2019 Supreme(SC) 1250

SUPREME COURT OF INDIA
R. BANUMATHI, A.S. BOPANNA, HRISHIKESH ROY, JJ.
M/s. Mitra Guha Builders (India) Company – Appellant
Versus
Oil And Natural Gas Corporation Limited – Respondent
Civil Appeal No.5511, 5512 of 2012
Decided on : 08-11-2019

IMPORTANT POINTS
(1) Entire contract between parties and terms thereon have to be read as a whole to decide rights and liabilities of parties arising out of contract.
(2) Once parties have decided that certain matters are to be decided by Superintending Engineer and his decision would be final, same cannot be subject matter of arbitration.

Headnote:

Arbitration and Conciliation Act, 1996 – Section 34 – Arbitration – Scope and ambit – Levy of liquidated damages – Excepted matter – Entire contract between parties and terms thereon have to be read as a whole to decide rights and liabilities of parties arising out of contract – By upholding award of Arbitrator, Single Judge held that delay in completion of work was on account of both parties and by applying equitable principles, Single Judge held that damages were payable by either of parties – By virtue of finality clause in contract, any decision taken by Superintending Engineer in levying compensation cannot be referred to an arbitrator – Parties have consciously agreed to have finality to decision of Superintending Engineer and same cannot be frustrated by challenging same as illegal – Whether there was delay in completion of work and levy of liquated damages, could not have been determined by Arbitrator – Finality clause in contract cannot be frustrated by calling upon Arbitrator to decide on correctness of levy of compensation by Superintending Engineer – Once parties have decided that certain matters are to be decided by Superintending Engineer and his decision would be final, same cannot be subject matter of arbitration – Impugned judgment does not suffer from any infirmity warranting interference – Appeals dismissed. (Paras 13, 16, 17, 18, 19, 21, 25 and 27)

Facts of the case:

Appeals arise out of the judgment dated 16.02.2009 passed by the High Court of Delhi in FAO(OS) No.6 of 2008 and FAO(OS) No.7 of 2008 in and by which Division Bench of High Court has set aside the order of Single Judge and also of the learned Arbitrator by holding that levy of liquidated damages is an “excepted matter” under Clause 2 read with Clause 25 of the contract and same is not arbitrable.

Findings of Court:

Levy of compensation of Rs.32,79,828/- in Arbitration Case No.297A of 2002 and Rs.42,08,940/- in Arbitration Case No.297 of 2002 in terms of Clause 2 of the agreement is final and the same could not have been the subject matter of arbitration. Applying the ratio of Vishwanath Sood, Division Bench of the High Court rightly set aside order of Arbitrator with regard to claim No.6 by holding that levy of liquidated damages/compensation is adjustable against final bill payable to appellant.

Result : Appeals dismissed.