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2013 Supreme(P&H) 322
IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH
A.N. Jindal, J.
U.B. Engineering Limited - Appellant
Vs.
Indian Oil Corporation Limited and another - Respondents
Indian Oil Corporation Limited - Appellant
Vs.
U.B. Engineering Limited and another - Respondents
F.A.O. No. 2345, 4000 of 2006
Decided On : April 01, 2013
Mr. Ashwani Talwar, Advocate for the appellant in FAO No. 2345 of 2006 and for the respondents in FAO No. 4000 of 2006.
Mr. R.K. Chhibbar, Sr. Advocate with Mr. Adarsh Jain, Advocate for the respondents in
FAO No. 2345 of 2006 and for the appellant in FAO No. 4000 of 2006.
The main legal point established in the judgment is the interpretation of contract terms and the arbitrator's authority in adjudicating claims. The judgment emphasizes the principles of fairness and reasonableness in contract enforcement, as well as the claimants' right to seek civil remedy within the limitation period.
Headnote:
Arbitration - Claim Beyond Scope - Clause 6.6.1.0 - Summary of Acts and Sections: The judgment discusses the claim raised by the appellants-claimants before the arbitrator, which was held to be beyond the scope of arbitration as per Clause 6.6.1.0 of the general conditions of the contract. The judgment provides a detailed analysis of the facts, claims, and the legal provisions under the Contract Act, Arbitration and Conciliation Act, and Indian Contract Act. It highlights the interpretation of the contract terms, the arbitrator's authority, and the principles of fairness and reasonableness in contract enforcement.
Fact of the Case:
The case involved a dispute between M/s U.B. Engineering Ltd. and Indian Oil Corporation Ltd. regarding a contract for erection of equipment and machinery, fabrication, and civil works at Panipat Refinery Project. The claimants alleged losses due to delayed supply of equipment and extra work ordered by the respondent. The arbitrator awarded a total amount to the claimants, but the Additional District Judge, Panipat, held that the claims were beyond the scope of arbitration.
Finding of the Court:
The court found that the claims raised by the appellants were beyond the scope of arbitration as per the contract terms. It also acknowledged the settlement meetings and the delay in seeking civil remedy, allowing the claimants to file a suit within the limitation period. The court modified the interest awarded and dismissed the appeals with the mentioned modifications.
Issues: The crucial issue was whether the claims raised by the appellants fell within the scope of arbitration as per the contract terms. The court also addressed the award of interest and the claimants' right to seek civil remedy within the limitation period.
Ratio Decidendi: The court held that the claims were beyond the scope of arbitration as per the contract terms, but allowed the claimants to seek civil remedy within the limitation period. The court also modified the interest awarded and provided reasoning for the modifications.
Final Decision: The court dismissed the appeals, finding the claims beyond the scope of arbitration, but allowed the claimants to seek civil remedy within the limitation period. The court also modified the interest awarded and provided reasoning for the modifications.
A.N. Jindal, J
This judgment shall dispose of two connected appeals No.2345 of 2006 (M/s U.B. Engineering Ltd. vs. Indian Oil Corporation Ltd. & Anr.) and 4000 of 2006 (Indian Oil Corporation Limited vs. M/s U.B. Engineering Ltd. & Anr.), having arisen out of the common judgment and involving similar question of law. However, for convenience, facts are being taken up from F.A.O. No. 2345 of 2006.
The crucial question involved in this appeal against the judgment dated 27.4.2006 passed by the Additional District Judge, Panipat is as under :
1. Whether the claim raised by the appellants-claimants before the arbitrator was beyond the scope of arbitration being not notified in terms of Clause 6.6.1.0 of the general conditions of the contract?
As per claimants, its claim consists of two heads :
1. Compensation for the loss incurred on account of the extended stay for completion of work beyond stipulated time.
2. Costs of extra work ordered by the respondent/IOCL and executed by the claimant.
The brief facts of the case are that a contract No.PRP/044 of 1995-96 was entered into between the claimant and the respondent No.1 for erection of equipment and machinery, fabrication and erection of above ground piping and connected civil and structural works at Panipat Refinery Project. The parties entered into an agreement on 30.5.1995. It was primarily a labour contract with material and equipments to be supplied by the respondent-Indian Oil Corporation. The value of the contract was Rs.6,14,50,797/-. The stipulated time for completion of work was 16 months to be reckoned from 23.3.1995 i.e. the work was to be completed on 30.7.1996. The claimants alleged that delayed supply of the equipments, resulted into delay in execution and completion of the project. The claimants had been continuously reminding the Indian Oil Corporation Limited (herein referred as, 'the IOCL') in this regard and applied for extension of time limit of the project which was accordingly done and the work was completed on the extended date i.e. 24.2.1998 while the completion certificate was issued vide letter No.EI/PRP/3236/99 dated 30.7.1999. The dates regarding the execution of the work and other details are as under :-
1.Date of commencement of work 23.3.1995
2.Scheduled date of completion 22.7.1996
3.Date of actual completion of work 24.2.1998
4.Extension of final time limit was granted up to 24.2.1998 while issuing completion certificate vide letter No.EI/PRP/3236/99 dated 30.7.1999.
5.Date of submission of the claims and claim amount were as under :
i) J-387/NS/96 dated 5.8.1996 for an amount of Rs.106.75 lacs for period oiup to 31.7.1996.
ii) UBEL/IOCL/SDK/97/MI-606 dated 14.8.1997 for an amount of Rs.366.25 lacs for the period up to 31.10.1997 (including above amount of Rs.106.75 lacs referred to in (i) above).
iii) UBEL/IOCL/SDK/98/MI-606 : 426 dated 30.4.1998 for an amount of Rs.80.80 lacs for the period from 11/1997 to 3/1998.
iv) Final bill vide UBEL/NCD/J-387/MI/606/4948 dated 2.11.1998 for an amount of Rs.7,78,08,507 which includes the following :
Value of the final bill Rs.70,89,170
Value of extra item of work Rs.1,40,83,839
Price escalation for materials Rs.70,62,772
and labour prior to final bill Price escalation for material Rs.16,29,750/-
and labour for final bill amount Price escalation for extra Rs.32,37,776
items executed Compensation/contractual Rs.3,66,25,000
claim up to 31.10.1997. Compensation/contractual Rs.80,80,000
claim for the period from 11/1997 to 3/1998
Total Rs.7,78,08,307
6.Date of submission of the final bill 2.11.1998 7.Original contract amount Rs.6,14,50,797 8.Amount of final bill (excludes bills Rs.7,78,08,307 upto final bill) 9.Payment received from IOCL Rs.5,81,12,901
It has been further alleged that the claimants have submitted the claim for extra payments in accordance with the Clause 6.6.1.0 of the general conditions of the contract and these claims were reflected in the fina
