Union of India v. Glove Civil Projects Pvt Ltd

9. He further draws my reference to Clause 9 of the GCC to submit that the said Clause clearly provides that no further claim after the final bill shall be made by the contractor.

10. He further submits that the learned Arbitrator having found that only 70% of the delay was attributable to the petitioner, erred in rejecting the counter claim of the petitioner, wherein damages were being claimed for the remaining 30% of the delay that was attributable to the respondent. He submits that in this manner, there were contradictions in the findings in the Impugned Award.

11. He submits that the final arguments in the arbitration proceedings were concluded on 07.02.2021, whereas the Award was passed only on 28.02.2022, that is with a delay of more than one year. Interest for the said period has also been awarded to the respondent, thereby further burdening the petitioner.

12. He further submits that the respondent had raised its claims only in the notice invoking arbitration dated 08.09.2018, which is with a delay of almost one year from the date of payment of the final bill. He submits that this aspect has also been ignored by the learned Arbitrator in awarding interest to the respondent.

13. The learned counsel for the petitioner further submits that the learned Arbitrator has, in fact, gone beyond the pleadings of the respondent and made up a case for the respondent, which has not been pleaded in the Statement of Claim.

SUBMISSIONS OF THE LEARNED COUNSEL FOR THE RESPONDENT:

14. On the other hand, the learned counsel for the respondent submits that the learned Arbitrator has found that there was no provision in the Contract which required the submission of a No Claim Certificate from the respondent before processing of its bills. The Arbitrator found that such demand of a No Claim Certificate from the respondent itself shows that the respondent was coerced into submitting the same and therefore, the No Claim Certificate shall hold no value.

15. He submits that the learned Arbitrator on facts has also found that in spite of the final bill, the petitioner itself was entertaining further claims of the respondent under Clause 10C and 10CA of the GCC, which itself belied the contention of the petitioner that no further claims after the final bill could be entertained.

16. He submits that the petitioner itself had granted extension of time for completion of the work to the respondent. In terms of Section 55 of the Indian Contract Act, 1872, and the judgment of the Supreme Court in Hind Construction Contractors v. State of Maharashtra, AIR 1979 SC 720, the learned Arbitrator has rightly held that time was not of essence to the Contract.

17. He submits that the learned Arbitrator has also found that while 70% of the delay is due to the petitioner, the remaining 30% is not attributable to any of the parties. The learned Arbitrator has therefore, awarded only 70% of the damages for the delay in favour of the respondent, while rejecting the counter claim of the petitioner. He submits that the petitioner has not shown any ground to challenge the above findings.

18. On the issue of interest, he submits that the delay in passing of the Award occurred due to the Covid-19 pandemic. This has been taken note of by the learned Arbitrator in the impugned Award. The respondent cannot be made to suffer for such delay. The amounts found due and payable by the petitioner to the respondent necessarily has to have a consequence of interest. He submits that therefore, no fault could be found on the award of interest for the period between the date of completion of hearing the arguments and the date of the Award.

19. On the issue of raising the claims belatedly, the learned counsel for the respondent submits that even after the final bill had been paid, the petitioner was still considering the claim of the respondent for escalation under Clause 10C and 10CA of the GCC. The claim having been raised within the period of limitation, no fault can be found with the respondent. He submits that, in fact, the petitioner had not raised any plea on the maintainability of the claims of the respondent.

ANALYSIS AND FINDINGS:

