MESCO KALINGA STEELS LTD. Vs. BIJAYA KUMAR MOHAPATRA

JUDGEMENT

(1.) This is an appeal at the instance of the contesting respondent in the arbitration proceeding before Hon'ble Justice P.K. Mohanty (Retd.) and the appellants in the proceeding under Sec. 34 of the Arbitration & Conciliation Act, 1996 vide Arbitration Petition No. 04/14 of 2006/2012 on the file of District Judge, Jajpur. The respondent herein was the claimant before the Arbitration Authority and opposite party in the aforesaid arbitration petition. By filing this appeal, the appellants have challenged the order dated 15.7.2013 passed by the District Judge, Jajpur in Arbitration Petition No. 4/14 of 2006/2012 refusing to set aside the award dated 7.10.2005 passed by the sole Arbitrator in Arbitral Proceeding i.e. in M.J.C. No. 262 of 1997.

(2.) Short background involved in the case is that pursuant to tender call notice at the instance of the appellants, the respondent submitted his tender. Respondent's tender being accepted, construction of compound wall work for a stretch of one kilometer was awarded with contract worth of Rs. 43,91,475/ - with the voluntary offer of rebate at 5% by the respondent. As per the terms of the work order, the date of commencement was fixed to 1.8.1995 and date of completion was 31.8.1995. Further, the respondent was required to mobilize and make all arrangements within 7 days from the date of letter of intent. The nature of work was construction of a boundary wall of the plant covering one kilometer. The respondent constructed the boundary wall up to the length of 245 meters and could not continue thereafter for resistance of the local public on the pretext of land dispute. Consequently, the respondent on 17.8.1995 and 24.8.1995 intimated the Vice President of the appellant -company about the stoppage of work and local land problems. Respondent again intimated the appellant on 31.8.1995 that he could complete the construction up to the length of 245 meters and the work has been stopped for the reasons indicated hereinabove. Facing no improvement in resolving the problems, the appellants closed the contract on the premises that the construction of the boundary wall beyond 245 meters could not be executed by the respondent. In the meantime, the respondent submitted the 2nd R/A bill and final bill on 22.12.1995 (Ext. C/13). Subsequently, the respondent executed a "No Claim Certificate" dated 11.10.1997. After submission of the No Claim Certificate, the respondent issued a demand notice dated 28.1.1997 for final payment vide Ext. C/12. In response to the communications of the respondent, the appellants issued a letter dated 1.2.1997 (Ext. 9) undertaking therein that the amount payable was Rs. 39,746.70 paise. At this stage the respondent issued a notice under Sec. 11(4)(a) in terms of Clause 15.1 of the General Conditions of Contract for appointment of an Arbitrator by appointing a retired Judge of the High Court. Felling mutual consent of the parties in the matter of appointment of an Arbitrator, an application under Sec. 11 of the Arbitration & Conciliation Act, 1996 was moved before the High Court of Orissa vide M.J.C. No. 262 of 1997. Even though, there was already appointment of an Arbitrator, but in change of the nomination of Arbitrator because of unwillingness of the previous Arbitrator, the Hon'ble Chief Justice by order dated 27.6.2002 appointed Mrs. Justice A.K. Padhi, Former Judge of the Orissa High Court as the sole Arbitrator. After the appointment of Arbitrator by this Court, the respondent raised a claim of Rs. 36,15,128/ - with interest @ 8% per annum with effect from 1.9.1995 and also claimed cost of Rs. 2,00,000/ -. The present appellants as respondents before the Arbitrator filed defence statement. As per the appellants, the defence statement of theirs' was accepted by the Arbitrator, Mrs. Justice A.K. Padhi by order dated 21.12.2003. In a further development in the matter, after the evidence from the side of the present respondent got closed, Mrs. Justice A.K. Padhi resigned and by a further order of this Court, Justice P.K. Mohanty, (Retired) of the Orissa High Court was appointed as sole Arbitrator. As per the direction in the appointment of new Arbitrator, there was specific direction that the sole Arbitrator to continue in the proceeding from the stage of resignation of earlier Arbitrator. It is alleged by the appellants that the sole Arbitrator rejected the defence statement filed by the appellants on the ground that the defence statement has been verified and sworn to by one Sudhansu Sekhar Naik, who is not a party to the arbitration proceeding. It is alleged that the learned Arbitrator has failed to appreciate the fact that the respondents before the Arbitration Proceeding is a company and can be represented only by the authorized signatory of the Board of Directors, who was even then continuing as the General Manager of the Company and have been duly authorized by the Board of Directors to represent the Company and as such the defence statement was properly verified and accordingly the appellants claimed that the rejection of the defence statement is illegal. It is further alleged that the Arbitrator has reached at a wrong finding that the appellant No. 1 has violated the contractual obligation and did not cooperate the present respondent for which reason the contract was closed. The appellants further submitted that land was acquired by IDCO, a State Government Nodal Agency and the amount of compensation payable to the land losers had already been deposited with the IDCO and IDCO has already handed over the land to the extent of 1756 acres to the Company and as such there was no legal impediment on possession of the land by the Appellant No. 1 -Company, as such it cannot be held responsible for local issues created by some miscreants. Upon hearing the parties and after considering their respective case, learned Arbitrator by its award dated 7.10.2005 awarded an amount of Rs. 8,22,240/ - with interest @ 10% per annum from 24.9.1997 till the date of award along with cost of Rs. 75,000/ - Failing in its approach, the appellants filed an application under Sec. 34 of the Arbitration and Conciliation Act, 1996 before the District Judge, Cuttack by way of Arbitration Proceeding No. 4 of 2006 challenging the award of the sole Arbitrator. The case was subsequently transferred to Jajpur upon creation of the new district and renumbered there as Arbitration Proceeding No. 14 of 2012. The matter was heard and by final judgment dated 24.6.2013, by the impugned judgment, the Arbitration Case at the instance of the present appellants got rejected. Hence the appeal. This appeal is filed basically on the grounds as follows:

