Y.Sleebachen Etc vs Superintending Engineer Wro/Pwd & Anr

3. It so happened that the appellant, who is an Engineering Contractor, was awarded three contracts by the respondents herein particulars whereof are as under:

4. Certain disputes and differences arose between the parties relating to all these contracts. According to the appellant, delays were caused by the Department in handing over the sites where the works were to be undertaken by the appellant and in addition, various other breaches were committed by the Department in not fulfilling its obligations under the three contracts. The appellant raised his claims in respect of all the three contracts. The Department appointed Mr. Velu as the Arbitrator in one case and Mr. S. Krishnamurthy was appointed as Arbitrator in other two cases. After adjudication of the disputes, awards were passed in all the three cases to the following effect:-

5. The respondent No.1 challenged all the awards by filing three petitions under Section 34 of the Act, seeking to set aside these awards. The appellant filed his replies contesting those petitions. All these petitions were listed before the Principal District Judge, Tirunelveli. While these proceedings were pending before the Principal District Judge, the Government Public Works Department issued letter dated 02.12.2008 whereby it directed its officers to negotiate with the appellant for settlement of arbitration awards amount. Accordingly, there were meetings between the parties on 19.12.2008 and 09.01.2009 to negotiate out of court settlement. Officials, including the Superintending Engineer, had discussions with the appellant, wherein the appellant was requested to reduce 40% of the principal awarded amount for all the three works covered under the independent arbitration Awards. The contractor instead, came forward to reduce 40% of the interest accrued on the total awarded amount for all the three works, particularly with reference to interest in respect of the three works, which worked out to 12.81% towards the principal award amount covered under the three Awards. However, the Superintending Engineer insisted for further reduction of the principal amount. Ultimately in the meeting held in the Chamber of the Superintending Engineer on 9.1.2009, the contractor was asked to offer 10% reduction in the principal award amount, besides 40% offer made on the interest amount accrued. The appellant, however, agreed to only 5% reduction in the principal amount, in addition to 40% reduction in the interest amount. Because of the aforesaid position taken by the parties, the negotiation could not be fructified and fell through. The Principal Secretary to the Government wrote a letter dated 9.1.2009 to the officials concerned, directing them to pursue the applications under Section 34 of the Act in respect of the three awards pending before the Court.

6. The matters, however, lingered on in the Courts for some reason or the other. When they were listed in the Court on 09.04.2011, the appellant came forward with a memorandum to the effect that, apart from the offer made during the negotiations on 09.01.2009 for foregoing the interest at 40%, he was also willing to forgo further accrued interest on the award amount after 09.01.2009. This offer appeared to be fair to the Government Pleader. He made a written endorsement on the said memorandum, on behalf of the Government that it had no objection for this memo. As a result thereof, acting on this compromise, the petitions were partly allowed and the awards of the Arbitrators were modified whereby from the award amount, 5% reduction on the principal amount was ordered. Further apart from 40% reduction on the interest awarded till 09.01.2009; total interest accruing beyond that period, was also waived. However, from the date of award i.e. 25.04.2006 to 09.01.2009, interest was calculated at 18% p.a. from where the reduction of 40 % in interest amount was granted.

7. To recapitulate the salient facts, the compromise talks took place between the parties at the instance of the respondents themselves expressing their intention to explore the possibility of settlement as per its letter dated 02.12.2008. Certain meetings were held for this purpose. The appellant had agreed to forgo substantial part of interest and also 5% of the principal amount. The Superintending Engineer, however, wanted 10% reduction in the principal sums awarded in favour of the appellant. It is because of this difference the settlement talks failed at that time and the Government decided to pursue the applications under Section 34 of the Act on merits. However, when the matter came up before the District Judge on 9.4.2011, the appellant agreed to forgo the entire interest accrued after 09.01.2009 as well, in addition to the concessions which were already given by the appellant and recorded above. When the Government Pleader was confronted with this offer given by the appellant, he took a view that it was a very fair offer and made an endorsement on the offer itself, to the effect that the Government had no objection for accepting the same. This resulted in modifying the award by the District Judge in terms of agreed conditions, vide his orders dated 28.04.2011 in all the three petitions.

21. Here is a case where arbitral awards were given in favour of the appellant way back in April and June, 2006. However, the appellant is yet to reap the benefits thereof. Respondent No.1 challenged these awards by filing applications under Section 34 of the Act. When these proceedings were pending, the respondents themselves came out with the proposal to negotiate and try to amicably settle the matters, keeping in view the otherwise laudable decision taken by PWD to settle such disputes as is clear from the letter dated 02.08.2008. Negotiations took place thereafter. Though the appellant had agreed to forgo substantial part of the award in terms of interest etc., the talks failed at that time as the respondents wanted 10% reduction in the principal amount as well, whereas the appellant was conceding to give up only 5% of the principal amount. Be, as it may, the appellant agreed to give further concessions in the Court when the matter came on 09.04.2011 vide his 3 memos dated 6.4.2011 filed on that date. These memos show that the appellant had given the said offer due to the acute financial crisis he was suffering from as he wanted to satisfy his creditors including his bankers to whom he owed substantial amounts. Alas, even after the settlement was fructified, resulting into passing of agreed orders, it has resulted into legal tangle even thereafter, and the appellant has not been able to get even the said agreed amount. We are, therefore, of the opinion that the High Court was not justified in setting aside the consent decree passed by the learned District Judge. Such a consent decree operates as an estoppel and was binding on the parties from which the respondents could not wriggle out by taking an after thought plea that its lawyer was not authorised to enter into such a settlement.

Provided that any such appearance shall, if the court so directs, be made by the party in person.”

22. These appeals are accordingly allowed. The impugned judgment of the High Court is set aside and the consent decrees dated 28.04.2011 passed by the trial court are restored. The appellant shall also be entitled to costs which is quantified at Rs.25,000/- in each of these appeals.

August 4, 2014.