Arbitration Petition No. 172 of 2007 · The High Court
Case Details
IN THE HIGH COURT OF ORISSA AT CUTTACK ARBA No.39of 2013 (From the judgment dated 05.12.2012 passed by the Learned District Judge, Cuttack, in Arbitration Petition No.172 of 2007arising out of award dated 30.04.2007 passed by the sole Arbitrator in ARBP No.11 of 2022) State of Odisha …. Appellant(s) -versus- HarekrushnaPradhan and Anr. …. Respondent(s) Advocates appeared in the case: For Appellant(s) For Respondent(s) : : -versus- Mr.Tarun Kumar Patnaik, Adv. Mr. A. Sangneria, Adv. CORAM: DR.JUSTICE S.K. PANIGRAHI DATE OF HEARING:-12.10.2023 DATE OF JUDGMENT:-20.11.2023 Dr. S.K. Panigrahi, J. 1. This Appeal under Section 37(1)(b) of the Arbitration and Conciliation Act, 1996 (“A&C Act”) have been filed against the order dated 05.12.2012 passed by the learned District Judge, Cuttack in Arbitration Petition No.172 of 2007 rejecting the application under Section 34 of the Arbitration and Conciliation Act to set aside the award dated 30.04.2007 passed by the sole Arbitratorin ARBP No.11 of 2022 on the ground that the judgment Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: Assistant Registrar-cum-Senior Secretary Reason: Authentication Location: HIGH COURT OF ORISSA, CUTTACK Date: 28-Nov-2023 19:29:19 pg. 1 and award are illegal, bad in law due to non-application of mind, perverse and contrary to the settled position of law. I. FACTUAL MATRIX OF THE CASE: 2. Harekrushna Pradhan(“the Respondent”) was awarded the work against the reconstruction of cyclone damaged road from Nuagaon to Noliasahi, having a length of 18 km. The Respondent was awarded part of the tender, i.e., 4.55 km vide the Agreement bearing No.3(N.C.B./R.J.S.P./2000-01) dated 20.11.2000. The contract price of the said project was Rs.81,70,644/-. The stipulated date of commencement of the said work and its completion were fixed as 20.11.2000 and 19.06.2001 respectively. 3. While executing the agreement, Executive Engineer, Rural Works Division, Jagatsinghpur(“the Petitioner”) signed the documents and the Agreement on behalf of the Chief Engineer, Rural Works-I, Government of Odisha, on behalf of OSDMA, Bhubaneswar. The project under World Bank’s package No.RJSP-7 covered portions of the road which were the life lines of severely cyclone-affected zones and were to be given special attention. 4. It is alleged that theRespondent was asked several times by the authority, to complete the work as early as possible. But no effective measures were taken by the Respondent inspite of the release of running bills. The Respondentdemonstrated gross negligence in executing the work at the work site and ultimately abandoned the work without completion. 5. When the Respondent did not perform its part of the contract during the specified time as well as extended period; the contract was terminated by the Employer, OSDMA which was communicated by the petitioner to the Respondent on 20.07.2002. Signature Not Verified
Legal Reasoning
Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: Assistant Registrar-cum-Senior Secretary Reason: Authentication Location: HIGH COURT OF ORISSA, CUTTACK Date: 28-Nov-2023 19:29:19 pg. 2 6. The Respondent filed ARPB No.129 of 2002 as well as ARBP No.11 of 2002 before the High Court of Orissa. In pursuance to the order of this Court dated 05.09.2003 in ARBP No.11 of 2002 the Sole Arbitrator was appointed. 7. Upon receipt of the notice sent by the Sole Arbitrator, the Respondent (Opp. Party No.1) filed Claim statement before the Arbitrator for a total sum of Rs.55,05,074/- alongwith claim for release of Bank Guarantee for a sum of Rs.5,72,100/-. The Respondent also claimed interest on the claimed amount. 8. The Appellant filed statement of defence/written statement denying the allegations of the Respondent and filing counter claim amounting to Rs.19.11 lakh and from the said counter claim after deduction of security deposit to the tune of Rs.1.92 lakh and withheld amount of Rs.12.56 lakhs (total Rs.14.48 lakhs), the net demand against the claimant was to the tune of Rs.4.63 lakhs. The Proforma Opp. Party (OSDMA), which was arrayedas Respondent No.12 in the arbitral proceedings, fully accepted the statement of defence/written statement filed by the Appellant in the said Arbitral proceeding. 9. In course of hearing, number of letters and documents were filed and marked as Exhibits by the Appellant-State before the Sole Arbitrator as well as the Respondent. The most important documents like agreement, "Measurement Book", "Level Book" and relevant letters were produced by the Appellant in the Arbitration proceeding. Neither of the parties did adduce any oral evidence. After full-fledged hearing, taking into consideration of the claim of the Respondent and defence alongwith the Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: Assistant Registrar-cum-Senior Secretary Reason: Authentication Location: HIGH COURT OF ORISSA, CUTTACK Date: 28-Nov-2023 19:29:19 pg. 3 counter claim of the Appellant, the Sole Arbitrator passed the award on 30.04.2007. 