IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA. Arb. Case No. 46/2010 Reserved on:18.10.2011 Decided on:8.11.2011 ___________________________________________________ Dr. Hans Raj and others. …Petitioners. Versus The Divisional Manager, Forest Working Division, Kullu and others. …Respondents. ________________________________________________________ Coram: Hon’ble Mr. Justice Rajiv Sharma, Judge. Whether approved for reporting?1 Yes For the Petitioners : Mr. Naveen K. Bhardwaj, Advocate. For the Respondents : Mr. Bhupender Thakur, Advocate vice Mr. V.B. Verma, Advocate. _____________________________________________________ Justice Rajiv Sharma, Judge. The present petition has been filed, under section 34 of the Arbitration and Conciliation Act, 1996, for setting aside award dated 29.5.2010 made by Sh. R.K. Gupta, I.F.S., Managing Director, H.P.S.F.C and to award counter-claim as per claim of the petitioners in full. 2. Material facts necessary for the adjudication of this petition are that tenders were called for floating 1 Whether reporters of the local papers may be allowed to see the judgment? Yes 2 timber on 4.4.1994. The predecessor-in-interest of the petitioners, namely, Ran Singh, also participated in the tender process. The said tender, being lowest one, was approved and sanction was conveyed vide letter No. 6706 dated 24.6.1994. Thereafter, Sh. Ran Singh and the respondent-corporation entered into agreement on 21.8.1994 and 11.9.1995, in which working periods were upto 31.3.1995 and 31.3.1996, respectively for 1994-95 and 1995-96 ghalls. Contractor deposited a sum of ` 50,000/- in favour of the respondent-corporation as security, pledged to Divisional Manager, F.W.D. Kullu. Respondent-corporation filed a civil suit No.25/99 for recovery of ` 94,52,034/- in this Court. The contractor preferred an application for referring the matter to the Arbitrator. Consequently, the matter was referred to the Managing Director, H.P. State Forest Corporation on 3.11.1999. He made the award on 15.6.2002. The same was set aside by this Court and the matter was remanded to the sole Arbitrator. He decided the same on 3.11.2009. 3. Mr. Navin Bhardwaj has strenuously argued that the learned Arbitrator has mis-read and misconstrued the oral as well as documentary evidence. According to him, the Arbitrator has not taken into consideration the losses caused to the timber due to 3 blasting/construction of the road. He then argued that the Arbitrator has not at all taken into consideration the counter-claim filed by the petitioners whereby they have claimed a sum of ` 44,86,246/-. According to him, the predecessor-in-interest of the petitioners had deployed sufficient number of laborers for floating the timber. He further argued that the entire timber was not supplied to the contractor and the corporation itself was negligent. He also contended that the ghall was floated under the supervision of A.C.F., Assistant Managers, Deputy Rangers, Forest Guards etc. of the corporation. He then argued that no notice was ever issued to the predecessor- in-interest of the petitioners for engaging more labour. He further contended that the contractor had completed the stacking work before the expiry period, i.e. 21.8.1994 and 11.9.1995. He further contended that the predecessor-in- interest of the petitioners had been submitting the progress report weekly. He lastly contended that the Arbitrator was biased towards the petitioners. 4. Mr. Bhupender Thakur has supported the award made by the Arbitrator on 29.5.2010. 5. I have heard the learned counsel for the parties and have perused the record carefully. 4 6. The tender of the predecessor-in-interest of the petitioners was approved and sanction was conveyed vide letter dated 24.6.1994. Initially, an agreement was entered into between the contractor and respondent- corporation on 21.8.1994 and supplementary agreement was executed between the parties on 11.9.1995. The work period was 31.3.1995 and 31.3.1996 for 1994-95 and 1995-96 ghalls. The matter was referred to the Arbitrator by this Court on 3.11.1999. The award made by the Arbitrator on 15.6.2002 was set aside on 3.11.2009. Thereafter, the matter was remanded to the Managing Director, H.P. State Forest Corporation to decide the same afresh. Respondent-corporation claimed a sum of ` 93,46,434/- and the claim was contested by the predecessor-in-interest of the petitioners. They filed counter-claim seeking a sum of ` 44,86,246/-. The learned Arbitrator framed issues on 5.8.2000. He determined issue Nos. 1, 2, 3 and 4 together, being inter- connected. According to claimant, i.e. respondent- corporation, the contractor was required to engage required number of labourers for speedy and timely delivery of timber. He did not engage sufficient number of labourers for floating and also for timely collection of timber, which has resulted in huge loss to the corporation. 5 The loss was attributed to the negligence on the part of the contractor. 7. PW-1 Jagar Nath Sharma was the Launching Officer for the ghall. According to him, entire timber was handed over to the contractor for floating during 1994-95 and 1995-96 as per Ex.PW-1/B, PW-1/C and PW-1/G. 8. PW-2 Dharam Chand has deposed that entire timber was handed over to the contractor in respect of both the ghalls. According to him, loss was caused due to negligence on the part of the contractor. He was served with notices Ex.PW-2/H and Ex.PW-2/K calling upon him to engage sufficient number of labourers for collecting timber. He has denied that there was any snow-fall at the time of launching. 9. PW-4 Todar Mal, PW-5 Lal Singh and PW-6 S.R. Sharma have deposed that the contractor did not engage sufficient number of labourers though he was called upon to do the same. 10. Ran Singh has appeared as DW-1. According to him, he has taken all the necessary steps for floating the timber. However, 13,000 scants were made available for floating in the year 1994. He waited upto 15.10.1994 and started floating the timber received by him. The weather was bad and there were heavy rains and snowfall. 