Alstom T & D India Ltd v. M/S Aradhya Infra-Tech Pvt. Ltd.

10. Relying upon the above clauses, it is submitted that it was the duty of the respondent to not only submit the documents in support of its Running Account Bills but also the measurement certification of AREVA / Petitioner from MSETCL.

11. The learned counsel for the petitioner, placing reliance on certain letters written by the petitioner to the respondent, has submitted that the respondent has failed to submit the relevant documents in favour of Royalty Passes etc., that would have shown that Murrum was, in fact, excavated from Kellapur Quary and, in absence of these documents, claim could not have been granted in favour of the respondent.

12. The learned Arbitrator has rejected the said plea relying upon the letter dated 30.01.2012 of the petitioner itself to MSETCL which clearly records the stand of the petitioner that the Murrum was supplied from Kelapur Quary and the Royalty Passes with respect thereof had also been supplied by the petitioner to MSETCL. I may here quote the finding of the Arbitrator; “The claimant in support of its case has placed on record a letter dated November, 30, 2012 addressed by the respondent to MSETCL. This is a letter which in view of the Tribunal holds the key to the decision on the issue. Hence, it is being reproduced in its entirety. Our Reference: MSTECL/AREVA/Civil/11-12/786 To, The Chief Engineer, EHV Const cum O&M, MSETCL, OMP No.372/2015 Page 7 Amarvati Subject: Acceptability of Royalty passes for the Land Development at Ghatanji 132/33k V s/s OUR REFERENCE: a) Work order no. MSETCL/CO/11666 dated 27.08.09 b) R.A. bill of ACC No.5 submitted vide our Letter No.527 dated 13.07.11 c) Original Royalty passes submitted vide our letter above. d) Your Letter No.DYEE/CCCM Sub- Dn/EHV/MSETCLTD/YTL-205 dated 18.07.2011. Dear Sir, With reference to subject matter, we wish to bring to your kind attention that we finished Land Development works at Ghatanji s/s by supplying approximately 28,000 CUM of Murrum bought from outside in Mar-11. 95% of works are completed at site.

MSETCL certified for the 20,000 CUM of Land Development as per Contract based on Royalty passes submitted by us. We subsequently submitted ACC-5 for balance 8,000 CUM Qty of Land Development alongwith requisite Royalty Passes.

MSETCL returned the ACC-5 indicating that the Murrum is supplied form the same quary however Royalty Passes are belonging to another (Kelapur) Quary which is contrary to the fact. Our corresponding payment is therefore on hold since long and we are unable to pay to our Civil OMP No.372/2015 Page 8 Agency for the similar reasons. Our relations with the civil Agency are strained due to non-payment. “We once again re-assure that the Murrum is supplied from Kelapur quary and respective Royalty passes are also belonging to same quary. The receipts for payment of Murrum and original Royalty challans are verified by MSETCL Field Officers at the Collector Office.” Since it is a genuine case, we had been requesting for the certification of the said ACC. We therefore, request you for kind intervention to resolve the matter. Thanking You, With Regards Rajeev Dhande AREVA T & D India Ltd. CC to:

1. CMD-MSETCL (Prakashganga, Mumbai)

2. Director-Projects (Prakashganga, Mumbai)

3. ED-Projects (Prakashganga, Mumbai)

4. CE-Trans Projects (Prakashganga, Mumbai) The aforesaid letter which is signed by one Shri Rajiv Dhande on behalf of the respondent is sufficient to nail the defence set up by the respondent that Murrum was not excavated from an alternate site or that the claimant had submitted forged and fabricated documents. The reason is that the respondent in the letter of 30.11.2012 has not only accepted but has also emphasized to MSETCL that Murrum was excavated from Kelapur quarry. And let us also bear in mind that the respondent has not denied the existence of such a letter or the fact that it was written by it. The letter has been admitted by the respondent in its affidavit of admission and denial of documents dated August 5,