10. The Sole Arbitrator while adjudicating the claims put forth by the Respondent as well as the counter claims of the Appellant awarded NIL amounts in respect of the counter claim of the award. The award amount as reflected under Claim Item No.1,2,3,4,7,9,11 total amounting to Rs.30,60,912/- along with interest were awarded in favour of the Respondent in the manner given below: CLAIM ITEMS 1. AMOUNT AWARDED 2. Item No.1: Blockage of R/A Bills and 3. Rs.12,55,538.00 Withheld amount 4. Item No.2: Expenditure incurred by the the the work done on claimant for changed alignment of road 6. Item No.3: Idle Expenditure during suspended period of work incurred 7. Rs. 3,00,000.00 5. Rs. 3,04,800.00 8. Item No.4: Expenditure on work done by repairs and re-doings of initial disputed length of the road 9. Rs. 3,00,000.00 0. Item No.7:Reimbursement on account of stoppage of work and the idle expenditure incurred 1. Rs. 2,00,000.00 2. Item No.9: Refund of Security Deposit 3. Rs. 1,91,974.00 4. Item No.11: Release of Bank Guarantee 5. Rs. 5,08,600.00 Bonds Total 6. Rs.30,60,912.00 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: Assistant Registrar-cum-Senior Secretary Reason: Authentication Location: HIGH COURT OF ORISSA, CUTTACK Date: 28-Nov-2023 19:29:19 pg. 4 11. Besides the aforesaid amount an interest @ 12% and 18% in Claim Item Nos.2,3,4,7,9 and 11 were awarded from the date of award till full payment of the same. 12. The award dated 30.04.2007 was challenged before the District Judge, Cuttack under Section 34 of the Arbitration and Conciliation Act, 1996 as stated above in Arbitration Petition No.172 of 2007 on various grounds but the said petition was dismissed. 13. Aggrieved by the order dated 05.12.2012 passed by the District Judge, Cuttack; the Appellant State has preferred this appeal. Herein, the Appellant has limited its appeal by challenging the awardsagainst Claim Nos.3, 4 and 7 only. II. APPELLANT’S SUBMISSIONS 14. Learned counsel for the Appellant assails the judgment of the District Judge mainly on the ground that the impugned order suffers from non- appreciation of materials on record and incorrect application of law forhe failed to take relevant materials into consideration while deciding the matter and based its reasoning on irrelevant considerations. 15. It is argued that the entire project road can be divided into two parts i.e. 0
Legal Reasoning
Km to 2.54 km, and 2.54 km. to 4.55 kms. That, there was some dispute with regard to demarcation over area from 0 Km. to 2.54 kms, however, in July, 2001, the hindrance free path of road from 0 Km to 2.54 kms was handed over to the Respondent. 16. It is submitted, at the outset, that the Respondent contractor was free to carry out the work in RD 2.55 to 4.55 Kms. (tail end of the road) but the Signature Not Verified work was being executed at a very slow pace. In view of non-completion pg. 5 Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: Assistant Registrar-cum-Senior Secretary Reason: Authentication Location: HIGH COURT OF ORISSA, CUTTACK Date: 28-Nov-2023 19:29:19 of the work by the Respondent, the contract was mutually extended but the work was not sped up. Resultantly, the Contractor completed 50% of the project work i.e. 2.55 km to 4.55 km after one year from the completion date. Later, the contractor failed to carry out any work in the patch of project work from 0 km to 2.55 km despite the delivery of hindrance free land in July, 2001. It is alleged that the Respondent contractor abandoned the site from May, 2002 onwards by only completing 50% of the project work. 17. Now, in opposition of the amount awarded against Claim No. 3, it is submitted that the Arbitrator has allowed the claim for idle expenditure without considering the submission of the Appellant in the statement of Defence filed by it that all the men and machinery procured by the contractor was deployed at the part of the site where there was no stoppage of work. Thus, there could not have any idleness of men and machinery. The Arbitrator partly allowed the claim of the Respondent merely on the basis of the averments which has been made in the claim statement which is impermissible. The counsel for the Appellant relied on the Supreme Court Judgement in Associate Builders v. D.D.A1and State of Rajasthan v. Ferro Concrete Construction (P) Ltd.,2to contend that such awards without reliance of concrete proof is deemed to be legal misconduct on part of the arbitrator and an error apparent on the face of the award.