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R IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 19TH DAY OF SEPTEMBER, 2024 PRESENT THE HON'BLE MR JUSTICE K.SOMASHEKAR AND THE HON'BLE DR. JUSTICE CHILLAKUR SUMALATHA COMMERCIAL APPEAL NO.359 OF 2022 CONNECTED WITH COMMERCIAL APPEAL NO.360 OF 2022 CONNECTED WITH COMMERCIAL APPEAL NO.361 OF 2022 CONNECTED WITH COMMERCIAL APPEAL NO.362 OF 2022 CONNECTED WITH COMMERCIAL APPEAL NO.363 OF 2022 IN COMAP NO.359/2022 BETWEEN: U B SHETTY S/O MADAYYA SHETTY AGED ABOUT 59 YEARS CLASS-I CONTRACTOR R/AT WINDCHIME APARTMENTS NO.497, 6TH MAIN, RMV 2ND STAGE DOLLARS COLONY BENGALURU – 560007.
…APPELLANT (BY SRI. YASHODHAR HEGDE - ADVOCATE)
AND:
1 . STATE OF KARNATAKA REPRESENTED BY ITS PRINCIPAL SECRETARY DEPARTMENT OF HEALTH AND FAMILY WELFARE III-FLOOR, VIKASA SOUDHA BENGALURU – 560 001.
2 . KARNATAKA HEALTH SYSTEMS DEVELOPMENT PROJECT REPRESENTED BY ITS PROJECT ADMINISTRATOR NOW RENAMED AS HEALTH AND FAMILY WELFARE SERVICES REPRESENTED BY ITS DIRECTOR
6TH FLOOR, AROGYA SOUDHA MAGADI ROAD BENGALURU – 560 023.
3 . THE CHIEF ENGINEER KARNATAKA HEALTH SYSTEM DEVELOPMENT PROJECT(KHSDP)
I-FLOOR, STATE FOOD LABORATORY BHI BUILDING, SHESHADRI ROAD K R CIRCLE, BENGALURU – 560 001.
CURRENTLY AT:
ENGINEERING WING AROGYA SOUDHA
3RD FLOOR, LEPROSY HOSPITAL PREMISES, I-CROSS, MAGADI ROAD BENGALURU – 560 023.
…RESPONDENTS (BY SMT. MAMATA SHETTY – AGA & SRI. MAHANTESH SHETTAR – AGA FOR RESPNDENTS NO.1 & 2; SRI. ZULFIKIR KUMAR SHAFI –
ADVOCATE FOR RESPONDENT NO.3)
THIS COMAP/COMMERCIAL APPEAL FILED UNDER SECTION
13(1)A) OF THE COMMERCIAL COURTS ACT, 2015 R/W SECTION 37(1)(c) OF ARBITRATION AND CONCILIATION ACT- 1996, PRAYING TO:
i) ALLOW THIS APPEAL AND SET ASIDE THE IMPUGNED JUDGMENT DATED 30.06.2022 PASSED IN COM.A.S.NO. 113/2019 BY THE LEARNED LXXXV-ADDL. CITY CIVIL AND SESSIONS JUDGE (COMMERCIAL COURT) AT BENGALURU;
ii) CONSEQUENTLY, SET ASIDE THE PORTION OF THE AWARD DATED 14.03.2019, WHICH WAS RECTIFIED VIDE AWARD DATED 27.04.2019 PASSED IN A.C.NO.9/2018, REJECTING THE BALANCE OF CLAIMS TO THE EXTENT OF RS.77,79,44,000/-;
iii) CONSEQUENTLY, RELEGATE THE PARTIES BACK TO ARBITRATION WITH RESPECT TO THE PORTION OF THE AWARD DATED 14.03.2019, WHICH WAS RECTIFIED VIDE AWARD DATED 27.04.2019 PASSED IN A.C.NO.9/2018, REJECTING THE BALANCE OF CLAIMS TO THE EXTENT OF RS.77,79,44,000/-.
IN COMAP NO.360/2022 BETWEEN: U B SHETTY S/O MADAYYA SHETTY AGED ABOUT 59 YEARS CLASS-I CONTRACTOR R/AT WINDCHIME APARTMENTS NO.497, 6TH MAIN, RMV 2ND STAGE DOLLARS COLONY BENGALURU – 560007.
