ARVIND CONSTRUCTION COMPANY LIMITED Vs. ENGINEERING PROJECTS

JUDGEMENT

(1.) OBJECTIONS to the award dated 31.8.90 made by the Arbitrator, Shri Prakash Narain, former Chief Justice, in relation to a contract dated 5.5.80 had been filed by respondent. The respondent has challenged the award on many grounds. Shri V.R.Reddy, learned Additional Solicitor General who appeared for respondent, at the outset argued that the award was a non-speaking award and respondent is a Public Sector Undertaking and, therefore, learned Arbitrator was under a bonded legal Obligation to make a speaking award. Mr.Reddy has further contended that the Arbitrator has committed legal misconduct by giving a lump sum award and not giving claim-wise award.

(2.) MR.Reddy vehemently contended that the award in favour of the petitioner is disproportionately high having regard to the totality of the circumstances. He has submitted that petitioner had claimed large amount towards actual expenses alleged to have been incurred by the petitioner in foreign currency and there was no evidence before the Arbitrator as to how petitioner received such foreign exchange. Moreover, in the absence of any law permitting the petitioner to incur such expenditure without obtaining permission from the Reserve Bank of India. Petitioner has based its claims on such expenses and in spite of being pointed out to the learned Arbitrator the award of such amount makes the award bad on account of legal misconduct as well as error of jurisdiction. MR.Reddy has argued that disproportionate nature of award is evident as the value of work admittedly done by the petitioner was approximately. Iraqi Dinar (in short "I.D.") 6,93,971.862 and the amount payable as per the contract on executed work was I.D. 6,53,799.563 but the total amount paid to the petitioner had been I.D.12,33,136.690. Interest on borrowed sum has also been paid by the respondent and award has further made the respondent to pay a sum of I.D.2,96,403.260. The total claim of the petitioner before the Arbitrator was I.D.15,57,169.980. MR.Reddy has argued that claim No.6 was the claim payable by the respondent on account of revision of rates for the work done beyond the contractual date of completion i.e. 14.5.1981 for I.D.5,15,338 and claim No 8 of the petitioner being claim for damages on account of estimated loss of profits at the rate of I.D. 6,500 per month beyond the contractual date i.e.14.5.1981 for a period of 5 years for I.D. I.D.3,90,000.00 in fact amounts to duplication and can also be in alternative. MR.Reddy has argued that the claim No.6 on account of revision of rates was beyond the contract agreement and as such learned Arbitrator had no jurisdiction to adjudicate upon the said claim. More so, in view of the fact that the contract with the petitioner was a labour contract and as such the question of revision of rates would not apply. In support of his arguments he has cited the case of M/s.Alopi Parshad and Sons V. UOI AIR 1960 SC 588 and Dhandasi Sahu V. State of Orissa (1990) 1 SCC 214 in which the Supreme Court held that I-

(3.) IN view of these documents learned counsel for the respondent has argued that the learned Arbitrator lost sight of these two important piece of documents. Learned counsel for the respondent has also argued that the Arbitrator has gone wrong in giving the finding that encashment of bank guarantee by the respondent was illegal. Respondent has also argued that the Arbitrator lost sight of Ex.D-107, a letter dated January 25,1992 wherein it was inter alia mentioned that ad hoc advances were paid to the petitioner over and above their running bills and for which the respondent was paying interest from 18% to 22%. and Ex.D-140, a letter dated 1.7.1980. Mr.Reddy has also placed reliance on the minutes of 5.12.1986 in support of his contention that the bank guarantee was encashed after the working group, wherein the petitioner was also a party, agreed for the same. When the working group had agreed that it had no objection to the respondent invoking the unconditional guarantee. He has stated that in view of the undertaking that the respondent will not invoke the guarantee without obtaining the approval of the working group the respondent had invoked the guarantee after the working group agreed in principle as stated above and, therefore, the finding of the Arbitrator on this part is contrary to the documents filed on record and thereby the Arbitrator has committed a legal misconduct. IN support of his arguments he has cited the cases of UOI V. M/s.Mehta Teja Singh and Co. AIR 1983 Delhi 297, M/s. Bombay Ammonia Pvt. Ltd. V. UOI AIR 1987 Delhi 148 and K.P.Poulose V. State of Kerala and anr. AIR 1975 SC 1259 wherein the Supreme Court held that -