2013. Of course, it has tried to retract from the same OMP No.372/2015 Page 9 by taking refuge behind non issuance of certificate by MSETCL as also on the ground that the examination of the murrurn established that it was from the same quarry and not from the Kellapur site. It needs to be borne in mind that the claimant had entered into a contract with the respondent. There was no privity of contract between the claimant and the MSETCL except that the work was to be carried out on the joint instructions of the respondent and MSETCL. Therefore, the respondent cannot pass on the buck to the MSETCL and wash his hands of when it comes to making payment to the claimant by hiding behind the plea of non-certification by MSETCL and on some test carried out certifying that the additional Murrum was from the same quarry and not from the Kellapur. It will be fair to presume that the respondent before writing the letter dated 30.11.2012 to MSETCL had fully verified and satisfied itself that 8300 cum of Murrum was excavated from Kellapur quarry and not from the original site. The respondent therefore is estopped from taking a stand different from that taken by it in its letter of 30.11.2012. The contents of the letter of 30.11.2012 also reveal that receipts for payment of Murrum and original royalty challans are office. If the MSETCL is not prepared to rely upon its own Field Officers then one is left wondering who else will it reply upon? The respondent has not placed on record any letter from the MSETCL denying the presence of its Field Officers at Kelapur quarry. As regards the plea that the examination of Murrum established that it was from the same quarry and not from Kellapur, in the first place it is not clear which examination is the respondent referring to and wherefrom report, if any, was obtained, for no such report has been placed on record. Assuming, any such report is in existence, it is obvious that it was obtained OMP No.372/2015 Page 10 behind the back of the claimant. How can such a report be relied upon and form the basis for rejecting the claim? It was a one sided exercise the result of which cannot be thursted upon the respondent. Succinctly put the following facts have emerged in favour of the claimant. The respondent has not denied the issuance and existence of letter dated 30.11.2012; the respondent itself has corroborated that the Murrum was excavated from alternate site (Kellapur) in its letter of 30.11.2012 to MSETCL; the same was verified and certified by MSETCL's Field Staff (as stated in the said letter) and lastly the presumption goes that the respondent's Field Staff, Project Manager at site would have fully satisfied themselves before sending such an affirmation in the letter of 30.11.2012”.

13. The learned Arbitrator has therefore, analyzed the evidence led before her and the finding of the Sole Arbitrator cannot be said to perverse. It may be true that the clauses of the agreement referred by the counsel for the petitioner and quoted by me above have not been separately quoted in the award, however, the effect of the same has been elaborately discussed in the above finding of the Arbitrator. The Arbitrator has clearly found that the stand of the petitioner, in its letter dated 30th November, 2012 to MSTECL, was that the quantity of Murrum and its supply from alternative site (Kelapur) has been verified and certified by MSETCL Field Staff; the respondent, therefore, had clearly complied with the requirements of the contract as quoted above. If for any reasons MSETCL had not released the said payment in favour of the OMP No.372/2015 Page 11 petitioner, this was a dispute between MSETCL and the petitioner, for which the respondent could not have been denied its legitimate claim.

14. It is further contended by the counsel for the petitioner that the respondent, in its Statement of Claim, Rejoinder to the Statement of Claim and the Affidavit by way of Evidence had admitted that the claim of Rs. 35,07,965/- raised in claim No. 6 included claim for “extra item of transportation, escalation and payment for the work done”. It is further submitted that the amount under claim No. 1 and claim No. 7 could not have been separately granted to the respondent once claim No. 6 had been granted to the full extent of Rs. 35,07,965/-.

15. This submission of the petitioner is totally unfounded and has been rightly rejected by the learned Sole Arbitrator holding as under:- “The respondent contends that the claims raised are liable to be rejected at the very threshold without going into the merits of the same, even though it has filed written statement of defence denying the claims on merits. The contention for outright rejection of the claims is based on certain pleadings of the claimant which the respondent says tantamounts to admissions on its part with which it is bound by and which by themselves negate the claims. The so called admissions are as under:-

1. The value of the work executed is Rs. 3,27,23,874/-. The amount paid by the respondent is Rs. OMP No.372/2015 Page 12 2,92,15,909/- leaving a balance of Rs. 3,50,7965/only. In the rejoinder affidavit, the claimant has submitted that “Out of which the value of work executed by the claimant is Rs. 3,27,23,874/- which includes extra items of transportation, escalation and payment of work done.” (para 3 page 2) In its written arguments (page 17) filed before the Tribunal it is stated that “Value of the work executed by contracting agency- Rs. 3,27,23,874/- as per the bills submitted………… the payment released by the respondent for running bill upto RA bill No.7 is Rs. 2,92,15,909/- leaving balance of Rs. 35,07,965/- as value of bills executed but not paid for.” Do the pleadings noticed above, and as contended by the respondent constitute ‘admissions' on the part of the claimant leaving no scope with it in raising the claims amounting to Rs. 3,64,97,739 besides cost and interest @18% per annum. The pleadings which the respondent is showcasing as 'admissions' cannot be seen in isolation. They have to be read in conjunction with the other averments made in the statement of claim, and when so read, one cannot come to the conclusion that the claimant has made admissions detrimental to its case. The pleadings relied upon merely refer to the running bills submitted by the claimant which were to the tune of Rs.3,27,23874/- out of which it was paid a sum of Rs. 2,92,15,909/- only leaving a balance of Rs.3,50,7965/-. This is also borne out from the 'summary and details' of the, claimed amount of Rs.3,64,97739/- as set out on page 00023 of the statement of claim. This document gives the description of the claims and the amount claimed against each claim. One of the claims at item OMP No.372/2015 Page 13 no.13 pertains to 'balance of RA bills. The amount outstanding against it is shown as Rs. 350,7965/-, which is the difference between the amount claimed i.e. Rs.32723874/- and the amount paid i.e. Rs.29215909/-. All other amounts have been claimed under separate heads from serial No. 6 to 12 and 14 to 16, such as, claim for transportation 8300 cum of Murrum from longer distance, claim for additional expenditure for use of additional cement, claim for over head expenditure for extended duration of contract etc. It is clear from the 'summary and details of the claimed amount’ that the works which the claimant allegedly performed outside the scope of its work or in variation of the original scope of work or what is 'being claimed by way of loss or damages did not form part of the running bills”.

