EXECUTIVE ENGINEER PANCHAYATHRAJ ENGINEERING DIVISION RAMANAGAR - 571511 Vs. M/S.SUDHA PARIMALA PLUMBING AND SANITARY WORKS ENGINEERS AND CONTRACTORS NO. 1297, 1-F MAIN ROAD 4TH CROSS, 2ND PHASE GIRINAGAR, BANGALORE - 560085 AND SRI T.G. RADHAKR

JUDGEMENT

(1.) THIS appeal is preferred against the judgment of the court below, dismissing the suit filed by plaintiff to set aside the supplementary award passed by II -respondent on 21.08.2008. The brief facts necessary for disposal of this appeal are as follows: - The appellant entrusted execution of work of "providing water supply to four villages in Channapatna Taluk, Bangalore Rural District (BNG -7) under IRWS & ES world bank assisted project Phase -II" to I -respondent. In terms of contract, I -respondent was expected to execute the work of providing water supply to four villages. The total cost of execution was a sum of Rs. 58,39,821/ - and time stipulated for completion of work was 18 months. The appellant communicated to I -respondent regarding execution of work at bid price of Rs. 58,39,821/ - and the same was accepted by respondent on 21.08.1998, on which day, performance bank guarantee of Rs. 2,91,991/ - was enclosed to agreement along with additional bank guarantee of Rs1,08,399/ -. The work order was issued in terms of letter dated 21.08.1998. In terms of contract, appellant was expected to give possession of sites of all villages to Contractor, within 15 days from the date of issue of notice to proceed with the works viz 21.08.1998. The sites of work near Byadarahalli, C.B. Doddi and Krishnapura, were handed over within stipulated time. However, site of work at Iggalur village was handed over on 09.06.1999. Therefore, dispute arose between parties. This apart, when work was being executed by I -respondent, appellant suggested certain alterations and additional works. Therefore, I -respondent was before Arbitrator and raised following claims: - 15.6. a. Award rates as requested by me and extend the time for executing the work by one year from the date of settlement, or in the alternative, b. Close the contract in "as is where is stage" and pay me i. all my pending bills ii. release my deposit amount and other amounts held in deposit and bank guarantees additional performance guarantee etc and 15.7. Pay 25% extra on the work already got executed from me at lower rates keeping me in the dark about the contemplating changes inspite of my early warning. That in case these changes had been indicated to me in the beginning, would have not executed any work at all and the department without regard to the facts of the case and examining the concerned issues has threatened and obtained an undertaking under coercion which by itself is unjust, unfair and illegal. Hence he cannot standby such a forced undertaking.

(2.) THE Arbitrator entered reference and passed an award by recording following findings: - I. Both parties were responsible for breach of contract. II. The work spot of Iggalur village was not handed over on time, so also working drawings and designs were not handed over to I -respondent on time. III. In view of failure of appellant, I -respondent could not execute work at Iggalur village, which constituted major component of contract work amounting to Rs. 22,00,000/ - to Rs. 26,00,000/ -, out of total contract work of Rs. 58,39,821/ - and this is compensation event in terms of clause 44.1(c) of section 3 of conditions of contract. The award passed by Arbitrator on 09.03.2000 reads thus: - 23.1.2. Therefore it is held that there has been breaches of contract conditions on both sides but breaches of the contract conditions by the respondents have seriously vitiated the contract and fully responsible for slow progress of the work. Claims for allowing higher rates based on prevailing prices and granting extension of time to the claimants are rejected. 23.2. Claimants request that the work done to be finalised in "As is where is condition" is accepted. Payment for materials, made at 75% m or at part rate at present shall be made at full rates worked out on the basis of rate analysis. The claimants shall act responsibly and hand over all the materials rightfully owned by the Employer within 15 days of the date of this award. 23.3. The claim for payment of 25% extra rates for work done in other villages is rejected, as no evidence substantiating the claims was made before the Adjudicator / arbitrator. 23.4. Liquidated damages recovered, security deposit performance guarantee additional performance guarantee shall be released forthwith. 23.5. Compensation claimed for Iggalur "Work at 20% amounting to R.26,79,394/ - and interest @ 24% from 01.10.98 upto the date of payment are rejected as their claims are not based on any agreemental stipulations. 23.6. The claimants have advanced arguments (Ex. C - 22) that they could have achieved a progress of Rs. 58 lakhs during the contract period they have been able to achieve only Rs. 20 lakhs; they have suffered a productivity loss of nearly Rs. 38 lakhs due to respondents omission and commissions; even at the minimum profit of 15% and overhead charges of 15% they have suffered losses to the extent of nearly Rs. 12.9 lakhs for no fault on their part and therefore they need to be compensated to the extent of Rs. 12.9 lakhs along with 24% interest. This claim is also rejected. 23.7. It is also directed that finalisation of works already carried out, refund of liquidated damages, performance guarantees, withheld amount etc shall be effected within 30 days of this Award dated 09.03.2000 failing which the respondents shall pay simple interest @ 18% per annum from the date it because due till the payment is made. Against the award dated 09.03.2000 (hereinafter referred as 'first award'), I -respondent was before trial court in A.S. No. 43/2000. The appellant entered appearance in A.S. No. 43/2000 and contested the case. On 06.09.2007, the learned trial Judge passed the order under Section 34 of Arbitration and Conciliation Act (for short, 'the Act'), operative portion of which reads thus: - Though the award passed by the defendant no.2, the learned Arbitrator is confirmed, it is remanded back to the learned Arbitrator to work out the exact amount of compensation and the payments, which the plaintiff is entitled to from defendant no. 1. Thereafter, supplementary award (which should have been termed as modified award) was made on 21.08.2008. In the supplementary award, Arbitrator has classified payments due by appellant to I -respondent under the caption "payments due to claimant -respondent (other than compensation) and "amount of compensation awarded to claimant on account of breach of contract by appellant". The payments due to claimant (Contractor) (other than compensation) are stated thus: - <FRM>JUDGEMENT_1981_TLKAR0_2012.html</FRM>

