in the impugned order- Thus, the calculation given by the appellant claiming the compensation for the entire value for a sum of Rs. 14,66,04,216/- (447.92 x 3,27,300) was clearly contrary to the terms of the contract. As per the contract to the idle time for such payment is to be reckoned as the total time in one continuous interruption minus 2 hours. It cannot be said it was reasonable interpretation- Court is unable to uphold the impugned order of the learned single judge upholding the award as far as Claim No. 7 is concerned- Appeal is allowed.

JUDGMENT :

C. Saravanan, J.

1. The present appeal is directed against impugned order dated 10.9.2019 passed in O.P. No. 152 of 2015. By the impugned order, the learned single Judge has dismissed O.P. No. 152 of 2015 filed by the appellant herein. The appellant was aggrieved by an award dated 18.10.2014 passed by the Arbitral Tribunal in a commercial dispute between the appellant and the respondent. Thus, O.P. No. 152 of 2015 was filed by the appellant under Section 34 of the Arbitration and Conciliation Act, 1996.

2. Since the award was passed prior to the amendment to the provisions of the Arbitration and Conciliation Act, 1996 in 2015, challenge to the award was disposed as per the provisions of the Act as it stood at the time of the filing of O.P. No. 152 of 2015 under Section 34 of the Arbitration and Conciliation.

3. The Hon'ble Supreme Court has also clarified that the law as it stood at the time of the passing of the award would govern the challenge to the award in S. Sangyong Engg. & Construction Co. Ltd., Vs. NHAL, (2019) 15 SCC 131. Therefore, to that extent the disposal of O.P. No. 152 of 2015 was in accordance with the law.

4. The brief facts of the case are that the appellant had awarded a dredging contract to the 1st respondent for deepening of the channel and basin to facilitate passage of 12.80 M drought vessel at Tuticorin Port pursuant to a tender floated by the appellant. A contract was thereafter signed into between the appellant and the 1st respondent on 27.12.2010 which was titled as "License Agreement". The tender conditions were incorporated as part of the said Agreement.

5. The appellant had assessed the average daily output of 12,000 Cubic Meters for the scenario of deployment of Heavy Duty Cutter Suction Dredger(CSD) to complete the work within the specified period of 14 months for which the following indicative plant and equipment were required:-

    (i) Cutter Suction Dredger having cutter-power 3000 HP or more-1 No.

(ii) Self-propelled barges having hopper capacity 16,000 Cubic Meters-3 Nos.

(iii) Sufficient length of Floating/Submersible pipelines with and without the ball joints 800 MM to 900 MM diameter.

(iv) Backhoe Dredger having bucket capacity 3 to 4 Cubic Meter-1 No.

(v) Supporting Vessels.

(vi) Survey Vessels et cetera.

6. The contract value as per the aforesaid License Agreement was for a sum of Rs. 465,47,56,517/- (Four Hundred Sixty Five Crore Forty Seven Lakhs Fifty Six Thousand Five Hundred and Seventeen only). The duration of the contract was for 14 months.

7. The 1st respondent commenced the work on 28.12.2010 and completed on 31.08.2011 much ahead of the schedule by eight months. The 1st respondent also did not stay beyond the contract period. On completion of the work, the Appellant issued a takeover certificate to the 1st respondent on 02.04.2012.

8. The 1st respondent thus submitted its final bill on 29.05.2012. A dispute arose between the appellant and the 1st respondent regarding the payments. Among other disputes, a dispute arose as to whether the 1st respondent was entitled for additional compensation towards idling charges for 2 Cutter Suction Dredger and 1 Backhoe Dredger deployed by it. Cutter Suction Dredger was a Major Dredger while Backhoe Dredger was a Minor Dredger.

9. The claim for idling charges for these Dredgers were made by the 1st respondent though the work was completed much ahead of the schedule by citing few clauses in the agreements and the tender documents to which we shall refer in the course of the order.

10. Since the appellant did not entertain the claims of the 1st respondent, the 1st respondent invoked the arbitration clause under the License Agreement. The dispute was thereafter referred for arbitration on 20.09.2012 before an Arbitral Tribunal consisting of Members.

11. Before the Arbitral Tribunal, the 1st respondent raised 11 claims against the appellant under t

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