Arbitration Petition No. 2 of 2005 · The High Court
Case Details
IN THE HIGH COURT OF ORISSA AT CUTTACK ARBA No.3 of 2012 (From the judgment dated 04.08.2011 passed by the Learned District Judge, Ganjam, Berhampur in Arbitration Petition No. 2 of 2005arising out of award dated 31.01.2005 passed by the sole arbitrator) Govt. of Odisha, Department of Water Resources …. Appellant(s) -versus- M/s. Gayatri Projects Ltd. …. Respondent(s) Advocates appeared in the case: For Appellant(s) For Respondent(s) : : -versus- Mr. Iswar Mohanty, ASC Mr. G.R. Mohapatra, ASC M/S S.P.Mishra, Sr. Adv. Along with Mr.S.Mishra, Adv. CORAM: DR.JUSTICE S.K. PANIGRAHI DATE OF HEARING:-10.10.2023 DATE OF JUDGMENT:-22.12.2023 Dr. S.K. Panigrahi, J. 1. This Appeal under Section 37(1)(b) of the Arbitration and Conciliation Act/ 1996 (“A&C Act”) has been filed against the order dated 04.08.2011 passed by the Learned District Judge, Ganjam, Berhampur Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: Assistant Registrar-cum-Senior Secretary Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 02-Feb-2024 16:12:18 pg. 1 in Arbitration Petition No. 2 of 2005 rejecting the application under Section 34 of the Arbitration and Conciliation Act to set aside the award the award dated 31.01.2005 passed by the Sole Arbitrator on the ground that the judgment 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. The work of “Rehabilitation of Padma Anicut of Surada Reservoir” was awarded to the opposite party under “Package No. 8” at the cost of Rs.8,27,73,050/- (Eight Crore, Twenty Seven Lakh, Seventy-three Thousand and Fiftyonly) under agreement No. D13/ NCB/96/97.The stipulated date of commencement was 24.08.1996 and the work was supposed to be completed till 23.11.1998 i.e. within 27 months. However, the work was delayed and could be completed only by 27.07.1999. 3. Following the multi-tier dispute resolution clausein the agreement a claim a petition was submitted by the Respondent to the Adjudicator, Shri Dibakar Misra, Retired Engineer-in-Chief on 04.08.1999 claiming a compensation of Rs. 4,18,25,990/- (Rupees Four Crore, Eighteen lakh, Twenty-five Thousand, Nine Hundred and Ninety) only with interest at the rate of 18 % on a value of Rs.3,26,15.901/- (Three crore, Twenty- eight Lakh, Fifteen Thousand, Nine Hundred and One) only. The adjudicator gave an award of Rs.18,68,108/- (Eighteen lakh, Sixty-eight Thousand, One Hundred and Eightonly) on 31.08.1999. Signature Not Verified
Legal Reasoning
Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: Assistant Registrar-cum-Senior Secretary Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 02-Feb-2024 16:12:18 pg. 2 4. Aggrieved, the Respondent moved to this Court for appointment of Arbitrator in OJC No. 367 of 1999. This High Court in their order No.
Legal Reasoning
18 dated 15.05.2001 appointed Shri Lingaraj Rath, Retired Judge Orissa High Court as Arbitrator to decide the dispute within three months with effect from 15.06.2011. 5. The Sole Arbitrator while adjudicating the claims put forth by the Appellant as well as the counter claims of the Respondent held that the claimant is entitled to an cumulative amount of Rs. 3,66,80,491/- (Rupees Three Crore, Sixty-six lakh, Eighty Thousand Four hundred and Ninety-one only). The breakup of the award has been produced hereinbelow: CLAIM ITEMS . AMOUNT AWARDED . . Item No.1(c), 2(a) & 4:Towards excessive additional dewatering Item No.2(b) & 2(c):Removal of silt and disposal and damages to the machineries respectively . Rs. 1,47,55,652.00 0. Rs. 28,23,368.00 1. Item No.3(a):Relating to increase in 2. Rs. 12,14,513.00 the quantity of sheet piling 3. Item No.6:Price Escalation 4. Rs.14,63,254.00 5. Item No.7(ii):Interest due to non- 6. Rs. 1,10,157.00 release of advance payments against non-perishable material 7. Item No.7(iii): Interest @12% per 8. Rs. 1,90,699.00 annum for delayed payments of R/A bills and final bill Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: Assistant Registrar-cum-Senior Secretary Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 02-Feb-2024 16:12:18 pg. 3 9. Item No.8:Payment towards final bill; price escalation on final bill; and reimbursement of sales tax 0. Rs. 10,92,739.00 1. Total 2. Rs. 2,16,50,382.00 23. The Appellant filed an application under Section 34 of the Act, 1996 before the learned District Judge, Ganjam under Arbitration Petition No.2 of 2005 but in vain. 24. Aggrieved by the aforementioned judgment, the appellant has preferred the appeal under Section 37 of the Arbitration and Conciliation Act, 1996 on the grounds that the aforementioned judgement and the impugned award is illegal, arbitrary, perverse, contrary to the provisions of contract, outcome of non-application ofmind, contrary to the settled principles of law and opposed to Public Policy of India. II. APPELLANT’S SUBMISSIONS: 25. The counsel for the Appellant assails the judgment of the District Judge mainly on the ground that the impugned order of the District Judge 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. 