(3.) On his appearance, the respondent apart from filing his objection through Sri S.P. Misra, learned Senior Advocate contended that the respondent was a Special Class Contractor registered under the Orissa Public Works Department and following a tender call notice by the appellant No. 1, the respondent submitted his tender application. The tender was accepted with award of contract on a value of Rs. 43,91,475/ - and after joint agreement get a rebate of 5% and being accepted by both the parties, the respondent was issued with the Letter of Intent fixing the date of commencement and completion of work stated as 1.8.1995 and 31.8.1995 respectively. Though as per the term of contract/Letter of Intent, work was to commence from 1.8.1995, the present appellants committed serious delay in giving the lay out. Ultimately on 6.8.1995 when the respondent started execution of the work/foundation work, the work site got changed and subsequently the lay out was revised and therefore, requiring the respondent to transfer of machineries and construction materials from the old site to new site consequently shifting of the labourers also. It is after completion of the construction of boundary wall up to a length of 245 meters, the local people started creating obstruction at three places of alignment preventing the respondent from proceeding further with the contract work. Finding no other alternate with the respondent than to bring to the notice of the appellants the obstruction created by the local people. The respondent by letter dated 17.8.1995 brought this fact to the notice of the competent officer of the company and requested him either to resolve the issue immediately in order to enable him to proceed with the work and complete the same or else to extend the period of completion of work. There was no response till 24.8.1995. The respondent again wrote a letter to the competent officer of the Company indicating that a plot of land locally known as DAS -MNIA comes within the work site for which notice under Sec. 4 of the L.A. Act had been served and he is unable to proceed as the acquisition of land was not completed enclosing therein a separate sheet indicating the names and addresses of land owners creating obstruction. The respondent even went demanding to the extent of allotment of a different site for construction of their work, which request was not cared for. On 31.10.1995, the respondent issued another letter indicating therein that the work has come to a grinding halt after completion of the boundary wall up to a length of 245 meters and the main and machineries are sitting idle. On 9.12.2015, the respondent was communicated by the Associate Vice -President of the Company indicating their decision for closure of the contract upon realizing the reality and on coming to closure of contract, the respondent submitted final bill on 22.12.1995 which was followed with another letter dated 7.6.1996 referring to its earlier letter dated 6.4.1996 requesting the Company to clear the outstanding dues within 15 days. On 11.10.1996, the respondent met the General Manager, Project and by handing over a letter to him requested for early clearance of the balance dues. The response was that the bills cannot be settled unless the respondent submits a No Claim Certificate, the bills cannot be settled. The respondent was constrained to give a signature on the printed specimen of "No Objection Certificate". To the surprise of the respondent, dues were not even settled thereafter. Ultimately, after a long gap on 20.1.1997 the General Manager of the Company issued a letter making therein reference of varieties of payments in the matter and indicating therein that net amount to be paid to the respondent was Rs. 39,746.70 paise and assured the respondent for making the payment in due course, which compelled the respondent to issue a notice asking for appointment of an Arbitrator complying provision contained in Sec. 11(4)(a) of the Arbitration & Conciliation Act, 1996 following terms of Clause -15.(1) of the General Conditions of Contract. On failure of mutual appointment of an Arbitrator, the matter came up to Hon'ble High Court and ultimately, this High Court by order dated 27.6.2002 in modification of its earlier order appointed Mrs. Justice A.K. Padhi, a Former Judge of the High Court of Orissa as sole Arbitrator on consent of the parties. After filing of the claim and defence statement refused to continue Mrs. Justice A.K. Padhi, as an Arbitrator, hence, this High Court by a subsequent order appointed Hon'ble Mr. Justice P.K. Mohanty, a Retired Judge of this Court as the substituted Arbitrator. The respondent contended that on 11.2.2005 he produced before the Arbitrator the original claim statement and the consolidated claim statement along with Exts. 1 to 13, which had been returned to the respondent earlier. Mr. A.C. Das, learned Counsel appearing for the present appellants also filed the original defence statement which was also returned to him for his previous undertaking to file the consolidated defence statement and the list of Exts. with other documents.