UNION OF INDIA Vs. TAPAN KUMAR ROY

JUDGEMENT

(1.) The present challenge is to an Award dated 25th February, 2010 passed by a learned Sole Arbitrator by which eight out of ten claims of the respondent (claimant before the Arbitrator) were allowed and amounts were awarded to the respondent under each of the claims.

(2.) The petitioner Railways entered into a contract with the respondent on 30th September, 2002 for undertaking several civil works. The work was awarded at a total cost of Rs.27,17,123.71/-. The original date of completion of the work as per the letter of acceptance (issued by the petitioners to the respondent on 2nd August, 2002) was 1st February, 2003. It is the petitioner's case that several extensions had to be given to the respondent for completing the work under the General Conditions of Contract, 2001 which formed part and parcel of the agreement executed between the parties. It is also the petitioner's case that the respondent was paid until the eighth on-account bill of Rs.19,64,769.40/- and only the ninth on-account of bill of Rs. 4,22,259/- remained outstanding. The respondent referred the dispute to the Deputy Chief Mechanical Engineer (Safety), Head Quarters, Eastern Railway who was appointed by the General Manager, Eastern Railway as the Sole Arbitrator on 14th July, 2009. According to the petitioner, the Measurement Book as well as the Site Register were produced before the learned Sole Arbitrator and were treated as part of the records in the proceedings. Of the ten claims, eight were awarded in favour of the respondent and the petitioners have paid the amounts awarded in respect of claim nos.1, 2 and 3 to the respondent. Therefore, the claims which are presently before court are 6, 7, 8, 9 and 10.

(3.) Learned counsel for the petitioner submits that Claim no.6, which was on account of labour work of Permanent Way/Contract, Barasat could not have been awarded to the respondent since there was no record of the alleged non- payment of labour works in the Measurement Book and the claim made against such work was also not in terms of the Schedule of the agreement between the parties. Claim no.7 against which an amount of Rs.43,717/- was awarded was claimed on account of item pairing and butting of panel rail of 260m. Counsel contends that the final record of the work done by the respondent/contract would always be found in the Measurement Book, which was prepared in the presence of the parties and in the absence of which the Arbitrator could not have awarded the amount claimed. With regard to Claim no.8 in connection with which an amount of Rs.87,433/- claimed on account of inserting panel rail of 39 to 130m was awarded is liable to be set aside. There is no record of the said work in the Measurement Book. Counsel also opposes the Award of interest at 8% per annum on the total sum of Rs.8,31,601/- as being contrary to the provisions of The Arbitration and Conciliation Act, 1996. Counsel submits that the Arbitrator could not have granted the interest for pre-reference period as well as interest pendente lite. Counsel relies on Clauses 16(3) and 64(5) of the General Conditions of Contract, 2001 which prohibits payment of interest for any period till the date of making of the Award. Claim no.10 under which the respondent was awarded Rs.50,000/- is assailed on the grounds of breach of principles of natural justice. Learned counsel for the petitioner has relied on M/S. Rastriya Chemicals and Fertilizers Ltd. Vs. M/S. Chowgule Brothers reported in AIR 2010 SC 3543 on the point of interest. Counsel further cites a decision of the Supreme Court in Sree Kamatchi Amman Constructions Vs. Divisional Railway Manager (Works), Palghat reported in (2010)8 SCC 767 as well of the Division Bench of this court passed in A.P.423 of 2009 (Union of India Vs. A.K. Mukherjee) which held that interest pendent lite cannot be granted if the agreement between the parties prohibits the same.