26. It is submitted that the award of the Arbitrator in respect of Claim. No.1 (c),2(a)and 4 for a sum of Rs. 1,47,55,652/- towards additional dewatering is contrary to the materials available on record, without Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: Assistant Registrar-cum-Senior Secretary Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 02-Feb-2024 16:12:18 pg. 4 any basis, perverse and wholly outcome of non-application of mind for there is no such extra item of work in the contract called de- watering and payment towards de-watering. The work of de-watering and cofferdam is included in all major work items and there is no provision for any extra payment. Hence, it is argued that the awards in respect of claim Nos. 1 (c), 2(a) and 4 liable to be set-aside. 27. It is also submitted that the Arbitrator has not assigned any separate reasons in respect of Claim Nos. 1(c),2(a) and 4 and therefore the award being based on no reasons, the same is liable to be set-aside. 28. It is submitted that the Arbitrator first opined that the claim of the Respondent/Claimant is futile and refused higher compensation on count oftheir claims before the statutory authorities for Tax determination.However, the arbitrator still awarded an amount
Decision
against the claim.In view of the above finding the award passed by the Arbitrator is liable to be set-aside 29. It is also submitted that the total value of pump hire charges for the period 1996-97 to 1999-2000 was computed as Rs. 54,85,942.00/- and invoices of this amount were submitted to the Sales Tax authorities. Based on this amount, the award amount was computed as Rs.28,58,227.00/- after effecting correction to award on 5.2.2005. On representation of Respondent/Claimant, this award was further increased by Rs.19,50,000.00/- in the above correction order making the total pump hire charges as Rs. 74,35,942.00/-. Arbitrator’s finding in the award as stated above is that this amount shall not be more than Rs. Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: Assistant Registrar-cum-Senior Secretary Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 02-Feb-2024 16:12:18 pg. 5 54,85,942.00/-, but the awarded amount now is Rs. 74,35,942.00/-. Hence, it is submitted the award is inconsistent to the findings and as such liable to be set aside. 30. It is mentioned in the award that during 1997-98, 3 extra pumps were working for 32 days. This period of 32 days obviously refer to the floods on 1.4.1997 and 29.4.1997. It is submitted that the claimed flood occurred between 4.11.1997-17.11.1997 and the consequent additional dewatering for 28 days which were not considered by Arbitrator for computing diesel consumption. This being his finding that no additional dewatering was done, the Arbitrator gives an award of Rs.15,53,120.00/-which is inconsistent to its findings. 31. It is then submitted that the Arbitrator’s found that Cofferdam was constructed at the location of Pier 4 only and not beyond Pier 9 during the floods on 1.4.1997 and 29.4.1997 which is incorrect.The quantum of amount awarded against removal of silt, is therefore, inconsistent and as such the same should have been set-aside by the learned court below. 32. It is submitted that when the Arbitrator awards the pump Hire Charges amounting to Rs.54,85,942/- only and not more vide Pages-31- 32 of the award, the diesel computation figures should be compatible to the pumping HP-Hrs. corresponding to the hire amount of Rs. 54,85,942.00/-. Considering the evidences generated in this case that the total deployment of pumps of 68.5 Hp capacity being Nine (Six working, two stand by and one jet pump) and that the monthly hire Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: Assistant Registrar-cum-Senior Secretary Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 02-Feb-2024 16:12:18 pg. 6 charge of all the nine pumps is Rs. 65,000/- for each pump with 250 litres of diesel consumed in 24 hrs., the pumping HP-Hrs work out to 27,70,678 and diesel consumption works out to 4,21,143 litres. But the award shows diesel consumption figures of 12.61.500 litres. Hence, the award being outcome of non application of mind is liable to be set- aside. 33. It is submitted that the award of Rs. 19,50,000.00/- towards pump hirecharges vide the corrections effected on 5.2.2005/- is to be deleted as it is a case of double payment. This amount of Rs. 19,50,000.00/- is related to the periods January-March, 1999 and May-July, 1999. The Sales Tax assessment orders for 1998-1999 and 1999-2000 shows the values at Rs. 24,88,725.00/- and Rs. 4,53,207.00/- towards pump hire charges and these figures were furnished by Respondent. As such, extra award of Rs. 19,50,000.00/- would mean double payment and as such the same is liable to be set-aside. 34. It is submitted that the Arbitrator misconducted himself by combining two different claims to one claim. Furthermore, no reason has been assigned by the learned Arbitrator in awarding a sum of Rs. 28,23,368.00 in respect of Claim No. 2(b) and 2 (c). 