THE UNION OF INDIA REP., BY THE GENERAL MANAGER, SOUTHERN RAILWAY, CHENNAI AND OTHERS Vs. M/S. APPACHI GOUNDER AND SONS

JUDGEMENT

(1.) This petition has been filed under section 34 of the Arbitration and Conciliation Act, 1996, (hereinafter referred to as the "Act"), to set aside the award passed by the Arbitral Tribunal, dated 16.01.2010. The first respondent is the claimant/contractor, who was awarded the contract for the Strengthening /extension/re-construction of 23 minor bridges between Rajapalayam and Sankaran Koil Stations. Letter of acceptance was issued on 10.10.2000, and the parties entered into an agreement on 07.03.2001, in agreement No.73/CN/2001. The contract was to be completed within six months i.e., on or before 09.04.2001 with the total value of Rs. 1,38,23,688/-. The respondent contractor made a claim for payment of extra rates and other reliefs, which were not considered and the contractor raised a dispute and requested the matter for being referred for arbitration. However, it appears that the Railway Administration did not immediately appoint an Arbitrator and O.P.No.90 of 2007, was filed under Section 11 of the Act and orders were passed appointing the Hon'ble Arbitrator to adjudicate upon the disputes. The Arbitral Tribunal allowed the claim Nos. 1, 4, 5, 6, 7, 8, 11, 12 and 13. This award is put to challenge in this Petition.

(2.) Mr. V. Radha Krishnan learned Senior counsel assisted by Mr. V.G. Suresh Kumar, learned counsel for the Railway Administration contended that the major part of the award is granting extra rates for the works, which were performed by the contractor and the award is wholly unsustainable, since the contract does not provide for payment of extra rates, if the work is performed beyond the originally stipulated period. In this regard, the learned counsel referred to clauses 17(2) and (3) of the General Conditions of Contract (GCC) and submitted that there can be no claim for extra rates or escalation. Further, it is submitted that the contractor had signed 11 rider agreements agreeing to work at the same rates and the parties being bound by the terms of the contract, the Arbitral Tribunal cannot go beyond the contract. Therefore, it is the submission that when clauses 17(2)(3) of the GCC covers extra rates also coupled with rider agreement executed by the contractor, the award passed by the Arbitral Tribunal requires interference. Further, it is submitted that though the contractor made request for extra rates in terms of the letters Exhibits C-31 and C-70, the same were not accepted by the Railway Administration and after being informed that extra rates would not be paid, the contractor continued and completed the work. In this regard, the learned Senior counsel placed reliance on the decision in the case of Sree Kamatchi Amman Constructions, v. The Divisional Railway Manager-Works, Palghat Division (DB), reported in 2007 (5) CTC 17 , which was affirmed by the Hon'ble Supreme Court in (2010) 8 SCC 767. It is further submitted that in respect of claim Nos.5,7,8&9, the contractor having specifically accepted not to claim any extra rates, cannot maintain a claim for alleged idling. It is submitted that though the period of contract commenced on 10.10.2000, the contractor could not complete the works within the due data, due to delay in furnishing of drawings which was approved, according to the contractor only in February 2010 and further when it is the contention of the contractor that only in September 2002, the programme of work was discussed and speed restriction was imposed only during December 2002, the contention of the contractor that the men and machinery were idling from October 2000 till December 2002 for a period of 22 months is unbelievable and no prudent contractor will ever make ready men and machinery when he has clear knowledge that the work under the contract could not be commenced due to the requirements of drawings and line-block not fulfilled. Further, it is submitted that the Arbitral Tribunal has awarded charges for idling for a period of 43 months, when the total period during which the contract has been performed itself is 43 months. Therefore, the very basis for calculating the alleged idling period is unsustainable. With regard to the award pertaining to loss of profit, it is submitted that the contractor had to establish prolongation and cost loss and that he could not utilise its men and machinery for other works and since the contractor failed to prove the same, no award could have been passed towards loss of profit. In support of such contention, reliance was placed on the decision in the case of Bharat Coking Coal Ltd., v. L.K.Ahuja reported in (2004) 5 SCC 109 . Further, it is submitted that the interest awarded by the Arbitral Tribunal is excessive. In support of such plea, reliance was placed on the decision in the case of Mahanadi Coalfields Limited and Ors., v. Dhansar Engineering Company Private Ltd. and Anr., reported in (2016) 10 SCC 571 . With regard to the plea of excess rates, the learned Senior counsel referred to the decision of the Hon'ble Supreme Court in the case of Rashtriya Chemicals and Fertilizers Limited v. Chowgule Brothers and Ors., reported in (2010) 8 SCC 563 ; Bass Constructions v. The Board of Trustees of the Port of Madras and Ors., reported in (2016) 8 MLJ 501 ; Rajasthan State Mines and Minerals Ltd., v. Eastern Engineering Enterprises and Anr.,reported in (1999) 9 SCC 283 ; W.B. State Warehousing Corporation and Anr., v. Sushil Kumar Kayan and Ors., reported in (2002) 5 SCC 679 ; Ramnath International Construction (P) Ltd., v. Union of India reported in (2007) 2 SCC 453 .

(3.) Mr. Amalaraj S. Penkilapatti, learned counsel for the contractor submitted that in the present petition, the Railways have not challenged the award granted as against claim Nos.1,2,3,9,10&14. Further, in this petition, Railways have raised only six grounds and none of the grounds relate to the award under claim No.9, for damages towards cost of idling and under utilising of machinery, details etc. Therefore, at this stage, during the course of oral submission, the petitioner cannot challenge that portion of the award. Further, it is submitted that in ground No.1 of the petition, the petitioner has raised a contention referring to the rider agreement and clause 17(2) of the GCC and such plea was not raised before the Arbitral Tribunal and therefore, the petitioner should not be permitted to raise such a plea before this Court for the first time. It is further submitted that the Court cannot reappraise the exhaustive evidence and the finding rendered by the Arbitral Tribunal as regards these claims. With regard to the plea that the petitioner having signed rider agreement cannot claim for extra rates, it is submitted that the contractor did not furnish any "no claim certificate" nor the railways issued certificate of full and final discharge and the Arbitral Tribunal has recorded that the contractor completed the work on 31.05.2004 and the Railways started writing letters to the contractor only after the Railways had received the Court notice in the petition filed by the contractor under Section 11 of the Act. Further, the final bill itself was prepared by the Railway Administration only during the arbitration proceedings. Further, it is submitted that the contractor has never given up his claim for damages in claim Nos.4,5,7&8, as the Railways had prepared its final variation statement only after the receipt of the notice in O.P.No.90 of 2007. That the rider agreements do not extinguish the contractor's claim for damages and it does not mention about damages for the losses suffered by the contractor on account of the default and delay on the part of the Railways.