Civil Revision No. 7635 of 2009 (O&M) -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Civil Revision No. 7635 of 2009 (O&M) Date of decision: 16.08.2010 Punjab State Electricity Board, The Mall, Patiala ....Petitioner Versus M/s Sutlej Construction Limited ....Respondent CORAM: HON'BLE MR. JUSTICE VINOD K. SHARMA Present: - Mr. H.S. Sidhu, Advocate, for Dr. Puneet Kaur Sekhon, Advocate, for the petitioner. ***** VINOD K. SHARMA, J (ORAL) This revision petition is directed against the order dated 30.5.2009, passed by the learned Courts below, vide which the award passed by the learned arbitrator has been made rule of the court, and the appeal filed against the award also stands dismissed. On petition filed under Section 20 of the Arbitration Act, 1940 (hereinafter referred to as 'Act'), the learned trial Court appointed Justice S.P. Goyal (Retd.) as sole arbitrator, to adjudicate the dispute raised in the petition under Section 20 of the Act. The reference was made to the learned arbitrator. One of the disputes raised was, that the petitioner was not entitled to claim any damages, as there was no termination of contract. The notice issued to the respondent-contractor was only for stopping the work under Clause 2.12 of Section E.1 of the contract agreement. The learned arbitrator, did not agree with this contention, as Civil Revision No. 7635 of 2009 (O&M) -2- decision of the Board was placed on record by way of Annexure R-2, wherein the following decision was taken by the Board: - “It was noted by the Board that most of the machinery intimated by M/s Sutlej Construction Co. Pvt. Ltd. to be brought to work at Power Houses II & III of UBDC stage – II was engaged on various works like Dholba Dam, S.Y.L. Canal, WYC Power Houses, T.T.P.S. (Bihar) etc. and most of the same is hypothecated with those departments. It was further noted that progress of the work where this machinery was lying/working was lagging and therefore it would not be possible for those organizations to spare the machinery in the near future. It was understood that the financial position of the firm was not good. Inspite of the fact that M/s Sutlej Construction Co. Pvt. Ltd., has already been informed by Chief Engineer/Civil that the Board had not agreed for mobilization advance, the firm was making fresh references, for reconsideration. It was further noted that the firm was not in a mood to settle the previous claim on reasonable terms. Under the circumstances the Board did not consider advisable to permit M/s Sutlej Construction Co. Pvt. Ltd. to restart the work and further decided that the contract be terminated under the existing terms and conditions of the contract.” The learned arbitrator did not accept the plea of the petitioner, that there was no termination of the contract. The only basis for rasing the contention that contract was not terminated was, that as the decision of the Board was not conveyed to the contractor, therefore, it could not be said that the contract was terminated. This plea is totally mis-conceived. Once, the decision of the Board was placed on record, it does not lie in the mouth of the petitioner to contend that the contract was not cancelled, merely on the ground that the notice issued was not in terms of the decision taken. The contractor claimed a sum of Rs.74,62,199/- (Rupees Seventy four lac sixty two thousand one hundred and ninety nine only) Civil Revision No. 7635 of 2009 (O&M) -3- as damages. The learned arbitrator considered the details given in the claim petition, showing the losses suffered by the contractor on account of machinery. Most of the claims were not accepted, as it was proved, that the contractor had removed the machinery after suspension of work. The learned arbitrator, however, took note of the workers employed, for doing the work. The learned arbitrator also took note of the meeting held between the parties (Annexure P-17), wherein the Board showed its willingness to pay a sum of Rs.2,64,000/- (Rupees two lac and sixty four thousand only) on account of losses suffered for suspension of work. The learned arbitrator recorded a finding that the amount of damages assessed by the petitioner was not adequate, as it did not include the pay of staff and the interest, which the contractor paid on advances, to the banks. On appreciation of pleading and evidence, the learned arbitrator under this head gave Rs.5,00,000/- (Rupees five lac only) as damages. Similarly, other claims were adjudicated by the learned arbitrator and a sum of Rs.65,00,000/- (Rupees sixty five lac only) was assessed on account of losses and damage suffered on account of arbitrary and illegal suspension of the work. The learned arbitrator