35. It is then submitted that the award of the Arbitrator in respect of Claim No. 3(a) for a sum of Rs.12,14,513.00/- is contrary to the materials available on record, contrary to Conditions of Contract, perverse and wholly outcome of non- application of mind.For that, the award of the learned Arbitrator in respect of Claim No.8 for a sum of Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: Assistant Registrar-cum-Senior Secretary Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 02-Feb-2024 16:12:18 pg. 7 Rs. 10,92,739.00 (Rs.3,46,781/- + Rs.6,66,874/-) towards final bill amount, price escalation amount and refund of Sales Tax is contrary to the materials available on record. 36. It is submitted that the Arbitrator while giving his award has adopted fraudulent means which are in conflict with the public policy of India vide Section 34 of the Act. During the proceeding the Arbitrator got several proofs of Respondent’s fraudulent actions, but by overlooking the same and by supporting the stand of the Respondent, the Arbitrator also committed fraud. This "Fraud" was committed in getting refund of Sales Tax from two sources during 1996-97 and 1997- 98. 37. Even by wrong interpretation of Clause 45.2 of conditions contract, the Respondent are not entitled to get anything more than Rs.4,53,844/- during 1996-97 and Rs.15,83,699/- during 1997-98, which is the total tax paid. By fraud, they got Rs.3,65,732/- more in 1996-97 and Rs 3,64,630/- more during 1997-98. This was, however, belatedly noticed by Sales Tax authorities and Penalties were imposed. It is alleged that in spite of the above fraud, the Arbitrator went on supporting the Respondent in all their efforts to get more Claim. Arbitrator’s action therefore, is no less fraudulent than the Respondent and as such the award is liable to be set-aside. 38. It is submitted that the award of the learned Arbitrator in respect of Claim Nos.1(c ),2(a) to (c),3(a), 4 and 8 are exorbitant and contrary to the evidence/material produced by the Respondent.The award of Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: Assistant Registrar-cum-Senior Secretary Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 02-Feb-2024 16:12:18 pg. 8 interest @ 12% from 4.8.1999 till 31.01.2005 i.e. for a period of 5 years and 181 days is on a very higher side in the facts and circumstances of the present case particularly when there are no latches on the part of the Appellant in fulfilment of its contractual obligations and contrary to the settled principles of law.For that, the award of future interest @ 18% on the total awarded amount of Rs. 3,75,28,957/- is on a very higher side and contrary to the settled principles of law with regard to payment of interest.Thus, in view of the aforesaid, the award should be set aside. 39. On the question of limitation under Section 37 of the A&C Act, it is submitted that after the District Court order was delivered on 4.8.2011; the copy of the same was received from the Govt. Pleader, Ganjam, Berhampur on 19.8.2011. The counsel for the Appellantconceded that the period of limitation being 90 days, the appeal should have been filed on 8.11.2011 after deducting the period of 5 days for obtaining the certified copy of the judgment. 40. However, it is submitted that consequent thereto, the Govt. Pleader vide his letter No. 41 dated 17.8.2011 transmitted the certified copy along with his opinion for filing of an appeal which was received by the appellant on 19.8.2011. After examining the records and collecting necessary documents, vide his letter dated 20.8.2011, he sent a proposal to the Administrative Department Government in Water Resources Department for obtaining sanction order from the Government for filing of an appeal against the impugned order. The Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: Assistant Registrar-cum-Senior Secretary Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 02-Feb-2024 16:12:18 pg. 9 Water Resources Department examined the said proposal and on 29.8.2011 referred the same to the Law Department for their examination and approval. After examining the said proposal, the Law Department vide their letter dated 19.9.2011 intimated the Advocate General, Orissa to prefer an appeal against the impugned order with a copy to the Water Resources Department. Consequent thereto, the Water Resources Department vide letter dated 24.9.2011 instructed the appellant to submit all the required documents in the office of the Advocate General for filing of appeal. Thereafter the appellant on 28.9.2011 transmitted the required documents to the office of the Advocate General, Orissa which was received on 30.9.2011who entrusted the matter to the learned State Counsel for preparation of grounds of appeal. Thereafter, the State Counsel after going through the records and discussing with the concerned officer prepared the grounds of appeal and intimated the concerned officer to attend the office of the Advocate General, Orissa for filing of appeal. Thereafter, the officer attended the office on 24.01.2012 and filed the appeal without any further delay. 