High Court
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IN THE HIGH COURT OF JUDICATURE AT BOMBAYBENCH AT AURANGABADARBITRATION APPEAL NO. 1 OF 2012KOPARGAON MUNICIPAL COUNCIL, KOPARGAONTHROUGH IT’S CHIEF OFFICERVERSUSM/S R. L. BHUTADAMr. M. M. Patil (Beedkar), Advocate for the appellant Mr. S. S. Chapalgaonkar, Advocate for the respondents CORAM: R. M. JOSHI, J.DATE: 4th JULY, 2024PER COURT :-1.This appeal is filed under Section 37 of the Arbitration andConciliation Act, 1996 (for short the ‘Act’) challenging judgment dated01/08/2011 passed in Arbitration Application No. 16/2010. 2.The facts which lead to the filing of the Arbitration Appeal canbe narrated in brief as under:(i)Appellant, Municipal Council, Koperagaon took decision to constructa commercial complex on CTS Nos. 1229 and 1243 at Bangdi Chawl,Kopargaon, Dist. Ahmednagar. Accordingly, tenders were invited forconstruction of the said complex. Respondent’s tender came to beaccepted and work order was issued on 01/07/2005. An agreement wasalso executed between the parties. It is claimed by the Municipal Councilara1.12.odt1 of 6 that the site of construction was handed over to the respondent on15/09/2005 and work was to be completed within 12 months from thesaid date. As per the terms of the agreement the earnest money depositand security deposit were to be withheld till completion of the work andno interest was due and payable on the said amount. It was also a termof the agreement that the Municipal Council would not be responsible forany rise or fall in the prices and on that ground escalation of the costshall not be permitted. Similarly, provision of liquidated damages ofRs.7000/- per week was made in case of any is delay in completion ofthe work. According to the Municipal Council the work was not completedwithin time but the Municipal Council paid Rs.1,00,37,793/- torespondent. Respondent invoked arbitration clause in the agreement andmade reference to the arbitration raising claim of Rs.60,11,303/-.Municipal Council appeared before the Arbitral Tribunal and filed writtenstatement and also raised counter claim for Rs.20,97,933/-. It is allegedby the Municipal Council that the Arbitral Tribunal without properappreciation of the record as well as the provisions of law had passedaward on 03/05/2010 whereby Municipal Council was directed to payRs.25,90,144/- along with interest at rate of 18% per annum to therespondent. The counter claim of the Municipal Council was also rejected.(ii)Being aggrieved by the said award an application came to be filedara1.12.odt2 of 6
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under Section 34 of the Act before District Court, Ahmednagar. LearnedPrincipal District Judge dismissed the application by passing impugnedorder dated 01/08/2011. Hence, this Arbitration Appeal.3.Learned counsel for the appellant submits that the learnedArbitrator has committed error in allowing the claim of the respondent,ignorance of the evidence on record and the District Court has committederror in deciding the said application without even framing necessarypoints for determination. It is also claimed that the Arbitration Tribunalas well as District Judge has taken into consideration the claim of therespondent which are beyond the terms of the contract. He furthersubmits that error is committed by the Tribunal in awarding interest atthe rate of 18% per annum when there is specific agreement betweenthe parties for such interest to be limited to 9% per annum. On theseamongst other submission, learned counsel for the appellant has soughtintervention in the impugned orders.4.Learned counsel for the respondent supported the orders onthe ground that Arbitral Tribunal has rightly taken into consideration theevidence on record and more particularly the fact that the site was nothanded over to the respondent and hence, the delay caused incompletion of the project is not attributable to the respondent. It is alsoara1.12.odt3 of 6 claimed that respondent has extended the period of work and hence onthat count also there is no justification to oppose the claim of therespondent. However, as far as the interest is concerned, there is nodispute made by him about the fact that the agreed interest between theparties is 9% per annum.5.Arbitral Tribunal after claim being raised before it, hasconsidered the pleadings of the parties and evidence placed before it andpartly allowed claim of the respondent with interest at the rate of 18%per annum and rejected counter claim of the Municipal Council. Againstthe said order, application came to be filed under Section 34 of the Act.While exercising the jurisdiction under the said provision it was notpermissible for the District Court to re-appreciate the evidence andrecord any findings afresh or contrary to the findings recorded by theTribunal. It is only in case where the award is contrary to the provisionsof law or against the public policy, such interference is permitted.6.In the light of above position of law, if the order impugned isconsidered then the same indicates that there was a term in theagreement for period of completion of the work to be 12 months but thesame was from the date of delivery of the site to the respondent. Fromthe correspondence placed on record more particularly letter datedara1.12.odt4 of 6 25/08/2005 and 28/04/2006 issued by the respondent to the MunicipalCouncil, it can be seen that the possession of the site was handed overto the respondent on 15/09/2005. It can further be seen that there wasdispute with regard to the removal of electric poll which was causingobstruction to the work. The said poll was not removed up to14/12/2015. It is therefore held by the Arbitrator that the MunicipalCouncil had failed to hand over unobstructed possession to therespondent.7.It is further observed that there was delay in finalization ofdesigns and drawing which has resulted in delay in completion of theproject. The learned District Judge has also taken into consideration thefact that the Municipal Council has suo moto extended the period ofcompletion of work by six months. By taking into consideration materialevidence on record it is held that the Municipal Council was responsiblefor the delay and not respondent. Considering material evidence beforethe learned Tribunal, the findings recorded by the Tribunal cannot becalled as perverse much less contrary to the public policy and against theprovisions of law. The learned District Court has also exercised itsjurisdiction within the limited scope of Section 34 of the Act and as suchquestion of causing interference therein while exercising the jurisdictionunder Section 37 of the Act does not arise. This Court, therefore, findsara1.12.odt5 of 6 no reason or justification to cause interference in the impugned order tothe extent of grant of compensation to the respondent and refusal ofcounter claim.8.As far as the interest granted on the amount of compensationis concerned, the learned counsel for both sides concur to the factualposition that as per the agreement between the parties the amount ofinterest would be 9% on delayed payment. In view of Section 16 of theAct, Arbitral Tribunal is not permitted to grant interest more than agreedbetween the parties. Hence, a joint request is made for modification ofthe award to the extent of grant of interest at the rate of 9% per annuminstead of 18% as directed by the Arbitral Tribunal.9.By consent of both sides, the interest payable to therespondent on the amount directed to be paid by the Arbitral Tribunal isrestricted to 9% per annum.10.Appeal stands disposed of in above terms. (R. M. JOSHI, J.)sspara1.12.odt6 of 6