abs IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ARBITRATION PETITION NO. 478 OF 2004 Prasar Bharti .. Petitioner V/s M/s Choudhary & Choudhary (India) .. Respondent Ms.S.I. Shah with Ms.J.N. Pardhi i/b Dr.T.C. Kaushik for the petitioner. None for the respondent. CORAM : D.G. KARNIK, J. DATE : 9TH APRIL 2009 P.C. P.C. P.C. : 1. This petition under section 34 of the Arbitration and Conciliation Act, 1996 (for short "the Arbitration Act") is directed against the award dated 15th October 2004 (hereinafter referred to as "the first award") rendered by the sole arbitrator. 2. The facts of the case stated in brief are that a certain work valued at Rs.61,22,705/- was awarded by the petitioner to the respondent. The date of commencement - 2 - of the work was 30th January 1994 and the stipulated date for completion of the work was 22nd April 1997. According to the respondent, frequent changes in the decisions relating to the work at the end of the petitioner, the contract could not be completed within the stipulated time, but was completed on 15th October 1998. By a letter dated 15th November 1998, the petitioner granted ex-post facto extension of time for completion of the work upto 15th October 1998. The respondent made certain claims on the petitioner on several grounds including the extra expenditure incurred by him on account of delay in completion of the work which was caused solely on account of the petitioner. The petitioner disputed the claims of the respondent and referred the dispute to arbitration at the hand of the sole arbitrator. The learned arbitrator declared his first award on 15th October 2004 partially granting the claim and passed an award to the extent of Rs.13,87,626/-. That first award is impugned in this petition under section 34 of the Arbitration Act. 3. When this petition first came for hearing before the Court, the petitioner contended that part of claim no.1 made before the learned arbitrator, i.e. item nos.10, 11, 12, 13, 15A, 15B and 15C of claim no.1, were not arbitrable as the decision of the Engineer in-Charge in relation to those items was final under the contract. - 3 - It was submitted that those claims were not arbitrable in view of specific condition in the contract. Counsel for the petitioner further contended that this objection was specifically raised before the learned arbitrator, but the learned arbitrator had not decided the said objection. After perusal of the award, this Court held that the question regarding arbitrability of those claims was not considered by the learned arbitrator. Ultimately, the counsel for the respondent submitted an application under section 34(4) of the Arbitration Act and requested the Court to enable the learned arbitrator to consider the question of arbitrability of the above referred items. By an order dated 1st March 2006, the Court granted the application of the respondent and adjourned the hearing for 8 weeks to enable the learned arbitrator to resume the proceedings and take appropriate action. Pursuant to the order dated 1st March 2006, the learned arbitrator resumed the proceedings and modified the award dated 1st April 2006 (the modified award is hereinafter referred to as "the second award"). The second award was challenged in Arbitration Petition No.328 of 2006. By an order dated 25th April 2006, this Court set aside the second award on the ground that it was passed without granting an opportunity of being heard to the respondent. The Court further directed the learned arbitrator to resume the proceedings and make a fresh award in accordance with - 4 - law. In pursuance of the order dated 25th April 2006, the learned arbitrator again resumed the proceedings and, after granting the opportunity of hearing to both the parties, passed a afresh award dated 3rd July 2007 (hereinafter referred to as "the third award"). By the third award, the learned arbitrator accepted in part the objection of the petitioner regarding non-arbitrability of certain claims. He accordingly recalculated the claims and on recalculation came to the conclusion that the total claim awarded to the respondent would not, in any way, be affected on account of non-arbitrability of certain items of claim no.1. The third award dated 3rd July 2007 was challenged by the petitioner before this Court by filing Arbitration Petition No.42 of 2008. By an order dated 19th June 2008, this Court dismissed that arbitration petition directed against the third award of the learned arbitrator. 4. I am informed at the Bar that a review petition has been filed in this Court for review of its order dated 19th June 2008 dismissing Arbitration Petition No.42 of 2008. However, the said arbitration petition is under objection and not numbered. Be that as it may, in this petition the Court is not concerned with the said dispute regarding non-arbitrability of certain items of claim no.1. In fact, the learned counsel for the petitioner submitted that in this petition, the - 5 - petitioner now challenges the award insofar as it relates to claim nos.2 and 3 which have been partly granted by the learned arbitrator. 