LAWS(KER)-2018-3-874

SANJEEVA KOOSA BANGERA Vs. COCHIN INTERNATIONAL AIRPORT LTD

Decided On March 22, 2018
Sanjeeva Koosa Bangera Appellant
V/S
Cochin International Airport Ltd Respondents

JUDGEMENT

(1.) The respondent in O.P (Arb) No.589/2008 on the files of the District Court, Ernakulam is the appellant in this appeal, which is instituted under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act' for short). The respondent herein is the petitioner before the court below. By the impugned order, the District Court had partly interfered with the Award of the Arbitrator and set aside the direction issued to the respondent herein to make payment of an amount of Rs.12,87,361/- towards the 'price escalation' and a sum of Rs.7,54,444/- towards the 'refund of tax deducted in excess'. The appellant is challenging the decision of the District Court on various grounds.

(2.) A brief narration of the dispute will be beneficial. The appellant was the contractor for installation of the false ceiling and insulation works at the terminal of Cochin International Airport. On awarding the work, the respondent had executed the agreement on 6.12.1997. The period stipulated for completion of the work was on or before 17.8.1998. The work was actually completed on 30.9.1999. The period for completion of the work was extended without imposing any penalty on the appellant. The Final bill with respect to the contract was prepared on 20.3.2000, based on which payments were effected on 20.6.2000. Thereafter the appellant submitted a claim demanding further payments, on 5.11.2001, on three counts; (i) refund of balance security deposit (ii) repayment of excess sales tax deducted and (iii) payment of cost escalation based on provisions contained in the contract on the premise that the period of work was extended beyond 12 months. Interest was also claimed on these amounts. Since the respondent had refused to oblige the request, the appellant invoked the remedy of arbitration. A sole Arbitrator was appointed by this court in a petition filed by the appellant, under Section 11 of the Act. The sole Arbitrator had adjudicated the dispute and passed the Award on 26.12.2007, holding that the appellant is entitled to get, (i) refund of security deposit of Rs.3,71,716/- along with interest of Rs.64,056/-, (ii) Rs.7,54,444/- towards refund of alleged excess sales tax deducted and (iii) an amount of Rs.12,87,361/- towards price escalation. A counter claim filed by the respondent herein seeking damages on account of an alleged defect in the work and a consequential collapse of the false ceiling at the portion of one of the external domes, was rejected by the Arbitrator, on the finding that the alleged fault was occurred beyond the defect liability period.

(3.) The respondent herein had invoked Section 34 of the Act by approaching the court below seeking to set aside the award. While disposing the Original Petition the court below found that, the claim allowed by the Arbitrator with respect to refund of excess recovery of tax is not sustainable, because the deduction at the higher rate was only in accordance with the provisions contained in the Kerala General Sales Tax Act ('K.G.S.T Act', for short). It was found that the findings of the Arbitrator in this regard is opposed to provisions of the substantive law governing the issue and hence it is patently illegal. With respect to the claim for payment of price escalation, the court below found that the claim remained barred under clause 52.1 of the agreement, because the appellant was precluded from raising such a claim after submission of the final bill. However, the District Court upheld the Award to the extent it directed payment of the balance amount of security deposit along with interest. The court below had also upheld the findings of the Arbitrator in negativing the counter claim of the respondent, with respect to the defect liability. It is aggrieved by the findings of the court below in setting aside the award to the extent as mentioned above, the present appeal is instituted.