41. It is submitted that there has been neither deliberate laches nor any wilful negligence on the part of the appellant in not filing the appeal in time. The delay in filing the appeal was bonafide, unintentional and the same has been caused due to certain official/consultative process which was beyond the control of the appellant and ergo, such delay of 75 days should be condoned by this court. Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: Assistant Registrar-cum-Senior Secretary Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 02-Feb-2024 16:12:18 pg. 10 III. RESPONDENT’S SUBMISSIONS: 42. Per contra, learned counsel for the Respondent submitted that an application under Section 37 of the Arbitration Act may not be made after three months have elapsed from the date on which the party making that application had received the arbitration award.It is submitted that the claim of the Appellant is barred by limitation due to an unjustified delay of 75 days. 43. It has been specifically pleaded that the Arbitrator in order to give fair opportunity to both the parties held as many as 2001 sittings and ultimately passed the award. It has been further pleaded that the Arbitrator dealt with each of the claims independently on assessment of oral and documentary evidences available on record and has assigned justifiable and cogent reasons in support of its finding. 44. It is submitted that the Appellant cannot refute the award of the Arbitrator merely by using the term phrase on the ground pertaining to “Public Policy”without substantiating the same. It has been contended that the petition is net tenable before this forum. 45. It has also been contended that the submissions of the Appellant are based purely on factual grounds which cannot be questioned within the ambit of Section 37 of the Act. 46. It is pleaded that the award does not suffer from any patent illegality nor falls under the definition of public policy of India as one of the grounds as stated under Section 34 of the Act. It is submitted that all the documents were examined and after hearing the parties, the Sole Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: Assistant Registrar-cum-Senior Secretary Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 02-Feb-2024 16:12:18 pg. 11 Arbitrator had found the Appellant to be liable forthe delay of the payment and execution of the contract. IV. ISSUES FOR CONSIDERATION: 47. This court has heard the counsels for both the parties at length,and also perused the material available on record.I only have a solitary issue for the adjudication of the dispute at hand: A. Whether a delay of 90 plus75 days in filing an appeal under section 37 of the act against an order of the district judge arising out of a petition for setting aside an arbitral award under section 34 of the Act be condoned? B. Whether the order of the District Judge warrants any interference keeping in mind the limitations of this court’s powers under section 37 of the A&C Act? V. ISSUE A: WHETHER A DELAY OF (90+) 75 DAYS IN FILING AN APPEAL UNDER SECTION 37 OF THE ACT AGAINST AN ORDER OF THE DISTRICT JUDGE ARISING OUT OF A PETITION FOR SETTING ASIDE AN ARBITRAL AWARD UNDER SECTION 34 OF THE ACT BE CONDONED? 48. First and foremost, the Arbitration Act has, in its Statement ofObjects and Reasons, the following: “4. The main objectives of the Bill are as under:- xxxxxxxxx (ii) to make provision for an arbitral procedure which is fair,efficient and capable of meeting the needs of the specificarbitration; xxxxxxxxx pg. 12 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: Assistant Registrar-cum-Senior Secretary Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 02-Feb-2024 16:12:18 (v) to minimise the supervisory role of courts in the arbitralprocess” 49. The above mentioned principle has been reiterated by the Apex Many in a catena of cases. In State of Goa v. Western Builders,1 this Court held that: to is true that the Arbitration and “25. … It Conciliation Act, 1996 expedite intended commercial issues expeditiously. It is also clear in the Statement of Objects and Reasons that in order to recognise economic reforms the settlement of both domestic and international commercial disputes should be disposed of quickly so that the country’s economic progress be expedited…” 50. Again, in ICOMM Tele Ltd. v. Punjab State Water Supply and Sewerage Board,2the Supreme Court stated that: “25. Several judgments of this Court have also reiterated that the primary object of arbitration is to reach a final disposal of disputes in a speedy, effective, in inexpensive and expeditious manner. Thus, Centrotrade Minerals & Metal Inc. v. Hindustan Copper Ltd. [Centrotrade Minerals & Metal Inc. v. Hindustan Copper Ltd., (2017) 2 SCC 228 : (2017) 1 SCC (Civ) 593] , this Court held: (SCC p. 250, para 39) “39. In Union of India v. U.P. State Bridge Corpn. Ltd. [Union of India v. U.P. State Bridge Corpn. Ltd., (2015) 2 SCC 52 : (2015) 1 SCC (Civ) 732] this Court accepted the view [ InduMalhotra, O.P. Malhotra on the Law and Practice of Arbitration and Conciliation (3rd Edn., Thomson Reuters, 2014).]