N. Srinivasulu Reddy vs The Southern Railway and Others

S. Rajeswaran, J.—This O.P. has been filed u/s 34 of the Arbitration and Conciliation Act, 1996 (hereinafter called ''the Act'') to set aside

the award dated 13.1.2003 passed in O.P.No. 122/2000.

The brief facts of the case are as follows:

An agreement was entered into on 18.12.1995 between the petitioner and the 1st respondent in respect of the work ""Gauge Conversion from

Madras Beach to Dindigul-Tiruchirapalli-Dindigul Section, Earth Work in forming Bank/Cutting for formation of side drains etc., between

Kalpattichatram and Ayyalur Station from Ch. 60000 to Ch 62700 (Detour Portion D1)"". The value of the work was Rs. 29,18,250/- and the

period of completion was 9 months. It is the case of the petitioner that the site itself was made available only in January 1997 and the site was not

in a fit condition to commence the work. It is stated that the 1st respondent by letter dated 4.7.1996 agreed to grant escalation of cost. Despite the

hurdles and the difficulties experienced by the petitioner, the work was completed within a period of 9 months from the date of handing over the

site. Despite the same, it is stated that the final bill was delayed and lesser amount was paid. Therefore the petitioner filed O.P.No. 122/2000 for

referring the disputes and differences to arbitration. Accordingly, respondents 3 to 5 were appointed as arbitrators to decide the dispute. An

award was passed on 13.1.2003. Aggrieved against that award the above O.P. has been filed u/s 34 of the Act, 1996.

The following grounds have been raised by the petitioner to assail the award:

1) The award is bad for non-application of mind.

2) Due to delay in handing over the site, the petitioner had incurred overhead charges. Consequently, the same is liable to be compensated by the

1st respondent in terms of idle charges for men and machinery. Though it was agreed under Ex.C12 that the 1st respondent has to pay the

escalation charges, the denial of the same is illegal and arbitrary.

3) The arbitral award is liable to be set aside as it is against the terms of reference.

4) The failure of the tribunal to consider the grant of interest is contrary to the admitted pleadings and Exhibits.

On issuance of notice, respondents 1 and 2 appeared their counsel and he argued the matter on instructions.

Heard the learned Counsel for the petitioner and the learned Counsel respondents 1 and 2. I have also gone through the documents filed in

support of their submissions.

Learned Counsel for the petitioner submitted that the failure on the part of respondents 1 and 2 to hand over the site in time resulted in delay of

completing the work. Consequently, they are entitled to be compensated for the idle men and machinery as per the terms of the contract. In fact,

respondents 1 and 2 themselves have agreed to grant escalation of cost by the letter dated 4.7.1996. In fact, according to the learned Counsel for

the petitioner, the petitioner commenced the work in January 1997 and completed the same within the stipulated time of 9 months. In spite of that

respondents 1 and 2 have not only delayed the final bill but paid only a lesser amount. But the arbitral tribunal, despite the clear and categorical

statement made by respondents 1 and 2, held that there was a, delay on the part of the petitioner in executing the contract.

Per contra, the learned Counsel for respondents 1 and 2 submitted that the award has been passed by respondents 3 to 5 duly following the

terms and conditions of the contract and there is no infirmity in the same to be assailed u/s 34 of the Act 1996. Moreover, it is the specific case of

respondents 1 and 2 that no grounds have been made out to attract the provisions of Section 34 of the Act, 1996. Therefore the award has to be

upheld and the petition has to be rejected.

Respondents 3 to 5, namely the three members of arbitral tribunal, in due consideration of the facts and circumstances of the case, passed the

award in respect of claim Nos. 1 and 2 where the claimant-petitioner had made a claim for Rs. 66,85,000, after going through the clauses 17(3)

and 43(1) of the General Conditions of the Contract (GCC) and found that the claimant/petitioner did not prove his case by sufficient documentary

evidence to prove his claim that he had incurred additional expenditure on account of idle men and machinery during the time from July 1995 to

February 1997. Therefore, the tribunal rejected the claim Nos. 1 and 2 for idle charges for men and machinery.

Insofar as claim No. 3 is concerned, the petitioner claimed a sum of Rs. 7,25,000/-towards price escalation. The arbitral tribunal after going

through the General and Special Conditions of contract, the rider agreement dated 5.5.1997 and the subsequent rider agreement dated 19.8.1999

held that the petitioner/claimant is not entitled to price escalation and rejected the claim No. 3.

In respect of claim No. 4, for interest on withheld amount, there is no clause in the special or GCC enabling the department to pay interest for

the withheld amount. The tribunal in due consideration of the document produced before it by both the parties found that a sum of Rs. 3,96,844/-

has been unnecessarily withheld by the respondents 1 and 2 for which the petitioner has to be compensated by way of interest. Therefore the

tribunal directed respondents 1 and 2 to pay simple interest at the rate of 18% per annum on the withheld amount of Rs. 3,96,844/- for a period of

691 days and accordingly an amount of Rs. 1,35,231/- was directed to be paid under claim No. 4.

In respect of claim No. 5, for loss due to re-classification of strata, the tribunal after considering Clause 51(2) of GCC, Clause 19.4.1 of

special conditions of contract, Clause 45(a) of GCC and the final bill dated 21.8.1999 held that the amount is not payable by respondents 1 and 2

to the petitioner and hence eventually rejected the claim.

In respect of claim No. 6 towards loss of profit, as the same was given up by the petitioner/claimant himself, by letter dated 13.11.2002, the

same was not considered by the tribunal.

In so far as the claim ''A'' of the additional supplementary claim is concerned which is for a sum of Rs. 11,67,300/-, the tribunal found that it is

not supported by any documents or vouchers and consequently rejected the claims. The arbitral tribunal has also considered the Clause 17.3 and

Clause 43(1) of GCC before rejecting his claim.

Finally, insofar as the interest at 18% per annum made on all claims is concerned, the tribunal after considering Clause 64(1)(iii) of GCC and

Section 23(3) of the Act, 1996 awarded a simple interest at 10% on Rs. 1,35,231/- under claim No. 4, from 1.9.1999 till the Sate of publication

of the award.

I find that as against all the claims, the tribunal has awarded only one claim, that too, a sum of Rs. 1,35,231/- as against claim No. 4 towards

interest on the withheld amount.

I have considered the submissions made by the learned Counsel for the petitioner and the learned Counsel for the respondents in detail. I have

also gone through the award carefully and the documents filed in support of the O.P.

I find that the learned arbitrators have considered the claim in due regard to special and General Conditions of the Contract and also on the

basis of evidence adduced before them. As such, there is no infirmity nor illegality committed by the arbitrators in passing the award. When the

arbitrators passed a reasoned award on the basis of evidence adduced before them, that too by duly considering the relevant and specific clauses

contained in the contract, this Court cannot interfere with the same u/s 34 of the Act, 1996 as this Court is not an appellate court. In the award

under challenge, the arbitral tribunal has considered the relevant and specific clauses and has rightly evaluated the evidence before passing the

award and therefore the same is outside the purview of the non-interfering zone and the same is to be upheld only. Moreover none of the ground

urged by the learned Counsel for the petitioner would attract the provisions of Section 34(2) of the Act, 1996 to set aside the same. The award

passed by the arbitrators cannot be assailed on the grounds of any of the grounds urged by the learned Counsel for the petitioner. Therefore, I do

not find any merit in the contentions put forth by the learned Counsel for the petitioner and the same are liable to be rejected. Consequently,

O.P.No. 438/2003 is dismissed as one devoid of merits and the award passed by the arbitrators/respondents 2 to 5 is confirmed. No costs.