Union of India v. M/S B.R. Arora & Associates Pvt. Ltd

1. This is a petition filed under Section 34 of the Arbitration & Conciliation Act, 1996, seeking to assail the award dated 13.02.2013 passed by Mr. A.K. Singhal, sole arbitrator. 1.[1] Though, in the captioned petition, there is an averment to the effect that the petitioner seeks to assail the award vis-a-vis three claims, i.e., claim nos. 1, 15 & 16; Mr. Tandon, learned counsel for the petitioner has given up his objection to claim no. 16, which relates to costs awarded by the arbitrator. Fherefbre, in effect, I am called upon to adjudicate qua objections directed tov/ards claim no. 1 and claim, no. 15. 1.[2] Claim no. 1 pertains to payments sought by the respondent in respect of work executed at site, which inter alia, related to: "Back Filling between the Reinforced Earth Walls (in short RE Walls) in the approaches of the OMP No. 768'20I[3] 2013:DHC:8444 bridge below the existing ground level". For the sake of convenience I intend to refer to the aforesaid job as the work in issue..1.[3] Claim no. 15 pertains to award of interest by the learned arbitrator at the rate of 9% per annum on the amount awarded under claim no. 1 for the period commencing from 15.07.2010 to the actual date of payment of the awarded amount to the respondent.

2. I, therefore, propose to deal with the arguments advanced on behalf of the petitioner, by Mr. Tandon, in seriatim, i.e., claim-wise.

CLAIM No. 1

3. Mr. Tandon, sought to challenge the findings returned by the learned arbitrator qua claim no. 1, on the ground that, the amount awarded for the work in issue, was not payable in view of the fact that the said work was covered in the agi-eement entered into between the parties under item nos. 11.[1] and 11.2. According to Mr. Tandon, it was the obligation of the respondent to carry out ground improvement works for bearing capacit}' enhancement of the ground and, therefore, the expenses, if any incuiTed by the respondent, were already included in the quoted rates. In other words, no extra payment was required to be made to the respondent.

4. A perusal of the award would show that the work in issue required the respondent to cany out extra excavation, and thereafter, it was required to carry out filling with approved fillers to improve the bearing capacity of the works in issue from 9 tons per square metres to 44 tons per squares metres. As a matter of fact, the respondent had made payments for his work in issue, i.e., extra work, though later on the payments made were adjusted against rumiing bills when, it was brought to the notice of the respondentthat it was included in the quoted rates under item no. 11.2. OMP No. 768/2013 Page2or[5] 4.[1] The arbitrator records in the award, as a matter of fact, that even according to the respondent the said work was beyond the scope of item NO. 11.1, in as much as, a supplementary estimate amounting to Rs. 5,94,39,800/- was prepared and approval obtained, in that behalf, from the Government of NCT of Delhi vide letter dated 31.10.2008.

5. Based on this the learned arbitrator came to the conclusion that excavation of earth upto 3 metres, and thereafter, having the excavated portion filled with approved fillers to achieve a bearing capacity of 44 metric tons per square metre, was not, an aspect which was covered within the scope of the agreed item, i.e., item no. 11.1. Findings in that behalf have been recorded by the learned arbitrator in paragraph 2.3.[1] and 2.3.[2] of the award. These are findings of facts and, therefore, cannot be disturbed in the present proceedings. The reasons given by the learned arbitrator that the work in issue was not covered by item no. 11.[1] as the respondent itself had prepared a supplementary estimate and obtained an approval in that behalf, is in my opinion a plausible view which need not be disturbed in the present proceedings. The understanding of parties as to the interpretation of a particular provision in the agreement obtaining between them, is good interpretative tool, which can be adopted useftilly in coming to the conclusion as to the scope of a particular provision. The arbitrator has done exactly that. [See obsei-vations of the Supreme Court in The Godltra Electricity Co. Ltd. & Anr. V[5] The State of Gujarat & Am. (1975) 1 SCC 199 in paragraph 16 at pages 207-208]

6. As regards the quantities executed, the arbitrator clearly finds that the respondent had raised no dispute with regard to the quantities which were pegged at 7907 cubic metre each. The arbitrator compared the quantities in CMP No. 768/2013 Page[3] of 5 issue to those referred to in the supplementary estimate, wherein they were pegged at 8826 cubic metre. Having regard to the above, the arbitrator quantified the earth excavated and refilled by pegging the quantity at 7909 cubic metre. Here again no fault can be found with the finding returned by the arbitrator.

7. As regards the applicability of the rates to the quantities found by the arbitrator, Mr. Tandon submitted that the rates provided in the item no. 11.[1] had to apply. I pointed out to Mr. Tandon that the arbitrator has recorded a finding of fact that there was a deviation beyond 30%. Mr. Tandon quite fairly conceded that if deviation was beyond 30% then the market rate would apply. It could, thus, not be contended by Mr. Tandon that the "competent authority" had not found that the market rate was Rs 561.86 per cubic metre. Therefore, quite correctly, under claim no. 1 the arbitrator had awarded the rate of Rs.561.86 for item no. 11.[2] and the agreed rate of Rs. 182 per cubic metre for item no. 1.[1] as it was covered in the foundation and therefore deviation limit of 30% was not applicable. For all these reasons, the award of Rs. 58,81,700/- qua claim no. 1 cannot be found fault with.

8. Furthermore, the arbitrator is a former Director General of CPWD, who would be an expert in this area of work. Unless I was persuaded to hold that he had acted beyond the terms of submission, I would rely upon his skill and experience and would be loathe to interfere with award. See, the following obsei-vations of the Supreme Court in the case of Municipal Corporation of Delhi vs M/s Jagan nath Asliok Kumar & Anr. (1987) 4 see 497 (in paragraph 5 at page 504) \ •'.... The day has long gone by when the courts looked with jealousy on the jurisdiction of arbitrators. The modem tendency is, in my opinion, more especially in commercial arbitrations, to endeavour to uphold awards of the skilled persons that the parties themselves have selected to decide OMP No. 768/2013. c the questions at issue between them. If an arbitrator has acted within the terms of his submission and has not violated any rules of what is so often called natural justice the courts should be slow indeed to set aside his award..." CLAIM NO. 15

9. In so far as this claim is concerned, the only concern of Mr. Tandon was that the interest granted at the rate of 9% was high. In my view, the grant of interest at the rate of 9% is not exorbitant, as contended. The submission is thus rejected. [see observations of the Supreme Court in Krishna Bhagya Jala Nigam Ltd. vs G. Havischandra Reddy & Anr. (2007) 2 SCC 720 in paragraph 11 at page 724]

10. The petition is, accordingly, dismissed. lA No. 12224/2013 (condonation of delay in re-filing) The captioned application is rendered infructuous as I have decided the accompanying petition on merits. The application is thus dismissed.

RAJIV SHAKDHER, J AUGUST 05, 2013 Idv OMP No. 768/2013 PageSofS