…APPELLANT (BY SRI. YASHODHAR HEGDE - ADVOCATE)
AND:
1 . STATE OF KARNATAKA REPRESENTED BY ITS PRINCIPAL SECRETARY DEPARTMENT OF HEALTH AND FAMILY WELFARE III-FLOOR, VIKASA SOUDHA BENGALURU – 560 001.
2 . KARNATAKA HEALTH SYSTEMS DEVELOPMENT PROJECT REPRESENTED BY ITS PROJECT ADMINISTRATOR NOW RENAMED AS HEALTH AND FAMILY WELFARE SERVICES REPRESENTED BY ITS DIRECTOR
6TH FLOOR, AROGYA SOUDHA MAGADI ROAD BENGALURU – 560 023.
3 . THE CHIEF ENGINEER KARNATAKA HEALTH SYSTEM DEVELOPMENT PROJECT(KHSDP)
I-FLOOR, STATE FOOD LABORATORY BHI BUILDING, SHESHADRI ROAD K R CIRCLE, BENGALURU – 560 001.
CURRENTLY AT:
ENGINEERING WING AROGYA SOUDHA
3RD FLOOR, LEPROSY HOSPITAL PREMISES, I-CROSS, MAGADI ROAD BENGALURU – 560 023.
…RESPONDENTS (BY SMT. MAMATA SHETTY – AGA & SRI. MAHANTESH SHETTAR – AGA FOR RESPNDENTS NO.1 & 2; SRI. ZULFIKIR KUMAR SHAFI –
ADVOCATE FOR RESPONDENT NO.3)
THIS COMAP/COMMERCIAL APPEAL FILED UNDER SECTION
13(1)A) OF THE COMMERCIAL COURTS ACT, 2015 R/W SECTION 37(1)(c) OF ARBITRATION AND CONCILIATION ACT- 1996, PRAYING TO:
i) ALLOW THIS APPEAL AND SET ASIDE THE IMPUGNED JUDGMENT DATED 30.06.2022 PASSED IN COM.A.S.NO. 115/2019 PASSED BY THE LEARNED LXXXV-ADDL. CITY CIVIL AND SESSIONS JUDGE (COMMERCIAL COURT) AT BENGALURU;
ii) CONSEQUENTLY, SET ASIDE THE PORTION OF THE AWARD DATED 14.03.2019, WHICH WAS RECTIFIED VIDE AWARD DATED 27.04.2019 PASSED IN A.C.NO.11/2018, REJECTING THE BALANCE OF CLAIMS TO THE EXTENT OF RS.76,11,27,000/-;
iii) CONSEQUENTLY, RELEGATE THE PARTIES BACK TO ARBITRATION WITH RESPECT TO THE PORTION OF THE AWARD DATED 14.03.2019, WHICH WAS RECTIFIED VIDE AWARD DATED 27.04.2019 PASSED IN A.C.NO.11/2018, REJECTING THE BALANCE OF CLAIMS TO THE EXTENT OF RS.76,11,27,000/-.
IN COMAP NO.361/2022 BETWEEN: U B SHETTY S/O MADAYYA SHETTY AGED ABOUT 59 YEARS CLASS-I CONTRACTOR R/AT WINDCHIME APARTMENTS NO.497, 6TH MAIN, RMV 2ND STAGE DOLLARS COLONY BENGALURU – 560007.
…APPELLANT (BY SRI. YASHODHAR HEGDE - ADVOCATE)
AND:
1 . STATE OF KARNATAKA REPRESENTED BY ITS PRINCIPAL SECRETARY DEPARTMENT OF HEALTH AND FAMILY WELFARE III-FLOOR, VIKASA SOUDHA BENGALURU – 560 001.
2 . KARNATAKA HEALTH SYSTEMS DEVELOPMENT PROJECT REPRESENTED BY ITS PROJECT ADMINISTRATOR NOW RENAMED AS HEALTH AND FAMILY WELFARE SERVICES REPRESENTED BY ITS DIRECTOR
6TH FLOOR, AROGYA SOUDHA MAGADI ROAD BENGALURU – 560 023.
3 . THE CHIEF ENGINEER KARNATAKA HEALTH SYSTEM DEVELOPMENT PROJECT(KHSDP)
I-FLOOR, STATE FOOD LABORATORY BHI BUILDING, SHESHADRI ROAD K R CIRCLE, BENGALURU – 560 001.