6 He also deposed that there was no question of engaging insufficient labour since sufficient timber was not handed over to him. He also deposed that there were debris/boulders in the river due to construction of road and he has referred to the statements of PW-1, PW-2, PW- 4, PW-5 and PW-6. He also deposed that the timber was stuck in the mud. 11. It is evident from the record that 80,000 nugs were to be handed over to the contractor but only 25,433 nugs were supplied to him. These nugs were floated as per progress reports vide Ex.PW-7/2 to PW-7/6. Thus, there was no loss occasioned to the corporation as far as 25,433 nugs are concerned. The contractor had engaged sufficient number of labourers for floating 25,433 nugs. He had employed 99 to 82 labourers on different occasions for proper execution of floating work. There is no damage caused to the corporation as far as 25,433 nugs are concerned. 12. As far as agreement dated 11.9.1995, i.e. supplementary agreement is concerned, one lakh nugs were handed over to the contractor. He was required to deploy 200 labourers. However, he had engaged only 220 labourers at the initial stage, which was gradually reduced to 168, 91, 72 and 57, respectively. The timber was 7 handed over to him vide Ex.PW-1/G. He was handed over 83,474 nugs having volume of 7703.313 m. It has come on record that large number of quantity of timber got stuck under boulders and left behind as per progress reports Ex.PW-7/12 and PW-7/13. The total loss of 4847 scants was shown between 8.11.1995 to 14.11.1995 though the contractor has reported vide Ex.PW-7/21, PW- 7/22 and PW-7/23 that 8000 scants of timber had been damaged due to blast for the construction of road. PW-1 Jagar Nath Sharma has admitted that the construction of Manikaran to Gurshaini road was also in progress in portion. However, he has denied that the timber was damaged by debris due to construction of road. He has testified that there was a flood in September, 1995 yet Parvati Ghall was not involved in the flood. PW-2 Dharam Chand has also testified that the construction of road was undertaken and debris was being thrown during the course of construction into the river, which has caused some damage to the timber. He had reported the matter to the Divisional Manager. PW-6 S.R. Sharma has testified that the notices regarding negligence in ghall work were sent to the contractor. 13. Learned Arbitrator has come to a right conclusion after going through the statements of the 8 witnesses and documents placed on record that there was loss of 4847 scants having volume of 498.253 m3 due to flash floods but the corporation was held entitled to loss of 3000 scants instead of 8000 scants. The contractor was found negligent for the loss of 3000 scants. Consequently, respondent-corporation was held entitled to ` 22,11,647/- after taking into consideration the entire loss caused to the timber during floating of ghall. He has also awarded interest @ 6% per annum from the date of award till the date of actual payment. 14. Mr. Navin Bhardwaj has also argued that the Arbitrator has not taken into consideration the counter- claim filed by the petitioners. Learned Arbitrator has, in fact, dealt with the counter-claim of the petitioners in detail. According to DW-1 Ran Singh, 80,000 scants were to be floated during 1994-95 from 20.9.1994 to 10.10.1994. He found that the agreed quantity of timber was not available and he suffered heavy losses. He sent letter dated 30.9.1994 to Divisional Manager, F.W.D. Kullu expressing his concern about the delay in handing over timber. According to him, only 25,437 scants were handed over. According to the contractor, he was entitled for work bill for the committed quantity of timber, i.e. 80,000 scants during 1994 and 83,474 scants during 9 1995 @ ` 29/- per scant with interest on pending wage bills alongwith interest and cost of proceedings. It has come in cross-examination of PW-2 and PW-6 that due to cloudburst, Tosh Nala Bridge was damaged and haulage of timber work got hampered due to cutting of ration supply to labour. These circumstances were beyond the control of the officers of the respondent-corporation and the contractor was also advised vide letter dated 21.9.1995 Ex.DW-1/7 that due to heavy rains/cloud burst the work of haulage of timber to launching depot stood disrupted and the level of water in the river had also gone up, therefore, it was not safe to launch timber at that time. Thus, 80,000 scants of timber could not be provided to the contractor for launching. 15. Mr. Bhupender Thakur has referred to following clause of agreement Ex.PW-6/1-A: “The value of work is only estimated. No guarantee is given that this much work will be provided. In case the work falls short of or exceeds the estimated limit, the contractor/Labour Supply Mate(s) will not be entitled to any compensation.” 16. Thus, it is evident that the contractor was only entitled to work bill of number of actual scants delivered by him at RSD Manikaran. Accordingly, the non-claimant 10 has failed to establish how he was entitled to a sum of ` 44,86,246. 17. Mr. Navin Bhardwaj has also faintly argued that the arbitration was barred by limitation. However, the fact of the matter is that when Civil Suit No. 25/99 was pending in this Court, the contractor himself had moved an application on the basis of which the matter was referred to the Arbitrator on 3.11.1999. Petitioners have not led any evidence to establish the plea of malice. Learned Arbitrator has correctly appreciated the oral as well as documentary evidence. He has taken into consideration the statements of the parties. He has referred to all the documents in detail. The conclusions arrived at by him are based on settled principles of law. He has considered the counter-claim, as discussed hereinabove. The award is self-speaking and the learned Arbitrator has given cogent reasons while returning the findings. 18. Accordingly, in view of the observations and discussions made hereinabove, there is no merit in the petition and the same is dismissed. However, there shall be no order as to costs. (Justice Rajiv Sharma), Judge. 8.11. 2011*awasthi*