COMMERCIAL APPELLATE DIVISION v. Haldia Development Authority

3. Mr. Datta, learned Advocate appearing for Konarak took us through the order impugned and submitted that the same is erroneous to the extent the same holds that Haldia was entitled to “risk and cost compensation”. Mr. Datta invited our attention to the work order dated January 13, 2009 in order to show that the time for completion of the work awarded to Konarak was 180 (One Hundred Eighty) days. He thereafter invited our attention to Clause 1(p) of the said work order to demonstrate that the security deposit that had been furnished by Konarak was to be released in three phases.

4. It was submitted by Mr. Dutta that as the release of security deposit was inextricably linked with the completion of work, once the learned Arbitrator concluded that the security deposit should be released, he could not have at the same time held that the work remained unfinished.

5. He then invited our attention to page 72 of the paper book and contended that the work awarded to Konarak was only restricted to construction of a road measuring about 6100.0 meters from Gholpukur to Tekhali near Nandigram and that repair work was not the scope of Konarak’s work.

6. Mr. Dutta then took us through Clause 6 of the “Conditions of Contract” to show that upon completion of work the contractor was to be provided a certificate by the Executive Engineer/Authorised Officer. Inviting our attention to page 316 of the Volume-III of the stay application (4th and Final Bill), it was submitted that officers of Haldia themselves recorded the date of completion of work by Konarak as September 24, 2010. He then invited our attention to the last page of the same document (at page 359 of the stay application) in order to impress that a certificate of completion of work had been issued in terms of Clause 6 of the “Conditions of Contract”.

7. Our attention was then drawn to the Termination Clause in the work order to emphasise that Haldia was obliged to issue a notice of seven days’ calling upon the contractor (i.e. Konarak) to complete the unfinished work with a caution that default would attract termination of the contract.

8. Mr. Datta submitted that it was incorrect on the part of Haldia to claim compensation on the basis of “risk and cost principle” by alleging that work had been left unfinished by Konarak.

9. Mr. Datta then invited our attention to a notice inviting online tender (e- tender) dated February 08, 2016 (pages 256 to 260 of the stay application) and submitted that the said notice would make it evident that the work that had been awarded to the other contractor was different from the one completed by Konarak. He also invited our attention to the scope of work mentioned in the said notice. Referring to the several works mentioned under the caption “Scope of Work”, in the said notice, he submitted that most of the works listed there were not in the list of works allotted to Konarak.

10. He thereafter invited our attention to the work order issued by Haldia in favour of the person who had emerged successful in the aforesaid tender (hereafter “new contractor”) (at page 276 of the stay application) to drive home the point that the work awarded to the new contractor was different from the work awarded to Konarak. He firstly stressed on the date of issuance of the said work order i.e. March 03, 2016 and submitted that the said date was six (6) years after Konarak had completed the awarded work. It was submitted that the fact that there was a gap of six years between the date of completion of the work awarded to Konarak and the issuance of new work order in favour of a new contractor was evidence enough to conclude that issuance of such tender and work order was necessitated due to the deterioration of the condition of road upon the same being used for six years.

11. Mr. Datta then took us to the “Certificate of Final Completion” (at page 279 of the stay application) and showed us that the said new contractor also did not complete the entire work as would be evident from the fact that the amount put to tender was Rs.78,90,364/- (Rupees Seventy Eight Lakh Ninety Thousand Three Hundred and Sixty Four) and the value of actual work done was Rs.73,09,922/- (Rupees Seventy Three Lakh Nine Thousand Nine Hundred and Twenty Two). Mr. Datta sought to insinuate that if the new contractor had completed the entire work there would not have been a difference in the value of the quantity of work tendered and the value of the quantity of work actually executed/done. He further sought to project that if it was the case that completion certificate would be issued only upon completion of the entire work then in such case, completion certificate would not have been issued in favour of the new contractor also. He then submitted that variation in the value of the quantity of quantity of work tendered and the value of the quantity of work actually executed/done was a usual feature in such contracts. It was submitted that in cases where it is found that completion of work is impossible given the site conditions, then upon execution of such quantity of work as would be possible to be executed final completion certificate is issued for the value of work actually upon drawing an excess saving statement. By making such submissions Mr. Datta sought to exemplify that execution of work lesser than the contracted work by Konarak could not be held against Konarak once completion certificate has been issued.