CURRENTLY AT:
ENGINEERING WING AROGYA SOUDHA
3RD FLOOR, LEPROSY HOSPITAL PREMISES, I-CROSS, MAGADI ROAD BENGALURU – 560 023.
…RESPONDENTS (BY SMT. MAMATA SHETTY – AGA & SRI. MAHANTESH SHETTAR – AGA FOR RESPNDENTS NO.1 & 2; SRI. ZULFIKIR KUMAR SHAFI –
ADVOCATE FOR RESPONDENT NO.3)
THIS COMAP/COMMERCIAL APPEAL FILED UNDER SECTION
13(1)A) OF THE COMMERCIAL COURTS ACT, 2015 R/W SECTION 37(1)(c) OF ARBITRATION AND CONCILIATION ACT- 1996, PRAYING TO:
i) ALLOW THIS APPEAL AND SET ASIDE THE IMPUGNED JUDGMENT DATED 30.06.2022 PASSED IN COM.A.S.NO. 117/2019 PASSED BY THE LEARNED LXXXV-ADDL. CITY CIVIL AND SESSIONS JUDGE (COMMERCIAL COURT) AT BENGALURU;
ii) CONSEQUENTLY, SET ASIDE THE PORTION OF THE AWARD DATED 14.03.2019, WHICH WAS RECTIFIED VIDE AWARD DATED 27.04.2019 PASSED IN A.C.NO.13/2018, REJECTING THE BALANCE OF CLAIMS TO THE EXTENT OF RS.126,78,26,000/-;
iii) CONSEQUENTLY, RELEGATE THE PARTIES BACK TO ARBITRATION WITH RESPECT TO THE PORTION OF THE AWARD DATED 14.03.2019, WHICH WAS RECTIFIED VIDE AWARD DATED 27.04.2019 PASSED IN A.C.NO.13/2018, REJECTING THE BALANCE OF CLAIMS TO THE EXTENT OF RS.126,78,26,000/-.
IN COMAP NO.362/2022 BETWEEN: U B SHETTY S/O MADAYYA SHETTY AGED ABOUT 59 YEARS CLASS-I CONTRACTOR R/AT WINDCHIME APARTMENTS NO.497, 6TH MAIN, RMV 2ND STAGE DOLLARS COLONY BENGALURU – 560007.
…APPELLANT (BY SRI. YASHODHAR HEGDE - ADVOCATE)
AND:
1 . STATE OF KARNATAKA REPRESENTED BY ITS PRINCIPAL SECRETARY DEPARTMENT OF HEALTH AND FAMILY WELFARE III-FLOOR, VIKASA SOUDHA BENGALURU – 560 001.
2 . KARNATAKA HEALTH SYSTEMS DEVELOPMENT PROJECT REPRESENTED BY ITS PROJECT ADMINISTRATOR NOW RENAMED AS HEALTH AND FAMILY WELFARE SERVICES REPRESENTED BY ITS DIRECTOR
6TH FLOOR, AROGYA SOUDHA MAGADI ROAD BENGALURU – 560 023.
3 . THE CHIEF ENGINEER KARNATAKA HEALTH SYSTEM DEVELOPMENT PROJECT(KHSDP)
I-FLOOR, STATE FOOD LABORATORY BHI BUILDING, SHESHADRI ROAD K R CIRCLE, BENGALURU – 560 001.
CURRENTLY AT:
ENGINEERING WING AROGYA SOUDHA
3RD FLOOR, LEPROSY HOSPITAL PREMISES, I-CROSS, MAGADI ROAD BENGALURU – 560 023.
