STATE OF CHHATTISGARH Vs. BRIJMOHAN AGRAWAL

JUDGEMENT

(1.) This appeal has been preferred by the State/Appellants under Sec. 37 of the Arbitration and Conciliation Act, 1996 (for short 'the AC Act') being aggrieved by the order dtd. 1/1/2016, passed by learned District Judge, Ambikapur, District Surguja, Chhattisgarh, passed in Miscellaneous Civil Case No.52/2014, whereby the application preferred by the Appellants/State under Sec. 34 of the AC Act has been rejected and the award dtd. 7/9/2014 passed by learned sole Arbitrator retired Justice Shri L.C. Bhadoo in Arbitration Case relating to MCC No.52/2014 has been affirmed.

(2.) Facts of the case are that the State through the Public Works Department, National Highway had floated a tender for widening work in kilometer 401 to 422 i.e. reconstruction of Culvert in Katni-Gumla National Highway 78. The Respondent participated and submitted its bid and was the successful bidder. On 17/4/2008, the work order was issued in favour of the Respondent and as per the terms and conditions of the agreement, period of the contract was of 12 months including the Rainy Season. The work programme was to be submitted within 21 days after receiving the acceptance, but the Respondent did not submit any work program within stipulated time. After receiving work order, it is the obligation of the Respondent to start the work on the very next day. But, the Respondent did not start the work, therefore, the Appellant no.3 had issued several letters to the Respondent but the Respondent did not start the work then the Appellant No.2 issued show cause notices dtd. 22/10/2008, 12/11/2008 and 17,11,2008 then also the Respondent did not report any progress of the work. Ultimately, the Appellant No.2 terminated the contract vide its order dtd. 28/11/2008 (Annexure A-5). After termination of the contract, the Respondent submitted an application for revocation of termination of contract on 28/11/2008 (Annexure A-6). The Chief Engineer, Public Works Department, National Highway Division, Raipur vide its order dtd. 24/1/2009 (Annexure A-7) revoked the termination of the contract in public interest. After revocation of the contract, the Respondent again failed to show sufficient progress of work and, therefore, several letters were issued to the Respondent but, he failed to perform the contract in doing so. According to Clause 59.1 of the contract agreement, the State/Appellants had issued final show cause notice dtd. 24/10/2009 (Annexure A-10) to the Respondent. After issuance of show cause notice, the Respondent for the first time on 31/10/2009 raised the issue of redesign and working parameters which was raised only to seek extension of time. Vide order dtd. 1/12/2009, the Appellants requested the Respondent to remain present at the site on 7/12/2009 for final measurement, however neither the Respondent nor any of its agent were present on site on the said date. Finally, vide order dtd. 31/12/2009 (Annexure A-13), the contract of the Respondent was terminated in accordance with the relevant provisions of the contract agreement. The Appellants again offered another opportunity to the Respondent to remain present on 19/1/2010 for final measurement, but on 19/1/2010 also, the Respondent was not present. Therefore, the Appellants had completed the measurement on 20/1/2010 and recorded the same in the measurement book and informed the Respondent about the measurement on 1/5/2010 and 13/7/2010 respectively. As per Clause 24 and 25 of conditions of contract agreement, the Respondent ought to have approached the Dispute Review Expert (DRE) within 14 days from the decision of the Appellants. However, the Respondent approached the DRE and the DRE gave its decision on 19/8/2010 (Annexure A-15) stating that 'the case was fixed for hearing on 28/7/2010 but, on the said date, the Respondent was not present, therefore, the case was dismissed'. Thereafter, the Respondent preferred Miscellaneous Civil Case under Sec. 11 (6) of the AC Act for appointment of sole Arbitrator before this Court. This Court vide its order dtd. 20/9/2013 (Annexure A-17) allowed the prayer of the Respondent and appointed former Justice Shri L.C. Bhadoo as sole Arbitrator. The Arbitrator vide its arbitral award dtd. 7/9/2014 (Annexure A-18) passed an award in favour of the Respondent, the State/Appellants contested in the said arbitration proceedings and filed their counter claim. Being aggrieved by the award dtd. 7/9/2014, passed by learned Arbitrator, former Justice Shri L.C. Bhadoo, the State/Appellants had preferred an application under Sec. 34 of the AC Act before the learned District Judge Ambikapur which was rejected by the learned District Judge vide its impugned order dtd. 1/1/2016 passed in Miscellaneous Civil Case No. 52/2014 and affirmed the arbitral award passed by the learned Arbitrator. Hence, this appeal.

(3.) Learned counsel appearing for the State submits that learned District Judge has failed to appreciate that in the contract agreement, time frame for completion of work was essential but the Respondent despite granting 5 ' months extension of time, failed to complete the work and has completed only 13.43% of work till 17/5/2009. He further submitted that the learned District Judge also failed to consider this fact that while awarding the entire amount by the learned Arbitrator, he is failed to consider various deductions totaling to Rs.15,09,625.00. The specific ground number 25 in the memo of application under Sec. 34 of the AC Act which has been raised by the Appellant/State but without considering the same, the learned District Judge dismissed the application. It is further submitted by the Counsel that the learned District Judge also failed to consider the fact that the learned Arbitrator has committed irregularities in granting Rs.12,00,000.00 which was the amount of performance guarantee. Since, the Respondent failed to complete the work despite of extension of time, therefore, this amount was rightly withheld by the Appellant/State. Further, learned District Judge also failed to consider the fact that the learned Arbitrator committed irregularities in awarding Rs.56,85,000.00 towards the head anticipated loss on income. Since, the Respondent himself has not performed the entire contract and because of his fault, he could not get the profit on the award, therefore, loss of anticipated income cannot be awarded to the Respondent. Further, the amount of Rs.13,43,753.00 was also adjusted by the State as per the terms of the agreement but this fact has also not considered by the learned District Judge. It is further submitted by the Counsel that learned District Judge again failed to consider the fact that the learned Arbitrator has awarded rate of interest at very higher side which is not accordance with the terms of the contract and as per the Sec. 31(7)(B) of the AC Act. The learned Counsel lastly submitted that as the work alloted to the Respondent relates to construction of public road, therefore, it was the interest of the public but, this aspect has also not been considered by the learned District Judge while dealing with the issue.