Mokha Light House vs Central Pollution Control Board Central Pollution Control Board Vs Mokha Light House

R.C. Lahoti, J.

(1) This order shall govern the disposal of Suit Nos. 2959/90 and 2964/90.

(2) Suit No. 2959/90 has been registered on a petition u/s 14 of the Arbitration Act filed by M/s. Mokha Light House seeking filing of the award and making the same a rule of the Court.

(3) S.NO. 2964/90 has been registered on a petition under Sections 14,30 and 33 of the Arbitration Act seeking filing of the award and also setting aside of the same .

(4) There was a contract entered into between M/s. Mokha Light House, New Delhi (hereinafter referred to as ''the Contractor'') and Central Pollution Control Board (hereinafter referred to as ''the Employer'') relating to construction of Central Boards Building Complex at Shahdara Delhi (sub-head Electrical installation). The agreement No. was EE/BP/87.88.2. Disputes arose between the parties. There were claims and counter claims preferred. The Arbitrators have given an award dated 17/08/1990 whereby they have rejected the claims and the counterclaims both. The award is Nil.

(5) The employer has preferred objections. At the time of hearing, the award given by the Arbitrator on counter Claim No. 1 has been seriously challenged and that only deserves to be examined.

(6) To appreciate the contention raised before the Court, the counter claim and the award thereon are reproduced hereunder:-

"COUNTER-CLAIMNo.1 : The respondent claims an amount of Rs. 1,96,228.00 as excess cost incurred due to purchase of transformer through other agency at the cost of the claimant. Award :-The claim is not justified. Reason :Though the respondent has been able to establish delay on the part of claimant for supply of the transformer in terms of the Agreement, the purchase has been made without serving proper notice as required under the contract .While no formal Show Cause Notice was produced to have been served under Clause 22 of the Contract for the purchase of the transformer at the cost of the claimant, notices have been served under Clause 33 for termination of the contract without taking any action under the same and the claimant has been allowed to continue with the execution of the balance work.

(7) It is submitted by the learned Counsel for the employer that the award is demonstrably false as the Arbitrators have either over looked the documents or have misconstrued the same, which amounts to an error apparent on the face of the award ,also legal misconduct.

(8) It is not disputed that the relevant clause governing this counter claim is Clause 22 of the Contract. It reads as under:-

''"22.FAILUREby contractor to comply with Employer''s instructions:-If contractor after receipt of written notice from the employer requiring compliance ,with such further drawings and / or Employer''s instructions fails within seven days to comply with the same, the employer may employ and pay other persons to execute any such work whatsoever may be necessary to give effect thereto and all costs incurred in connection therewith shall be recoverable from the contractor by the employer as a debt or may be deducted by him from any moneys due to the contractor."

(9) There is yet another Clause-Clause 33 of the Contract which speaks of termination of contract in given contingencies subject to 7 days notice.

(10) EX.C-37 (Vol.II page 114) is a letter dated 27.2.89 written by employer sent to the contractor through Regd. A.D. post. It is clearly mentioned therein that there was a default on the part of the contractor in placing orders for H.T.penal and transformers .The urgency of placing the orders is impressed. At the end, it is mentioned - "Therefore please show cause within 7 days from the date of this letter as to why the transformers and H.T. Penal should be not purchased by the Board at your costs in terms of Clause 33 of the Act". The Clause No. should have been 22 but inadvertently it has been mentioned as 33. This was clarified through its letter dated 21.9.89 Ex.C-43 (Vol.ll page 127). It is mentioned therein that the letter dated 27.2.89 was under Clause 22 of the Agreement and in any case the letter dated 21.4.89 was to be treated as notice under Clause 22 of the Agreement. Thereafter the employer purchased the transformers as evidenced by the Bill No.533, dated 15.5.89 from Bhaskar Power Projects (Vol.ll page 223). This was done under the risk purchase clause.

(11) The Arbitrators have held against the employer solely on the ground that Regd.A.D. letter dated 27.2.89 Ex.C-35 mentioned clause 33 and not Clause 22 of the Agreement. This is an error apparent on the part of the Arbitrators. It is the substance of the notice and not the clause number that should have prevailed with the Arbitrators. Moreover if only they would have taken into consideration the letter dated 21.4.89 (Ex.C-43), their finding would not have been what it is.

(12) It is not disputed that the claim under this head being for an amount exceeding Rs. 300.00, the award had to be a reasoned award. Reason is vitiated, if the reasons given are not proper or adequate (see Raipur Development Authority v. Chokha Lal, 1991 Arb. L.R. 430. Failure to take into consideration material document available on record apparent vitiates the award.

(13) However, this Court cannot substitute its own finding in place of the Arbitrators .There are other contentions raised by the contractor which shall have to be taken into consideration by the Arbitrators while giving their award on this Court claim.

(14) However, this claim is separable from other claims.

(15) For the foregoing reasons, the employer''s objection is partly allowed. The award given by the Arbitrators on the counter claim No. 1 referred to herein above is set-aside and the same is remitted back to the Arbitrators. The rest of the award is maintained and made a rule of the Court.

(16) Let a decree be drawn in terms of the award excluding the award on counter Claim No. 1 which has been remitted to the Arbitrator. Both the suits stands disposed of.