…RESPONDENTS (BY SMT. MAMATA SHETTY – AGA & SRI. MAHANTESH SHETTAR – AGA FOR RESPNDENTS NO.1 & 2; SRI. ZULFIKIR KUMAR SHAFI –
ADVOCATE FOR RESPONDENT NO.3)
THIS COMAP/COMMERCIAL APPEAL FILED UNDER SECTION
13(1)A) OF THE COMMERCIAL COURTS ACT, 2015 R/W SECTION 37(1)(c) OF ARBITRATION AND CONCILIATION ACT- 1996, PRAYING TO:
i) ALLOW THIS APPEAL AND SET ASIDE THE IMPUGNED JUDGMENT DATED 30.06.2022 PASSED IN COM.A.S.NO. 116/2019 PASSED BY THE LEARNED LXXXV-ADDL. CITY CIVIL AND SESSIONS JUDGE (COMMERCIAL COURT) AT BENGALURU;
ii) CONSEQUENTLY, SET ASIDE THE PORTION OF THE AWARD DATED 14.03.2019, WHICH WAS RECTIFIED VIDE AWARD DATED 27.04.2019 PASSED IN A.C.NO.12/2018, REJECTING THE BALANCE OF CLAIMS TO THE EXTENT OF RS.83,45,66,000/-;
iii) CONSEQUENTLY, RELEGATE THE PARTIES BACK TO ARBITRATION WITH RESPECT TO THE PORTION OF THE AWARD DATED 14.03.2019, WHICH WAS RECTIFIED VIDE AWARD DATED 27.04.2019 PASSED IN A.C.NO.12/2018, REJECTING THE BALANCE OF CLAIMS TO THE EXTENT OF RS.83,45,66,000/-.
IN COMAP NO.363/2022 BETWEEN: U B SHETTY S/O MADAYYA SHETTY AGED ABOUT 59 YEARS CLASS-I CONTRACTOR R/AT WINDCHIME APARTMENTS NO.497, 6TH MAIN, RMV 2ND STAGE DOLLARS COLONY, BENGALURU – 560007.
…APPELLANT (BY SRI. YASHODHAR HEGDE - ADVOCATE)
AND:
1 . STATE OF KARNATAKA REPRESENTED BY ITS PRINCIPAL SECRETARY DEPARTMENT OF HEALTH AND FAMILY WELFARE III-FLOOR, VIKASA SOUDHA BENGALURU – 560 001.
2 . KARNATAKA HEALTH SYSTEMS DEVELOPMENT PROJECT REPRESENTED BY ITS PROJECT ADMINISTRATOR NOW RENAMED AS HEALTH AND FAMILY WELFARE SERVICES REPRESENTED BY ITS DIRECTOR
6TH FLOOR, AROGYA SOUDHA MAGADI ROAD BENGALURU – 560 023.
3 . THE CHIEF ENGINEER KARNATAKA HEALTH SYSTEM DEVELOPMENT PROJECT(KHSDP)
I-FLOOR, STATE FOOD LABORATORY BHI BUILDING, SHESHADRI ROAD K R CIRCLE, BENGALURU – 560 001.
CURRENTLY AT:
ENGINEERING WING AROGYA SOUDHA
3RD FLOOR, LEPROSY HOSPITAL PREMISES, I-CROSS, MAGADI ROAD BENGALURU – 560 023.
…RESPONDENTS (BY SMT. MAMATA SHETTY – AGA & SRI. MAHANTESH SHETTAR – AGA FOR RESPNDENTS NO.1 & 2; SRI. ZULFIKIR KUMAR SHAFI –
ADVOCATE FOR RESPONDENT NO.3)
THIS COMAP/COMMERCIAL APPEAL FILED UNDER SECTION
13(1)(A) OF THE COMMERCIAL COURTS ACT, 2015 R/W SECTION 37(1)(c) OF ARBITRATION AND CONCILIATION ACT- 1996, PRAYING TO:
iv) ALLOW THIS APPEAL AND SET ASIDE THE IMPUGNED JUDGMENT DATED 30.06.2022 PASSED IN COM.A.S.NO. 114/2019 PASSED BY THE LEARNED LXXXV-ADDL. CITY CIVIL AND SESSIONS JUDGE (COMMERCIAL COURT) AT BENGALURU;
v) CONSEQUENTLY, SET ASIDE THE PORTION OF THE AWARD DATED 14.03.2019, WHICH WAS RECTIFIED VIDE AWARD DATED 27.04.2019 PASSED IN A.C.NO.10/2018, REJECTING THE BALANCE OF CLAIMS TO THE EXTENT OF RS.92,68,84,000/-;
vi) CONSEQUENTLY, RELEGATE THE PARTIES BACK TO ARBITRATION WITH RESPECT TO THE PORTION OF THE AWARD DATED 14.03.2019, WHICH WAS RECTIFIED VIDE AWARD DATED 27.04.2019 PASSED IN A.C.NO.10/2018, REJECTING THE BALANCE OF CLAIMS TO THE EXTENT OF RS.92,68,84,000/-.