20. I have considered the submissions made by the learned counsels for the parties.

21. As far as the plea of time being of essence to the Contract, Clause 5 of the Contract provides for the time for completion of the work as also extension of period in case of delay in completion of the Contract. Clause 5 is reproduced hereinbelow: “CLAUSE 5 Time and Extension for Delay The time allowed for execution of the Works as specified in the Schedule „F‟ or the extended time in accordance with these conditions shall be the essence of the Contract. The execution of the works shall commence from such time period as mentioned in schedule „F‟ or from the date of handing over of the site whichever is later. If the Contractor commits default in commencing the execution of the work as aforesaid, Department, shall without prejudice to any other right or remedy available in law, be at liberty to forfeit the earnest money & performance guarantee absolutely. 5.[1] As soon as possible after the Contract is concluded, the Contractor shall submit a Time and Progress Chart for each mile stone and get it approved by the Engineer-in-charge. The Chart shall be prepared in direct relation to the time stated in the Contract documents for completion of items of the works. It shall indicate the forecast of the dates of commencement and completion of various trades of sections of the work and may be amended as necessary by agreement between the Engineer-in-Charge and the Contractor within the limitations of time imposed in the Contract documents and further to ensure good progress during the execution of the work, the contractor shall in all cases in which the time allowed for any work, exceeds one month (save for special jobs separate programme has been agreed upon) complete the work stones given in Schedule „F‟. 5.[2] If the work(s) be delayed by:

(i) Force majeure, or

(ii) Abnormally bad weather, or

(iii) Serious loss or damage by fire,or

(iv) Civil commotion, local commotion of workmen, strike or lockout affecting any of the traders employed on the work, or

(v) Delay on the part of other contractors or tradesmen engaged by Department in executing work not forming part of the Contractor or

(vi) Non-availability of stores, which are the responsibility of

(vii) Non-availability or break down of tools and Plant to be supplied or supplied by Department or

(viii) any other cause which, in the absolute discretion of the

Engineer-in-charge then upon the happening of any such event causing delay, the Contractor shall immediately give notice thereof in writing to the Engineer-in-Charge but shall nevertheless use constantly his best endeavours to prevent or make good the delay and shall do all that may be reasonably required to the satisfaction of the Engineer-in-Charge to proceed with the works. 5.[3] Request for rescheduling of Milestones and extension of time, to be eligible for consideration, shall be made by the Contractor in writing within fourteen days of the happening of the event causing delay on the prescribed form. The contractor may also, if practicable, indicate in such a request the period for which extension is desired. 5.[4] In any such case the authority as indicated in Schedule F may give a fair and reasonable extension of time and reschedule the milestones for completion of work. Such extension shall be communicated to the Contractor by the Engineer-in-Charge in writing within 3 months of the date of receipt of such request. Non application by the contractor for extension of time shall not be a bar for giving a fair and reasonable extension by the authority as indicated in Schedule F and this shall be binding on the contractor.”

22. A reading of the above would show that the said Clause also provides for grant of extension of time for completion of the Contract. In Hind Construction Contractors (supra), it has been held that the question whether or not time was of essence of the contract would essentially be a question of the intention of the parties to be gathered from the terms of the contract. Even where the parties have expressly provided that time is of the essence of the contract, such a stipulation will have to be read along with other provisions of the contract, and such other provisions may, on construction of the contract, exclude the inference that the completion of the work by a particular date was intended to be fundamental. If the contract were to include clauses providing for extension of time in certain contingencies or for payment of fine or penalty for every day or week the work undertaken remains unfinished on the expiry of the time provided in the contract, such clauses would be construed as rendering ineffective, the express provision relating to the time being of the essence of contract.

23. In the present case, the learned Arbitrator, after considering other Clauses of the Contract, has observed as under:-

24. It is settled law that the interpretation of the Contract is within the exclusive domain of the learned Arbitrator. This Court in exercise of its powers under Section 34 of the Act would not interfere with such interpretation of the Contract made by the learned Arbitral Tribunal. The Supreme Court in UHL Power Co. Ltd. v. State of H.P., (2022) 4 SCC 116, has reemphasised this principle as under:- “19. In Parsa Kente Collieries Ltd. v. Rajasthan Rajya Vidyut Utpadan Nigam Ltd. [Parsa Kente Collieries Ltd. v. Rajasthan Rajya Vidyut Utpadan Nigam Ltd., (2019) 7 SCC 236: (2019) 3 SCC (Civ) 552], adverting to the previous decisions of this Court in McDermott International Inc. v. Burn Standard Co. Ltd. [McDermott International Inc. v. Burn Standard Co. Ltd.,