12. Mr. Datta next relied on a letter dated August 25, 2009 written by Konarak to Haldia in order to demonstrate that 80% of the works had been completed as on the date of issuance of the said letter i.e. August 25, 2009. He also referred to several other letters dated December 13, 2010, January 05, 2011, February 09, 2011 and March 01, 2011 issued by Haldia and contended that although time had not been extended by Haldia yet Haldia kept on writing letters and pressing for completion of works, which in fact had already been completed by Konarak.

13. He also referred to a letter dated July 22, 2015 written by the Block Development Officer, Nandigram-II, Development Block to the District Magistrate, Purba Medinipur whereby the District Magistrate was informed about the pathetic condition of the road and he thereby sought to insinuate that the subsequent notice inviting tender was in fact a curative action aimed at repairing the damaged roads and not to complete incomplete works allegedly left by Konarak.

14. It was further submitted by Mr. Datta that in any event since time had not been extended therefore the claimant i.e. Konarak had no obligation to do any work after expiry of the contractual period. Mr. Datta submitted that the learned Arbitrator went completely wrong in deciding issue no. 6. It was submitted that once the learned Arbitrator held that Konarak i.e. the contractor was entitled to refund of the security deposit, then in the same breath, the learned Arbitrator could not have held that the employer i.e. Haldia was entitled to compensation based on the risk and cost principle.

15. It was then submitted by Mr. Datta that the Section 34 Court ought to have considered and appreciated that if issue no. 9 had been decided in the negative then security deposit could not have been directed to be refunded in terms of Clauses 3(a), 3(b) and 3(c) of the contract. It was then submitted that the learned Arbitrator had found that Haldia had not imposed any liquidated damages upon Konarak and that itself showed that Konarak had completed the work. It was submitted that both the Section 34 Court as well as the learned Arbitrator had failed to appreciate that the 4th and final bill and the certificate as regards completion of work had been prepared by the engineers of Haldia and the same constituted clinching evidence of Konarak having completed the work.

16. Mr. Datta was critical of the observations by the Hon’ble Single Judge in paragraph 28 of the order impugned and contented that the same suffered from inherent contradictions. He asserted that if the entire work had been completed then the question of adjusting security deposit or allowing any payment on the basis of risk and cost principle could not have arisen at all. He also took exception to the observation that “…the measurement books, which are documents admitted by both parties, clearly indicate that a substantial portion of the work was actually completed and final bills raised, passed and paid for such components of the work” in paragraph 29 of the order impugned and submitted that when the work had been completed the expression “substantial” could not have been used by the Hon’ble Single Judge without there being any basis therefor.

17. He challenged various observations as regards the contract being alive till October 31, 2010 and thereafter upto February 2011 made by the learned Arbitrator as being based on no evidence. It was further submitted the Conditions of Contract did not permit any unilateral extension of time and that extension was to be done in the manner indicated in the Conditions of Contract.

18. Mr. Datta submitted that no amount could have been awarded by way of counter claim to Haldia at all and that being so the enhancement of the amount awarded by the learned Single Judge in the order impugned, while correcting a perceived arithmetical error could also not be done. We hasten to put on record that although Mr. Datta challenged the very basis of awarding the counter claim and hence its enhancement, yet he very fairly steered clear of a ground taken in the Memorandum of Appeal thereby assailing the order impugned for the same having enhanced the counter claim by correcting arithmetical error, in view of the recent enunciation of law by a Constitution Bench of the Hon’ble Supreme Court in the case of Gayatri Balasamy vs. ISG Novasoft Technologies Ltd.1. It was submitted that in view of the law laid down by the Hon’ble Supreme Court in the aforesaid judgment, the Court had power to rectify computational errors even under Section 34 of the said Act of 1996 but in the case at hand there was no scope for the Court to exercise such power and enhance the counter claim when the counter claim itself was not allowable.

19. Mr. Datta relied on a judgment of the Hon’ble Supreme Court in the case of Associate Builders vs. Delhi Development Authority2 for the proposition that an award could be interfered with if the same was based on no evidence or by ignoring vital evidence.

20. Mr. Dutta pressed for setting aside that part of the order impugned whereby Haldia’s claim for compensation was allowed by the learned Arbitrator and affirmed by the Hon’ble Single judge. ARGUMENTS ON BEHALF OF THE RESPONDENT:-

21. Mr. Dey, learned Advocate appearing for Haldia at the outset submitted that the scope of interference under Section 34 was very limited and that power of the appellate court under Section 37 of the said Act of 1996 was akin to that of Section 34 of the said Act of 1996. In support of his