KIRLOSKAR BROTHERS LIMITED REPRESENTED BY ITS DY GEN MANAGER (LEGAL) AND DY SECRETARY, G G PALEKAR Vs. CHAMP INFRASTRUCTURE PRIVATE LIMITED REPRESENTED BY ITS MANAGING DIRECTOR, MR M S BALASUBRAMANIAN AND JUSTICE MR S JAGADEESAN, ARBITRATOR RETIRED HIGH COURT JUDGE

JUDGEMENT

(1.) The petitioner has filed this O.P., under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act) to set aside the arbitral award of the arbitrator dated 17.12.2003 awarding a sum of Rs. 1,62,04,140/- together with interest at 9% from 15.9.1999 to the date of payment on the grounds of Section 34(2)(iv) of the Act and for costs.

(2.) The petitioner company is an expert in the field of electrical and mechanical engineering and the first respondent company are engaged in the business of execution of civil construction works.

(3.) The Government of Andhra Pradesh called for tenders in respect of Andhra Pradesh Irrigation Command Area Development Department Turnkey Project. In order to submit the tenders, both the petitioner and the 1st respondent entered into a Memorandum of Understanding (MoU) on 20.1.1999. As per the MoU, the petitioner would bid for both the projects and in the event of the works being awarded to the petitioner, the 1st respondent would be responsible for the entire civil construction for the projects including the supply of the materials plus the works related or connected with the civil construction required under the terms of the contract. As per the understanding, the 1st respondent was designated as the associate contractor of the petitioner and the terms and conditions of the contract between the petitioner and the Government of Andhra Pradesh was applicable to the 1st respondent on Back to Back basis. The tender submitted by the petitioner in respect of the two projects was accepted by the Government of Andhra Pradesh on 2.4.1999. On 22.4.99, the petitioner entered into a contract agreement with the Irrigation Department, Govt. of Andhra Pradesh and the date of agreement is reckoned as the date of commencement of the contract. The 1st respondent commenced the work on 22.4.99. On 30.4.99 the petitioner issued a Letter of Intent to the 1st respondent to proceed and complete the civil and allied work for a lump sum package of Rs. 7,74,74,626/-. The time schedule for the work was 7-1/2 months. The entire civil construction work in respect of the bridge was comprised of Hydraulic structures for which the key element was. the design and drawings of these structures. As per the terms of the contract agreement between the petitioner and the Andra Pradesh Government, the Government has to provide design and drawings for the 10 activities within 15 days of commencement of the contract period and all the designs and drawings were to be finalised before 30 days of commencement of any activity. The lst respondent claimed that the petitioner herein failed to issue approved designs and drawings as provided under the agreement. According to 1st respondent, the petitioner issued drawings only for 8.1% of the total contract from 26.5.1999 to 15.9.99. The 1st respondent also claimed that they executed certain works apart from the original contract. The 1st respondent also alleged that they engaged external consultants and submitted alternative designs and drawings for the construction of the approach bridge in stage.1 which was worth 45% of the total contract price and the final approval of drawings was not issued by the petitioner. But the petitioner used the drawings submitted by first respondent through another party to complete the construction without the concurrence of the 1st respondent. According to the the 1st respondent, the petitioner has not paid the amount due to them as per the terms of the contract. Therefore misunderstandings and disputes arose between the parties resulting in allegations and counter allegations. Finally the petitioner terminated the contract with the 1st respondent by letter dated 15.9.99 alleging slow progress of work. Hence the claim petition was filed by the 1st respondent before the 2nd respondent for a total claim of Rs. 3,99,22,559.43.