Nigam Ltd. v. Dewan Chand Ram Saran[Rashtriya Ispat Nigam Ltd. v. Dewan Chand Ram Saran, (2012) 5 SCC 306], wherein it has been observed that an Arbitral Tribunal must decide in accordance with the terms of the contract, but if a term of the contract has been construed in a reasonable manner, then the award ought not to be set aside on this ground, it has been held thus: (Parsa Kente Collieries case [Parsa Kente Collieries Ltd. v. Rajasthan Rajya Vidyut Utpadan Nigam Ltd., (2019) 7 SCC 236: (2019) 3 SCC (Civ) 552], SCC pp. 244-45, para 9) “9.1. … It is further observed and held that construction of the terms of a contract is primarily for an arbitrator to decide unless the arbitrator construes the contract in such a way that it could be said to be something that no fair-minded or reasonable person could do. It is further observed by this Court in the aforesaid decision in para 33 that when a court is applying the “public policy” test to an arbitration award, it does not act as a court of appeal and consequently errors of fact cannot be corrected. A possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award. It is further observed that thus an award based on little evidence or on evidence which does not measure up in quality to a trained legal mind would not be held to be invalid on this score.

9.2. Similar is the view taken by this Court in NHAI v. ITD Cementation India Ltd. [NHAI v. ITD Cementation India Ltd., (2015) 14 SCC 21: (2016) 2 SCC (Civ) 716], SCC para 25 and SAIL v. Gupta Brother Steel Tubes Ltd. [SAIL v. Gupta Brother Steel Tubes Ltd., (2009) 10 SCC 63: (2009) 4 SCC (Civ) 16], SCC para 29.” (emphasis supplied)

20. In Dyna Technologies [Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd., (2019) 20 SCC 1], the view taken above has been reiterated in the following words: (SCC p. 12, para 25) “25. Moreover, umpteen number of judgments of this Court have categorically held that the courts should not interfere with an award merely because an alternative view on facts and interpretation of contract exists. The courts need to be cautious and should defer to the view taken by the Arbitral Tribunal even if the reasoning provided in the award is implied unless such award portrays perversity unpardonable under Section 34 of the Arbitration Act.”

21. An identical line of reasoning has been adopted in South East Asia Marine Engg. & Constructions Ltd. (Seamec Ltd.) v. Oil India Ltd. [South East Asia Marine Engg. & Constructions Ltd. (Seamec Ltd.) v. Oil India Ltd., (2020) 5 SCC 164: (2020) 3 SCC (Civ) 1] and it has been held as follows: (SCC p. 172, paras 12-13) “12. It is a settled position that a court can set aside the award only on the grounds as provided in the Arbitration Act as interpreted by the courts. Recently, this Court in Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd. [Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd., (2019) 20 SCC 1] laid down the scope of such interference. This Court observed as follows: (SCC p. 12, para 24) „24. There is no dispute that Section 34 of the Arbitration Act limits a challenge to an award only on the grounds provided therein or as interpreted by various Courts. We need to be cognizant of the fact that arbitral awards should not be interfered with in a casual and cavalier manner, unless the Court comes to a conclusion that the perversity of the award goes to the root of the matter without there being a possibility of alternative interpretation which may sustain the arbitral award. Section 34 is different in its approach and cannot be equated with a normal appellate jurisdiction. The mandate under Section 34 is to respect the finality of the arbitral award and the party autonomy to get their dispute adjudicated by an alternative forum as provided under the law. If the Courts were to interfere with the arbitral award in the usual course on factual aspects, then the commercial wisdom behind opting for alternate dispute resolution would stand frustrated.‟

13. It is also settled law that where two views are possible, the Court cannot interfere in the plausible view taken by the arbitrator supported by reasoning. This Court in Dyna Technologies [Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd., (2019) 20 SCC 1] observed as under: (SCC p. 12, para 25) „25. Moreover, umpteen number of judgments of this Court have categorically held that the Court should not interfere with an award merely because an alternative view on facts and interpretation of contract exists. The Courts need to be cautious and should defer to the view taken by the Arbitral Tribunal even if the reasoning provided in the award is implied unless such award portrays perversity unpardonable under Section 34 of the Arbitration Act.‟ ” (emphasis supplied)”

25. In the present case, the above stringent standard laid down by the Supreme Court has not been fulfilled by the petitioner. The findings of the learned Arbitrator reproduced hereinabove show the due application of mind and consideration of the relevant circumstances by the learned Arbitrator and therefore, warrants no interference from this Court.

