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2025 Supreme(Online)(Mad) 62310
IN THE HIGH COURT OF JUDICATURE AT MADRAS
G.Jayachandran, MUMMINENI SUDHEER KUMAR, JJ
The Superintending Engineer, Pubic Works Department, New Veeranam Plan.Chidambaram, Cuddalore District. – Appellant
Versus
M/s RPP Infra Project Ltd. – Respondent
Arbitration Appeal (CAD)No.18 of 2024 | C.M.P.No.28697 of 2024
For the Appellants/Petitioners: Mr.Ramanlal, AAG for Mr.D.Ravichander, Spl.G.P
For the Respondents: Mr.V.P.Sengottuvel, Senior Counsel for Mr.K.R.Nishanth
The court confirmed the validity of an arbitration award, emphasizing procedural adherence and the Arbitrator's authority in determining claims related to contract variations and delays.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 37(1) and (2), Section 13 of Commercial Court Act, 2015 - Dispute regarding non-payment and additional costs between a contractor and the PWD - The award by the Arbitrator, confirming contractor's claims after considering delays and escalations, was upheld. (Paras 15, 12, 36, 38)
(B) Arbitration Proceedings - Whether the arbitration request was within limitation - The court affirmed that the contractor was entitled to pursue arbitration despite the PWD's claims of procedural failure due to PWD's initial inaction. (Paras 28, 34)
(C) Standard of Review in Appeals - Appellate courts should respect the Arbitrator's findings unless there is an evident concern of public policy or procedural impropriety. (Paras 37, 38)
Facts of the case:
The Superintending Engineer sought to set aside an Arbitration Award for delayed payments and additional costs requested by a contractor due to modifications in project specifications. The initial contract was signed in September 1997 and significant delays were noted. The contractor sought arbitration after the PWD refused additional payments.
Findings of Court:
The Appellate Court upheld the Arbitrator's decision, finding no procedural irregularity in the arbitration request and affirmed the legitimacy of additional cost claims.
Issues: The appeal primarily questioned the arbitration's timeliness, procedural adherence, and the legitimacy of claims awarded to the contractor.
Ratio Decidendi: The court held that the Arbitrator acted within his authority, providing detailed reasoning for claims and that procedural errors asserted by the PWD did not invalidate the arbitration process.
Result: Appeal dismissed with costs, affirming the earlier Arbitration Award.
| Table of Content |
|---|
| 1. contract execution and claim initiation timeline. (Para 1 , 2 , 4 , 5) |
| 2. claim amounts and rationale for arbitration. (Para 6 , 12) |
| 3. defense against claims based on delay and procedure. (Para 7 , 8 , 9 , 10) |
| 4. arbitrator's award reasoning on claims. (Para 11 , 19 , 22 , 23 , 38) |
| 5. judicial review of arbitration award. (Para 13 , 14 , 36 , 39) |
JUDGMENT
(Order of the Court was made by Dr.G.Jayachandran, J.)
The Public Works Department in the Government of TamilNadu through its Superintending Engineer, Chidambaram, invited tender from qualified contractors on 07.08.1996 for improvements to Vadavar Channel from Reach LS 18/0 km to 21/8 km in Kattumannar Koil Taluk. The value of the work was estimated at Rs.3,93,51,272.50. The time for completion was fixed as 24 months ( inclusive of monsoon and irrigation period).
2. M/s RPP Construction (P) Ltd., a Class I Contractor of PWD and CPWD, participated in the tender and its offer was accepted by PWD resulting in agreement dated 22.09.1997.
3. For Convenient sake, wherever necessary, the appellant herein is referred as PWD and the respondent herein is referred as Contractor.
4. The work by the contractor commenced on 01.03.1998. The work was admittedly not completed within 24 months i.e by 29.02.2000. While carrying out the preliminary work of clearing the site, variation between the tender quantities and the quantities present in the site was noticed. Hence, there was change in the design of the proposed channel Section by lowering the bed level by 90 cm. After submitting the consent letter for execution of the work, as per the changed design, the contractor commenced the work in anticipation of approval. PWD proposed a supplemental agreement dated 27.03.2004 to substitute pre cast slabs for side lining instead of brick lining since the good quality bricks were not available.
5. The Contractor completed the work on 15.08.2004 after getting extension of time thrice. The Contractor claimed pending bill with escalation cost of work fixing PWD as responsible for the delay and additional cost for the work done after the change in design and specifications. However, the PWD declined to entertain the request for additional cost and escalation cost.
When the Contractor sought the appointment of an Adjudicator to resolve the issue, PWD declined the request stating the Arbitration and Conciliation Act , 1996, which came into force before the date of tender agreement, does not contemplate the dispute resolution through an Adjudicator. The contractor, therefore, invoked the arbitration clause in the agreement, sought appointment of an Arbitrator to decide the dispute. However, the Chief Engineer of PWD rejected the request for reference to arbitration, citing that the claim is barred by limitation. Hence, the Contractor, filed Original Petition before the High Court invoking Section 11 (6) of the , 1996, and prayed for the appointment of an Arbitrator to resolve the dispute. The Hon’ble High Court at Madras, allowed O.P.No.109 of 2007 filed by the Contractor, on 20.11.2007 and appointed a former Judge of the Madras High Court as the sole Arbitrator.
6. Before the Learned Arbitrator, the Contractor as claimant made a cumulative claim of Rs.3,63,84,546/- with further interest at the rate of 24% per annum from 01.02.2008 till the date of actual payment. The claims under different heads with specification put under 5 broad heads are as below:-
Summary of claims:
Claim-I Payment towards price adjustment for the period under Extension of time and for additional quantities and additional items executed =Rs.79,24,824/- Claim-II Payments towards interest on the belatedly paid bills for work done including price adjustment payment. =Rs.1,53,73,497/- Claim-III Payment towards compaction allowance for the conveyed earth =Rs.14,76,736/- Claim-IV Repayment of the deduction wrongly made from the Claimant's Bill =Rs.3,62,592/- Claim-V --------------------- Payment towards the compensation events =Rs.1