assessed the damages on basis of 15% of the contract amount by treating, it to be the losses which the contractor suffered. The petitioner filed objections under Section 30 and 33 of the Act against the award. One of the objections, which was pressed before Civil Revision No. 7635 of 2009 (O&M) -4- this Court, was that the claim before the learned arbitrator was time- barred. This objection deserves to be noticed to be rejected, as the learned arbitrator has entered reference in pursuance of the reference under Section 20 of the Act. It was for the petitioner to raise the question of limitation before the learned Court dealing with application under Section 20 of the Act. Once the reference was made, the learned arbitrator was to decide it on merit, and the claim could not be dismissed as time barred. Other contention raised by the learned counsel for the petitioner was, that the learned arbitrator wrongly came to the conclusion, that the contract was terminated, whereas, in fact, action was taken under Clause 2.12 of Section E.1 of the contract agreement merely for stopping the work. The grant of compensation by treating it to be termination of contract was, therefore, illegal and amounted to mis- conduct on the part of the learned arbitrator. The award, therefore, suffered from error apparent on the face of record. In support of this contention, the learned counsel for the petitioner placed reliance on the judgment of the Hon'ble Supreme Court in Indian Oil Corporation Ltd. Vs. Amritsar Gas Service and others, (1991) 1 Supreme Court Cases 533, wherein the Hon'ble Supreme Court has laid down as under: - “14. The question now is of the relief which could be granted by the arbitrator on its finding that termination of the distributorship was not validly made under clause 27 of the agreement. No doubt, the notice of termination of distributorship dated March 11, 1983 specified the several acts of the distributor on which the termination was based Civil Revision No. 7635 of 2009 (O&M) -5- and there were complaints to that effect made against the distributor which had the effect of prejudicing the reputation of the appellant- Corporation; and such acts would permit exercise of the right of termination of distributorship under clause 27. However, the arbitrator having held that clause 27 was not available to the appellant- Corporation, the question of grant of relief on that finding has to proceed on that basis. In such a situation, the agreement being revokable by either party in accordance with clause 28 by giving 30 days' notice, the only relief which could be granted was the award of compensation for the period of notice, that is, 30 days. The plaintiff- respondent 1 is, therefore, entitled to compensation being the loss of earnings for the notice period of 30 days instead of restoration of the distributorship. The award has, therefore, to be modified accordingly. The compensation for 30 days notice period from March 11, 1983 is to be calculated on the basis of earnings during that period disclosed from the records of the Indian Oil Corporation Ltd.” The reliance on this judgment is totally mis-conceived, as no law has been laid down in this judgment. The judgment is based on an interpretation of the agreement, which was in dispute between the parties. In the present case a positive finding was recorded, that decision was taken by the Board to terminate the contract, which has been reproduced above. The finding of the learned arbitrator, therefore, cannot be said to be suffering from error apparent on the face of record, nor it can be said to be a mis-conduct on the part of the learned arbitrator. Learned counsel for the petitioner also placed reliance on the judgment of the Hon'ble Supreme Court in State of Rajasthan and another Vs. Ferro Concrete Construction Private Limited, (2009) 12 Supreme Court Cases 1, to contend, that in absence of evidence no Civil Revision No. 7635 of 2009 (O&M) -6- damages could be granted, therefore, it was a mis-conduct on the part of the learned arbitrator. This contention again deserves to be noticed to be rejected. In the case in hand, the learned arbitrator has passed a detailed order and has given reasons for calculating the damages. The assessment of damages at 15% of the contract price, cannot be said to be excessive or not capable of being earned by a person, if he is allowed to be fulfilled. Even otherwise this plea is not available to the petitioner in view of settled law that the arbitrator is master of law and facts. No ground falling under Sections 30 and 33 of the Act, is made out to interfere with impugned judgments. No merit. Dismissed. (Vinod K. Sharma) Judge August 16, 2010 R.S.