26. The submission of the learned counsel for the petitioner that the learned Arbitrator having found that only 70% of the delay was attributable to the petitioner, could not have completely rejected the counter claim of the petitioner arising out of the delay in execution of the work, is also ill-founded. The learned Arbitrator, in his impugned Award has found that while 70% of the delay is attributable to the petitioner, the remaining 30% of the delay is not attributable to the respondent. No infirmity has been shown by the petitioner in the said finding of the learned Arbitrator.

27. I may herein quote the relevant findings of the learned Arbitrator on this issue:

28. On the plea of the petitioner that having executed No Claim Certificates, including in the final bill, the respondent was barred from claiming any further amounts from the petitioner, also deserves to be rejected. In this regard, I may quote from the opinion of the learned Sole Arbitrator, who has held as under:-

120. It is worthy to note that when the contract works get prolonged beyond the stipulated date of completion, inter alia, due to late approvals and grant of extension of time by the employer, without levy of liquidated damages, such as in the present case, the demand of the employer has been that till such time a no claim certificate/undertaking is tendered by the contractor, final bill shall not be paid, which is itself a circumstances to show that the contractor succumbed to the pressure of the employer. That is also the position when the Claimant tendered the other undertakings at the time when the Respondent granted EOT.

121. In addition, the fact remains that the Claimant initially submitted the final bill on 15.12.2016 but the Respondent did not release the payment for a long duration. As is evident, the Claimant had received the payments much after the submission of the undertaking along with the EOT application dated 06.12.2016 (Ex. R-96). In fact, the Claimant did not even know the quantum of the amount which shall be remitted to it at the time of execution of the said documents. These facts make the domineering stance of the Respondent qua the Claimant clear. It was as if the Respondent made the presentation of the undertaking along with the EOT application and the no claim certificate with the final bill a precondition for scrutiny of the bills of the Claimant. Thus, the said undertakings and the no claim certificate can under no circumstances be construed as discharge of the contract by accord and satisfaction.

122. As stated earlier, another aspect that needs to be adverted to is the fact that the letter dated 30.08.2017 issued by the Claimant confirming the payment, which as per the Respondent tantamounts to acceptance of „full and final‟ payment towards all claims, was not a „final bill‟ in the proper sense of the term, as it did not culminate or conclude the on-going transaction(s) between the Claimant and the Respondent. Such is the finding of the Tribunal owing to the nature and legal consequence of the letters dated 17.11.2017 (Ex. R-115), 04.01.2018 (Ex. C-66) and 17.03.2018 (Ex. C- 67) issued by the Respondent whereby the Respondent had asked the Claimant to submit the claims under Clause 10C and Clause 10CA of GCC. The Respondent‟s act of issuance of letters after the submission of the letter dated 30.08.2017 by the Claimant confirming the payment to the Respondent has immense significance.

123. In the letter dated 17.11.2017 (Ex. R- 115), the Chief Engineer wrote on behalf of the Respondent asking the Claimant to submit its claim under Clause 10 C and 10 CA of the Contract. The relevant part of the letter 17.11.2017 (Ex.R-115) reads as under: “This is in reference to our letter No. HLL/IDN/4C/GCPPL/2017-18/336 dated 12.07.2017, subsequent correspondence and various discussions with M/s. Globe Civil Projects Pvt. Ltd. regarding submission of their documents for processing the payment for escalation, if any, under clause 10C & 10CA of contract. However, your request for payment of escalation under clause 10C & 10CA, in totality, is still awaited. In view of the above, it is once again impressed upon M/s. Globe Civil Projects Pvt. Ltd, to submit your request for payment of escalation under clause 10C & 10 CA, in totality, along with required supporting documents like Labour records, Labour payment proofs, related insurance policies, invoices for steel & cement etc. to examine the matter as per the terms & conditions of contract” [Emphasis supplied]