16. It is not the case of the petitioner that the Running Bills claimed in claim No. 6 included the extra cost of transportation of Murrum that had been claimed under claim No. 1 and the retention amount that had been claimed under claim No. 7. The pleadings of the parties are not to be construed as Statue. Both parties were aware of the claim on each head being claimed and the petitioner cannot rely upon the purported ambiguity in the pleadings of claim to deny the legitimate claim of the respondent.

17. The petitioner has also challenged the award insofar as it grants the claim No. 6 in favour of the respondent. The petitioner submits that in terms of the contract between the parties, the petitioner was entitled to retain 5% of the amount from the Running Bills and adjust the same towards liquidated damages which were OMP No.372/2015 Page 14 leviable in terms of the contract in case of delay in execution of the work by the respondent. It is further submitted that in the present case there was an admitted delay in execution of the work by the respondent and therefore, in terms of Clause 8 of the contract, the petitioner was entitled to levy liquidated damages. The counsel for the petitioner submits that though various letters had been produced before the Sole Arbitrator showing the default on the part of the respondent in timely execution of the work, the Arbitrator has not given any reason for its finding that the delay was attributable to both the parties. Relying upon the judgment of the Supreme Court in ONGC Vs. Western Geco International Limited (2014) 9 SCC 263; Anand Brothers Private Limited Vs. Union of India And Others(2014) 9 SCC 212 and of this Court in Jai Singh Vs. DDA 2008(3) Arb. LR 667 (DEL), it is contended that it was obligatory on the Arbitrator to give reasons for the award and in absence of the same, the award is liable to be set aside.

18. I am unable to accept the above arguments of the petitioner. The Arbitrator has discussed the evidence led before her to come to the conclusion that the delay in execution of the work is attributable to the default of both the parties. The Arbitrator has further held as under:- “It is not disputed that Aradhya was a sub-contractor to Alston T & D for the project awarded to Alston by MSETCL. It is not pleaded before the Tribunal that any amount towards liquidated damages was imposed on respondent by MSETCL owing to time over-run. The respondent has claimed higher cost incurred on OMP No.372/2015 Page 15 account of re-allocation to third parties but the onus of delays and higher cost also fall on the respondent and not conclusively on the claimant. Thus the alleged breach as stated by respondent does not hold true on account of 1) delays not held to be entirely on claimants side; 2) alleged short supply on the part of the claimant but no instances cited by the respondent;

3) on poor quality a single instance of rusted steel cited by the respondent which is disputed by the claimant; 4) nothing to show that liquidated damages were levelled on the respondent by the principal employer MSETCL. The respondent it may be stated at the cost of repetition has not indicated what damages it has suffered from late completion of project or any realistic estimate of damages. A mere clause in the contract ipso facto will not entitle it for liquidated damages. In the case of Indian Oil Corporation Vs. Lloyd Steel Industries, 2007(4)Arb. LR 84 2008 quoting Section 74 of the India Contract Act, Delhi High Court has held that what is to be awarded is reasonable compensation, and in a case when a party complaining of breach of the contract has· not suffered legal injury in the sense of suffering loss or damage, there is nothing to compensate him for, there is nothing to re-companse, satisfy or make amends. The judgment further goes on to say that if liquidated damages are awarded to a party even when it has not suffered any loss it would amount to unjust enrichment which cannot be countenanced and has to eschewed. The relevant paragraph of the judgment is being reproduced as under:- ………………………………… In a particular case where there is a clause of liquidated damages the Court will award to the party aggrieved only reasonable compensation which would not exceed an amount of liquidated damages stipulated OMP No.372/2015 Page 16 in the contract. It would not, however, follow there from that even when no loss is suffered, the amount stipulated as liquidated damages is to be awarded. Such a clause would operate when loss is suffered but it may normally be difficult to estimate the damages and, therefore, the genesis of providing such a clause is that the damages are pre-estimated. Thus, discretion of the Court in the matter of reducing the amount of damages agreed upon is left unqualified by any specific limitation. The guiding principle is 'reasonable compensation'. In order to see what would be the reasonable compensation in a given case, the Court can adjudge the said compensation in that case. For this purpose, as held in Fateh Chand (supra) it is the duty of the Court to award compensation according to settled principles. Settled principles warrant not to award a compensation where no loss is suffered, as one cannot compensate a person who has not suffered any loss or damage. There may be cases where the actual loss or damage is incapable of proof; facts may be so complicated that it may be difficult for the party to prove actual extent of the loss or damage. Section 74 exempts him from such responsibility and enables him to claim compensation in spite of his failure to prove the actual extent of the loss or damage, provided the basic requirement for award of 'compensation', viz. the fact that he has suffered some loss or damage is established. The proof of this basic requirement is not dispensed with by Section 74. That the party complaining of breach of contract and claiming compensation is entitled to succeed only on proof of 'legal injury' having been suffered by him in the sense of some loss or damage having been sustained on account of such breach, is clear from Sections 73 and