5. In view of the aforementioned submission of the learned counsel for the petitioner, I would now proceed to examine the validity of the award qua the claim nos.2 and 3 only as awarded in the first award. 6. Claim no.2 was made by the respondent in the sum of Rs.13,77,954/- for the losses suffered by it on account of increased expenditure because of rise in prices of materials, labour and fuel on account of prolongation of the contract. Claim no.3 was made by the respondent in the sum of Rs.6,16,567/- for the losses suffered by it on account of increased expenditure on staff, establishment and overheads because of prolongation of the work. Thus, claim no.2 relates to increase in the cost of materials and labour and claim no.3 relates to increase in the overhead expenditure both arising out of prolongation of the period of execution of the contract. Indisputably, the contract originally provided that the work must be completed by the respondent on or before 22nd April 1997. According to the claimant, the work could not be completed before 22nd April 1997 on account of changes in the designs made by the petitioner while the contract - 6 - was underway and delays in the decision making at various stages by the petitioner. On account of such delay in the decision and change in the design, the contract could not be completed within the stipulated time and could only be completed on 15th October 1998. Roughly 14 additional months were required for completing the contract. During the period of 14 months, the prices of materials went up. Similarly, the respondent was required to incur extra expenditure of overheads by keeping supervisors, engineers and labourers on the site for the extra period. 7. After considering the material produced before the learned arbitrator, he allowed the claim for extra materials to the extent of Rs.1,92,204/- as against the respondent’s claim of Rs.13,77,954/-. Similarly, the learned arbitrator awarded a sum of only Rs.1,63,450/- for additional expenditure on establishment and overheads as against the claim of Rs.6,16,567/- made by the respondent. 8. Learned counsel for the petitioner did not address me regarding quantum or the correctness of the calculations made by the learned arbitrator for allowing the extra expenditure, but submitted that the respondent was not entitled to claim any extra expenditure in view of the undertaking given by him vide letter dated 6th - 7 - November 1998 in which the respondent has stated that it has no claim of whatsoever nature arising out of extension of time granted by the Superintending Engineer upto 15th October 1998. At the end, the letter states that this undertaking was signed wilfully subject to the grant of extension of time upto 15th October 1998 and in the event the extension was not granted, the undertaking shall be considered as withdrawn. 9. Learned counsel for the petitioner submitted that in view of this clear undertaking given by the respondent vide letter dated 6th November 1998, the respondent was not entitled to make any claim whatsoever on account of extension of time for completion of the work granted to it. Claim nos.2 and 3 were nothing but the claims arising out of extension of time granted to the respondent by the petitioner and, therefore, claim nos.2 and 3 could not have been granted by the learned arbitrator at all. 10. The learned arbitrator has held that the undertaking was obtained from the respondent under duress and it was not out of free will. This finding of the learned arbitrator is a finding of fact based on appreciation of evidence adduced before him. Appreciation of evidence is the sole prerogative of the learned arbitrator and the finding of fact recorded by - 8 - the learned arbitrator is not open for challenge unless it is palpably perverse. 11. The Court hearing an application under section 34 of the Arbitration Act cannot sit in judgment as an appeal court over the correctness of a finding of fact recorded by the arbitral tribunal unless the finding is shown to be perverse. In the present case, no perversity is shown in the finding recorded by the learned arbitrator that the undertaking was obtained by duress. In the light of the said finding, the learned arbitrator was right in ignoring the undertaking and adjudicating the claim of the respondent qua claim nos.2 and 3 on merits. As stated earlier, the counsel for the petitioner did not urge anything about the correctness of adjudication of claim nos.2 and 3 made by the learned arbitrator. 12. In the circumstances, there is no merit in the petition and the same fails and is dismissed with no order as to costs. (D.G. KARNIK, J.)