124. In response to the aforementioned letter, the Claimant duly submitted its claim along with the letter dated 30.12.2017. The Respondent, however, vide its letter dated 04.01.2018 (Ex. C-66), stated that the claim so raised was without the requisite documents and asked the Claimant to re-submit the claim. Similar has been the purport of the communication dated 17.03.2018 (Ex. C-67) whereby the Respondent again requested the Claimant to submit the claims under Clause 10C and Clause 10CA of GCC.

125. These correspondences between the parties are indicative of two significant aspects, one, that even beyond 30.08.2017, there was no „full and final‟ settlement between the parties contrary to what the learned counsel for the Respondent has urged and second, that since all the dues and payments of the Claimant were not finally settled till 30.08.2017. Because of the dominant position of the Respondent qua the Claimant, the Claimant was compelled to issue the full and final certificate in question, and it was only for getting its legitimate payment under the bill pending with the Respondent, which did not even contain the escalation amount under Clauses 10C and 10CA of the Contract.

126. In view of the above analysis, the Tribunal is of the view that neither the no claim certificate submitted by the Claimant to the Respondent vide letter dated 30.08.2017 nor the undertakings submitted by the Claimant along with the EOT application(s) to the Respondent amounts to acceptance of „full and final‟ payment and, therefore, the claims of the Claimant are not barred from consideration.”

29. The above are findings of fact based on the appreciation of the conduct of the parties as was evident from the documents before the learned Arbitrator. In Delhi Airport Metro Express Pvt. Ltd. v. Delhi Metro Rail Corporation Ltd., (2022) 1 SCC 131, the Supreme Court has again cautioned that in exercise of its powers under Section 34 of the Act, the Court does not act as a Court of appeal. It is not permissible for the Court to reappreciate evidence to conclude that the award suffers from patent illegality appearing on the face of the award. In the present case, the Award passed by the learned Arbitrator is well reasoned and no ground to interefer with the same is made out by the petitioner.

30. The reliance of the learned counsel for the petitioner on Clause 9 of the GCC is also ill founded. Only a vague reliance on Clause 9 of the GCC was placed by the petitioner in the Statement of Defence as also in the present petition, and that too only in relation to the Claims 1 and 2. These claims were under Clause 10C and 10CA of the GCC and admittedly raised by the respondent prior to the submission of the final bill. The petitioner itself was seeking documents in support of these claims from the respondent even after the submission of the final bill. Even otherwise, in view of the above findings of the learned Sole Arbitrator on the issue of No Claim Certificate, I find that the said Clause would have no application to the facts of the present case. The claims arising out of delay attributable to the petitioner could not have been raised by the respondent at the time of raising the Final Bill. I find no infirmity in the Arbitral Award on this account.

31. The submission of the learned counsel for the petitioner that the learned Arbitrator having reserved the Award for almost one year could not have awarded interest in favour of the respondent for the said period also has no merit. Admittedly, the learned Arbitrator has found amounts to be payable by the petitioner to the respondent. The delay in pronouncement of the Award occurred due to the outbreak of the Covid-19 pandemic, for which neither party can be made to suffer. However, as the amounts found due and payable by the petitioner to the respondent remained in the hands of the petitioner, the petitioner cannot escape the liability to pay interest on such amounts in any case.

32. Delay in raising of its claim by the respondent also cannot lead to denial of interest to the respondent for payment otherwise found due and payable to it from the petitioner. The claim was raised within the period of limitation and it was not as if the petitioner immediately paid the same. Even otherwise, the award of interest is at the discretion of the Arbitrator. Unless found to be completely perverse, the Court cannot interfere with such award merely because it may have taken a different view on the same.

33. I, therefore, find no merit in the present petition and the same is dismissed.

34. There shall be no order as to costs.

NAVIN CHAWLA, J. APRIL 18, 2023/RN/DJ