Sanjay Kishan Kaul, J.—Allowed subject to just exceptions.
OMP 437/2005:
2. The petition has been filed under Section 34(2)(a) of the Arbitration and Conciliation Act, 1996 seeking to impugn the award dated 16.8.2005 of the Arbitral Tribunal. The award has been rendered by a Tribunal of three arbitrators including the nominee of the petitioner and the award is unanimous.
3. Learned Counsel for the petitioner has rightly confined his submissions to the aspects arising from the plea that the award in certain matters is contrary to the terms of the contract. This plea arises from the judgment of the Apex Court in ONGC v. SAW pipes Ltd., (2003) 5 SCC 705 : AIR 2003 SC 2629, where it was held that the words ‘public policy of India’ have to be given wider meaning and where an award is patently illegal, the award is likely to be interfered with. Further if an award is patently contrary to the terms of the contract, the Court is entitled to interfere with the award. At this stage, it may clarified that while scrutinizing this aspect, it is not as if the award is required to be interfered with merely because there is another possible view to be taken on the finding arrived by the arbitrator. The award must be perverse in its reasoning while considering whether a particular aspect is or is not incorporated in the contract. So long as the view taken by the arbitrator is a plausible view, though perhaps not the only correct view, the award ought not to be interfered with by the Court.
4. Learned Counsel for the petitioner submits that the claim No. 1 awarded for extra lead involved in earthwork arising from a ban imposed by the Government after issuance of acceptance letter is contrary to the terms of the contract. In this behalf learned Counsel has referred to Clause 4.1 of the special data and specifications of Contract Agreement:
“The rates for earthwork in filling in lowlying area/platform has been invited. The rate quoted will be deemed to be inclusive of all classes of soil, taxes royalty, loading, unloading, handling, re-handling of earth-all leads, lifts, ascents, descents, crossing of Nallahs, streams, tracts, etc. levelling and dressing complete in all respects to the required profile with the earth to be brought by the contractor from outside railway land at his own cost.”
5. Learned Counsel submits that while quoting the rates for earthwork, the rate quoted were to be deemed to be inclusive of all classes of soils, etc. and thus the amount could not have been awarded. A perusal of the reasoning of the award in respect of this claim shows that the claim has been partly allowed on account of the fact that the material placed on record before the arbitrators establishes that the Government authorities banned mining of work around sites of work even for Government work and the respondent had no option but to bring the earth from adjoining sites involving extra lead which was not earlier envisaged by the respondent. What weighed with the arbitrators is the fact that a Government ban had resulted in a situation where the terms of the contract could not be implemented as per the terms originally envisaged. Since a Government ban was a supervening circumstance, the amount has been awarded, and thus, the reasoning of the arbitrator cannot be said to be fallacious or contrary to the terms of the contract as to call for interference by the Court.
6. Learned Counsel for the petitioner further submitted that in respect of the award of claim No. 2 on account of wastage of labour for not allowing the labour to work for normal eight hours per day, the same is again prohibited by Clause 7.2 of the contract read with Clause 22.5 which are as under:
“Clause 7.2
The tenderer/s are advised to visit the site of work, and investigate actual conditions regarding nature and conditions of soil difficulties involved due to inadequacy of stacking space for builtup area around the site, availability of materials, water and labour, probable tiles for labour camps, stores, godowns, etc. they should also satisfy themselves as to the source of supply and adequacy of their respective purpose of different materials referred to in the specifications if indicated in the drawings. The extent of lead and lift involved in the execution of work should also be examined before formulating the rates for complete items of works described in the schedule.
Clause 22.5
No claim for idle labour and/for idle machinery, etc. on any account will be entertained. Similarly no claim shall be entertained for business loss or any such loss.”
7. Learned Counsel submits that the respondent was required to visit the site of the work and investigate the actual conditions at site to take into consideration any inadequacies which may be there while making the tender and no claim for idle labour and idle machinery was to be entertained on that account.
8. The arbitrators while considering this claim have allowed it only to the extent of about 25 per cent of the amount claimed on account of the finding arrived at that the petitioner failed to provide the requisite blocks, cautions to the respondent in time and there was no fault on account of respondent in this aspect. Thus the amount has been awarded not in violation of the terms of the contract but on account of breach caused by the petitioner which has resulted in certain consequences. It is not open for the petitioner to contend that even if it breaches terms of the contract, no amount can be awarded to the respondent.
9. The next contention raised by learned Counsel for the petitioner is in respect of claim No. 8 which is on account of expenses incurred for employment of caution men. The claim of the respondent was for Rs. 2,56,000 against which an amount of Rs. 1,00,000/- has been awarded. In this behalf, learned Counsel relies upon Clause 3.3 of the contract, which is as under:
“Clause 3.3
The work is to be executed in the vicinities of running track and the contractor will ensure safety of the tracks and his own men, material and equipments at his own cost. No claim on this account will be entertained. All safety precautions will be entire responsibility of the contractor.”
10. Learned Counsel for the petitioner thus submits that safety of the tracks, men and material was to be at the cost of respondent and no claim was to be entertained in this behalf. The arbitrators have however found that a part of the amount is liable to be allowed on account of additional expenditure. It has to be kept in mind that an Arbitral Tribunal is chosen by the parties as a final adjudicator of the disputes. It is not the object in such proceedings to challenge the award for the Court to sit as a Court of appeal over the decision of the arbitrators. The arbitrators are technical people and have considered the ramifications at site as also the various obligations and counter obligations of the parties. If it is found that there are certain obligations not fulfilled by the petitioner which has resulted in certain consequences for the respondent, the award in that behalf cannot be said to be fallacious.
11. The last aspect urged by learned Counsel for the petitioner is that no interest ought to have been award in view of there being a specific stipulation to the contrary contained in Clause 16(c). The said clause is as under:
“No interest will be payable upon the earnest money or the security deposit or amounts payable to the contractor under the contract, but Government securities deposited in terms of sub Clause (1) of the Clause will be repayable with interest accrued thereto”
12. Learned Counsel submits that there is an absolute bar on grant of interest and in this behalf has referred to a judgment of the Division Bench of the Gauhati High Court in Arbitration Appeal No. 4/2001 (DB) titled Union of India v. Major V Ninhawan (Retd) where the same Clause has been considered. The Division Bench came to the conclusion that there appeared to be a complete bar for grant of interest under the said Clause on amounts payable in respect of refund of earnest money, security deposit or amounts payable to the contractor under the contract. Learned Counsel submits that the amounts awarded are the amounts payable to the contractor under the contract.
13. In my considered view, what is envisaged by the said expression ‘amounts payable to the contractor under the contract’ would mean the amounts which have to be paid in normal course to the contracting party. This expression has to be also read with two other stipulations in respect of earnest money and security deposit. The object is that the earnest money and security deposit are liable to be detained till the completion of the contract. Not only amounts are payable to the contractor at various stages of the contract but there will be differences between the dates when such bills are raised and amounts are paid. It is in respect of these payments on behalf of the petitioner that no interest is payable. It cannot be said that if the petitioner unreasonably detains any amount, no interest would be payable. Similarly if it is found that there are claims arising on account of eventualities like additional work, breach by the petitioner of the terms of the contract, then the arbitrators cannot said to be devoid of any authority to compensate the suffering party by grant of interest.
14. In view of the aforesaid position, despite the strenuous and erudite effort of the learned Counsel for the petitioner, I am unable to persuade myself to agree with the submissions made by learned Counsel for the petitioner.
15. Dismissed.
IA 9620/2005:
Dismissed.
IA dismissed.