74. OMP No.372/2015 Page 17 If liquidated damages are awarded to the petitioner even when the petitioner has not suffered any loss, it would amount to 'unjust enrichment', which cannot be countenanced and has to be eschewed.

42. It is too preposterous on the part of the petitioner to submit that it should get the liquidated damages stipulated in the contract even when no loss is suffered. In view of the above, the rub of the matter is whether the respondent suffered any loss which can entitle it to pre-estimated liquidated damages and retention of certain amounts. The respondent perhaps could make out a case in its favour had it shown or brought on record some evidence that it was burdened with liquidated damages by MSETCL on account of time over-run. No such evidence has been furnished by it and it has therefore in terms of the judgment of the High Court has suffered no legal injury. The Tribunal thus finds no merit in the respondent holding the retention money and imposition of liquidated damages on the claimant. As such, the amount of RA bills of Rs.3507965/- and retention money amounting to Rs.l460795/- is ordered to be refunded to the claimant.”

19. The learned Arbitrator has held that in absence of any loss having been suffered by the petitioner due to such delay, it was not entitled to levy liquidated damages on the respondent. It was not shown before the Arbitrator and even before me that MSETCL had levied any damages on ground of alleged delay in execution of the work on the petitioner.

20. The counsel for the petitioner has submitted that certain work had been withdrawn from the respondent and had been given to OMP No.372/2015 Page 18 third party, details of which were produced before the Arbitrator. The petitioner, therefore, submits that loss suffered by the petitioner could have been inferred from the same.

21. I am afraid that even this submission of the petitioner is not acceptable. The petitioner had merely placed before the Arbitrator the value of the work which had been granted to the third party after withdrawal of the same from the respondent. It had not been shown that for award of such work, it had incurred any additional cost. The counsel for the respondent, on the other hand, has pointed out that the original contract awarded in its favour was for Rs. 4.96 Crores approximately; the work executed and paid for by the respondent was Rs. 3.27 Crores and the work awarded to third party was around Rs. 1.22 Crores. Therefore, the work done by the respondent and that got done by the third party would still be short of the original value of the work allotted to the respondent. This could not be refuted by the counsel for the petitioner. It is, therefore, evident that for withdrawal of the work from the respondent and taking the same from the third party, the petitioner had not suffered any loss. In Kailash Nath Associates Vs. DDA (2015) 4 SCC 136, Supreme Court has reiterated the law on compensation for breach of Contract under Section 74 of the Contract Act, 1872 as under:-

43.7. Section 74 will apply to cases of forfeiture of earnest money under a contract. Where, however, forfeiture takes place under the terms and conditions of a public auction before agreement is reached, Section 74 would have no application”.

22. Therefore, even for claiming Liquidated Damages it was incumbent on the petitioner not only to show that the respondent had breached the Agreement that also due to such default the petitioner had suffered damage or loss. As held by the Arbitrator, petitioner has failed to prove any loss being suffered by it due to delay in execution of the work by the respondent, if any, therefore, respondent’s claim under Claim No. 7 was rightly allowed by the Arbitrator.

23. It, therefore, cannot be said that the Arbitrator has not given any reasons in Award for its finding. In Associate Builder Vs. DDA (2015) 3 SCC, 49, Supreme Court has held when any of the heads / sub-heads of test of ‘Public Policy’ is applied to an Arbitral Award, Court does not act as Court of appeal. Interference is not permissible only because another view is possible. Arbitrator is the ultimate master of quantity and quality of evidence. 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. In the present case none of the limited grounds of challenge to the Arbitral Award under Section 34 have been made out by the petitioner. OMP No.372/2015 Page 21

24. In view of the above, I find no merit in the present petition and same is accordingly dismissed with no order as to costs.

NAVIN CHAWLA, J DECEMBER 07, 2017