Case: M/S. Ravindra & Associates Vs. Union Of India

1. Heard learned counsel for the parties. 2. This appeal by special leave has been filed against the judgment and order dated 15.1.2003 of the High Court of Kerala at Ernakulam whereby the High Court has allowed the appeal filed by the respondent herein against the order dated 9.10.1996 of the Principal Sub Judge, Kochi. 3. It appears that the appellant was awarded a contract for construction of married accommodation for petty officers of the Navy at Rameswaram, Kochi. The value of the work awarded was Rs. 5,44,47,087/-. The work which commenced on 24.12.1990 had to be completed by 23.6.1993 and admittedly it was completed by the said date. 4. Disputes arose between the parties and the parties invoked the arbitration clause provided in the General Conditions of Contract. The claimant-appellant made claims under 25 heads. The arbitrator awarded to the claimant a sum of Rs.70,94,265/- and allowed simple interest at the rate of 18% from the date of accrual for cause of action till date of reference, from the date of reference till date of award and from the date of award till the date of decree or date of payment whichever is earlier. An application by the appellant-claimant was filed before the Principal Sub Judge, Kochi to make the award a Rule of the Court. The respondent-Union of India also filed an application for setting aside the award of the arbitrator. The Sub-Judge allowed the application of the appellant and made it a Rule of the Court, but awarded 12% interest on the amount awarded from the date of decree till realization and dismissed the application of the respondent-Union of India. Aggrieved against the order dated 9.10.1996 of the Sub-Judge, Kochi the respondent herein preferred an appeal before the High Court which has been allowed by the impugned judgment and order. Hence, the present appeal. 5. In our opinion, the High Court wrongly interfered with the arbitration award and practically acted as a Court of Appeal, which it could not do (See : State of Rajasthan Vs. Puri Construction Co. Ltd. (1994) 6 SCC 485 ; Trustees of Port of Madras Vs. Engineering Construction Corporation Ltd. (1995) 5 SCC 531 ; EOC India Ltd. Vs. Bhagwati Oxygen Ltd. (2007) 9 SCC 503 and G. Ram Chandra Reddy & Company Vs. Union of India & Anr. (2009) 6 SCC 414 ). 6. As regards the allegation that while in the contract mixture provided for in the contract is M/15, but in fact, M/20 was used, it has been held by the arbitrator that this was done at the insistence of the Department. The arbitrator also held that the relevant drawing for M/15 mixture and the drawing relied upon by the respondent did not find place in the list of drawings forming part of the tender documents. Hence, in our opinion, the High Court has wrongly interfered with the findings of the arbitrator as regards claim Nos. 1 and 9. 7. As regards claim No. 10(b) relating to payment of over-time to labour it has been contended by the learned counsel for the appellant that there was a delay in supply of stores by the respondent and therefore the labour had to be retained for a longer period of time than envisaged under the contract and hence overtime charges had to be paid to the labour. 8. In this connection, the learned counsel appearing for the respondent has relied upon the decision of this Court in the case of Ramnath International Construction (P) Ltd. Vs. Union of India (2007) 2 SCC 453. We have gone through the said decision. In our opinion that decision has no application to the case at hand as in that case the contractor sought and obtained extension of time for execution of the contract whereas in the present case neither extension of time was sought for, nor in fact, granted for completion of the contract. Hence, the aforesaid decision is clearly distinguishable. Clause 11(c) of the General Conditions of Contract has no application in this case at all. 9. As regards Claim No. 12 relating to difference in price of wood frames for doors and windows, it is stated that no doubt the contract provided for teak wood but it was changed to second class hard-wood at the insistence of the Department. The High Court has in this regard relied upon the decision of the Board of Officers who has made its assessment by relying upon Clause 62(G) of the General Conditions of Contract which provided that the decision of the Garrison Engineer would be final unless it was set aside in appeal. In the present case, the price was not fixed by the Garrison Engineer at all. Moreover, the Board of Officers had made an inquiry in the matter after three years and the arbitrator, in our opinion, rightly held that such an inquiry was of no consequence. 10. As regards Claims No. 20 and 23 relating to escalation in prices of material, in our opinion, the arbitrator has given his findings of fact and the High Court misread Clause 18 of the Special Conditions of Contract.

Decision reasoning: 1[ds]5. In our opinion, the High Court wrongly interfered with the arbitration award and practically acted as a Court of Appeal, which it could not do (See : State of Rajasthan Vs. Puri Construction Co. Ltd. (1994) 6 SCC 485 ; Trustees of Port of Madras Vs. Engineering Construction Corporation Ltd. (1995) 5 SCC 531 ; EOC India Ltd. Vs. Bhagwati Oxygen Ltd. (2007) 9 SCC 503  and G. Ram Chandra Reddy & Company Vs. Union of India & Anr. (2009) 6 SCC 414 )6. As regards the allegation that while in the contract mixture provided for in the contract is M/15, but in fact, M/20 was used, it has been held by the arbitrator that this was done at the insistence of the Department. The arbitrator also held that the relevant drawing for M/15 mixture and the drawing relied upon by the respondent did not find place in the list of drawings forming part of the tender documents. Hence, in our opinion, the High Court has wrongly interfered with the findings of the arbitrator as regards claim Nos. 1 and 97. As regards claim No. 10(b) relating to payment ofovertimeto labour it has been contended by the learned counsel for the appellant that there was a delay in supply of stores by the respondent and therefore the labour had to be retained for a longer period of time than envisaged under the contract and henceovertimecharges had to be paid to the labour8. In this connection, the learned counsel appearing for the respondent has relied upon the decision of this Court in the case of Ramnath International Construction (P) Ltd. Vs. Union of India (2007) 2 SCC 453.  We have gone through the said decision. In our opinion that decision has no application to the case at hand as in that case the contractor sought and obtained extension of time for execution of the contract whereas in the present case neither extension of time was sought for, nor in fact, granted for completion of the contract. Hence, the aforesaid decision is clearly distinguishable. Clause 11(c) of the General Conditions of Contract has no application in this case at all9. As regards Claim No. 12 relating to difference in price of wood frames for doors and windows, it is stated that no doubt the contract provided for teak wood but it was changed to second classd at the insistence of the Department. The High Court has in this regard relied upon the decision of the Board of Officers who has made its assessment by relying upon Clause 62(G) of the General Conditions of Contract which provided that the decision of the Garrison Engineer would be final unless it was set aside in appeal. In the present case, the price was not fixed by the Garrison Engineer at all. Moreover, the Board of Officers had made an inquiry in the matter after three years and the arbitrator, in our opinion, rightly held that such an inquiry was of no consequence10. As regards Claims No. 20 and 23 relating to escalation in prices of material, in our opinion, the arbitrator has given his findings of fact and the High Court misread Clause 18 of the Special Conditions of Contract.