(4.) <FRM>JUDGEMENT_1981_TLKAR0_2012(2).html</FRM> Under caption "amount of compensation awarded to claimant -contractor on account of breach of contract by appellant -defendant", Arbitrator awarded a sum of Rs. 3,83,654/ - towards infructuous overhead expenses and a similar amount of Rs. 3,83,654/ - towards loss of profit. Thereafter, appellant was before trial court in A.S. No. 8/2009. The learned Judge in terms of judgment dated 01.02.2011, dismissed the suit holding that appellant has failed to make out grounds to set aside supplementary award dated 21.08.2008. Therefore, appellant is before this court. 4. I have heard learned Additional Government Advocate for State and learned counsel for I -respondent. 5. The learned Additional Government Advocate has made following submissions: - I. The Arbitrator while passing the impugned supplementary award has ignored the order dated 06.09.2007, passed by trial court in A.S. No. 43/2000, wherein the matter was remanded to Arbitrator to work out the exact amount of compensation payable on compensation event and payments, which plaintiff is entitled to from I -defendant (appellant). II. The Arbitrator should have determined compensation only in respect of compensation event viz delay in handing over execution work site at Iggalur Village due to which work could not be executed by I -respondent and Arbitrator should have determined the amount payable to Contractor towards work done by I -respondent -contractor, in terms of para 23.2 of the award dated 21.08.2008, which reads thus: - 23.2. Claimants request that the work done to be finalised in "As is where is condition" is accepted. Payment for materials, made at 75% m or at part rate at present shall be made at full rates worked out on the basis of rate analysis. The claimants shall act responsibly and hand over all the materials rightfully owned by the Employer within 15 days of the date of this award. III. The Arbitrator has reopened entire dispute and made supplementary award by setting aside the findings recorded in first award dated 09.03.2000. IV. The Arbitrator has erroneously held that final bill prepared by M/s. Globe Consultants, is contrary to terms of contract. The Arbitrator has determined payments due to claimant -Contractor (other than compensation), without there being any evidence. The Arbitrator has determined compensation payable to I -respondent -contractor for Iggalur work under two captions viz "loss due to infructuous overhead expenses" and "loss of profit". This is contrary to the findings recorded in original award dated 09.03.2000 in paragraphs 23.5 & 23.6, reading as hereunder: - 23.5. Compensation claimed for Iggalur "Work at 20% amounting to Rs. 26,79,394/ - and interest @ 24% from 01.10.98 upto the date of payment are rejected as their claims are not based on any agreemental stipulations. 23.6. The claimants have advanced arguments (Ex.C -22) that they could have achieved a progress of Rs. 58 lakhs during the contract period they have been able to achieve only Rs. 20 lakhs; they have suffered a productivity loss of nearly Rs. 38 lakhs due to respondents omission and commissions; even at the minimum profit of 15% and overhead charges of 15% they have suffered losses to the extent of nearly Rs. 12.9 lakhs for no fault on their part and therefore they need to be compensated to the extent of Rs. 12.9 lakhs along with 24% interest. This claim is also rejected. V. The Arbitrator having rejected the claim for compensation in original award dated 09.03.2000 should not have awarded the same under the guise of determining compensation in respect of "compensation events". VI. The learned trial Judge, without considering all these material aspects by referring to certain judgments of Supreme Court has held that the court cannot interfere with the supplementary award. 6. The learned counsel for I -respondent, relying on following decisions: - I. State of Orissa and Another Vs. Kalinga Construction Co. (P) Ltd., AIR 1971 SC 1646 II. ILR 2011 KAR 3051 (in the case of Union of India, Telecom Civil Division No. II Vs. M/s. Nabin Designers and Constructors (P) Ltd.) III. J.G. Engineers Pvt. Ltd. Vs. Union of India (UOI) and Another, AIR 2011 SC 2477 IV. State of U.P. Vs. Allied Constructions, (2003) 51 BLJR 1819 V. AIR 2007 (NOC) 381 (Mad) (in the case of N. Srinivasulu Reddy Vs. The Southern Railway, Chennai & Ors.) has made following submissions: - I. In a proceeding to set aside the award, the court cannot sit in appeal over award by re -appreciating the evidence and cannot express its view to hold that conclusions arrived at by Arbitrator are wrong. II. The courts can interfere with the award only if there is lack or want of jurisdiction or violation of principles of natural justice. III. The construction of contract is a matter within the jurisdiction of Arbitrator, unless one or the other conditions under Section 30 of the Act is satisfied, the award cannot be set aside. The award cannot be questioned on the ground of errors on the face of the award, even if it contains no reasons.