STATE OF ORISSA Vs. LARSEN AND TOUBRO LTD

JUDGEMENT

(1.) This appeal is directed against the judgment dated 19-7-2003 passed by the learned District Judge, Khurda at Bhubaneswar in Arbitration M.J.C. No. 131 of 2002 dismissing the application filed by the appellants under Section 34 of the Arbitration and Conciliation Act, 1996 (hereafter referred to as 'the Act').

(2.) The Government of Orissa entrusted the respondent the work of strengthening and widening of Sambalpur-Rourkela Road (00 km. to 162.931 km). in three packages and the dispute arose in relation to Package No. S4 covered under Contract No. III/ 92-93/ABD/S 4 dated 30-9-1992. The value of the contract was Rs. 41,86,46,497/- and the work was to be completed within 48 months from the date of commencement with a clause for extension of time under certain eventualities. The said agreement contained an arbitration clause vide Clause No. 67.3. The work commenced on 28-10-1992 and as per the terms of the agreement it was required to be completed by 27-10-1996. Extension of time was granted for the respondent for completion of work on understanding that the respondent shall not claim any compensation for delay in completion of the work. The work was completed on 31-3-1997 and on 1-6-1997 the respondent issued a notice to the appellants claiming compensation for loss incurred by it on the ground that the said appellants did not fulfil their part of obligations and committed breach of contract by providing defective drawings, inaccurate survey, delay in cutting and removing standing trees as well as acquisition of lands. The appellants rejected the claim and processed the final bill. The final bill was signed on 23-9-98 under protest and the respondent received a sum of Rs, 44,08,12,410/- without prejudice to its claim. On 2-11-1998 the respondent invoked clause 67.3 of the agreement and gave notice to the appellant and appointed Sri Tathagat Roy as an Arbitrator from it's side. As per the terms of the Arbitration clause the appellant nominated one Sri G. K. Behera as an arbitrator from their side and the Ministry of Surface Transfer (Roads Wing), Government of India nominated Sri C. N. Ramdas as the Chairman of the Committee of Arbitrators. Before the Committee of Arbitrators claim petition was filed containing 16 items of claim. In course of hearing the claim Item No. 16 was withdrawn by the respondent. On consideration of materials placed before the Committee of Arbitrators, Claim Item Nos. 2, 4, 11 and 15 were rejected and Claim Item No. 1 was allowed whereas in respect of other items of claims were partly allowed and a total sum of Rs. 4,06,65,696 with pendente lite and future interest at the rate of 10% was granted.

(3.) Challenging the aforesaid award passed by the Committee of Arbitrators the appellants approached the learned District Judge, Khurda at Bhubaneswar in an application under Section 34 of the Act. Before the learned District Judge the award was challenged on the ground that the respondent having given an undertaking not to claim any compensation for delay in execution of the work, Claim Item No. 14 could not have been allowed by the Committee of Arbitrators. It was also contended that the award in respect of additional work under Claim Item Nos. 5 and 8 are hit under Clause 53.1, 53.2 and 53.3 of the agreement. This ground was also taken on the basis of the terms of the agreement that the respondent was required to give notice to the employer within 28 days after the event giving rise to the claims. The respondent took a stand that the undertaking not to claim compensation for delay in execution of the work was taken under duress and the same having been accepted by the Committee of Arbitrators there is no scope for the Court to interfere. The learned District Judge on consideration of the rival contentions of both the parties, held that the award passed by the Committee of Arbitrators is not hit under sub-section (2) of Section 34 of the Act and accordingly dismissed the application.