THESE COMAPs’, HAVING BEEN HEARD AND RESERVED FOR HEARING, COMING ON FOR PRONOUNCEMENT THIS DAY, K. SOMASHEKAR .J, DELIVERED THE FOLLOWING:
CORAM: THE HON'BLE MR JUSTICE K.SOMASHEKAR AND THE HON'BLE DR. JUSTICE CHILLAKUR SUMALATHA
CAV JUDGMENT
(PER: THE HON'BLE MR JUSTICE K.SOMASHEKAR)
These Commercial Appeals are filed by the common appellant namely, Shri U.B. Shetty, under Section 13(1)(A) of the Commercial Courts Act, 2015 read with Section 37(1)(c) of the Arbitration and Conciliation Act, 1996. The Appellant is aggrieved by the individual Judgments, all dated 30th June 2022 passed in Comm. A.S. No.113/2019, Comm. A.S. No.114/2019, Comm. A.S. No.115/2019, Comm. A.S. No.116/2019 and Comm. A.S. No.117/2019 respectively, by the Learned LXXXV Addl. City Civil and Sessions Judge (Commercial Court) at Bengaluru, dismissing each of the said Arbitration Suits filed by the Appellant/Contractor, under Section 34 of the Arbitration and Conciliation Act, 1996.
2. The brief facts of the cases necessary for adjudication, are as under:
The Appellant / contractor was a successful bidder for 14 projects pertaining to the renovation/expansion of Primary Health Centres (PHC); Maternity and Children Hospitals (MCH); Hospitals attached to the Medical Institutions, Taluka Level Hospitals (TLH) and District Hospitals (DH). Out of the aforementioned 14 works, the Appellant is said to have executed and successfully completed nine (9) works, within the prescribed period. With respect to the remaining five (5) projects, the Appellant was prevented from executing the works within time, due to inordinate delay attributable solely to the Respondents / Government and breach of contract by the Respondents. The said 5 projects are depicted in the table below:
| Name of the Project for renovation & Expansion | Comm. A.S. No. | COMAP No. | Extra time taken for completion of the project. (in months) | Estimated cost (in akhs) | Tender amount (In Lakhs) | Date of work order |
| District hospital, Madikeri | 117/2019 | 361/2022 | 31 | 580 | 520.74 | 27.03.1999 |
| MCH, Madikeri | 115/2019 | 360/2022 | 27 | 205 | 191.6 | 27.03.1999 |
| TLH, Virajpet | 116/2019 | 362/2022 | 22 | 398 | 395.26 | 08.09.2000 |
| District Hospital, Dharwad | 114/2019 | 363/2022 | 30 | 298 | 267.73 | 23.03.1999 |
| District Hospital (KIMS), Hubli | 113/2019 | 359/2022 | 37 | 330 | 263.91 | 03.09.1999 |
| TOTAL | 1811 | 1639.24 |
3. The Appellant / Contractor, was said to have prevented from performing the Contract and completing the works assigned on time due to the failure on that part of the Respondents / Government in handing over the project site to the Appellant / contractor. The Appellant/contractor made several representations to the Respondents/Government, pursuant to which the matter pertaining to the escalation of amounts claimed by the Appellant was placed before the Project Governing Board during its 25th Meeting on 17.08.2002. In the said meeting, a decision was taken in favour of the Appellant that instead of terminating the contract and entrusting the works to some other contractor, the Appellant could be permitted to continue with the work and to try and complete the works by 31.03.2003, after negotiating the rates with the Appellant/contractor.
4. Accordingly, the above five works were completed through the same Appellant / Contractor, between 31.12.2002 and 30.03.2004. Thereafter, the Appellant/contractor submitted his claim statement, along with all supporting documents on 02.04.2005 with respect to all 5 contracts, by making individual claims with respect to each contract, which was disputed.
Further, despite an unequivocal admission of liability by the Respondents/Government, since the Respondents/Government had not taken any steps to release the amount admitted by the Respondents itself, the Appellant/contractor was constrained to approach the Hon'ble High Court of Karnataka by way of a Writ Petition No. 15783/2006 and eventually, by way of an order dated 07.02.2014, the Writ Petition was allowed to the extent of Rs. 888.81 lakhs, which the Respondent/Government itself had admitted was payable. Hence, a direction was issued for payment of the said amount along with interest.
5. The Appellant/contractor issued a notice for commencement of arbitration,
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