UNION OF INDIA Vs. ESS KAY CONSTRUCTION

JUDGEMENT

(1.) The present appeal has been filed under Sec. 37 of the Arbitration and Conciliation Act, 1996 (for short 'the Act of 1996') assailing the order passed by the Commercial Court dtd. 11/3/2025, whereby it rejected the objections raised by the appellant under Sec. 34 of the Act of 1996 against the award passed by the Arbitrator dtd. 20/12/2022.

(2.) Brief facts are that on 9/7/2018, one NIT was issued by the appellant-department for the work of providing electrical installations and the unit dormitory at JNV Pachpahar, District Jhalawar against the balance work. On 20/8/2018, an acceptance letter was issued by the appellant to the claimant to submit PG within ten days. An NOC from mining department was required and the estimated cost of the work was Rs.2,25,46,166.00 while the tendered amount was Rs.2,15,09,402.00. Work was to be completed within one year and the date of start of work was 4/9/2018. Thus, the same was required to be completed by 3/9/2019. The contract was rescinded by the competent authority on 20/6/2019. Thereafter, the contractor raised an issue invoking Clause 25 of the General Clauses of the Agreement which provides for adjudication of the dispute through Arbitrator. The competent authority vide letter dtd. 14/9/2021, appointed one Mr. Rajendra Kalla as Sole Arbitrator, whereafter, the Sole Arbitrator examined the claim and after giving an opportunity to the appellant to lead the requisite evidence, passed an order dtd. 20/12/2022 granting an award of sum of Rs.85,62,569.00plus interest. Aggrieved by the said award, the appellant preferred objections under Sec. 34 of the Act of 1996 and as noticed above, the same were rejected. Hence, the appellant preferred the instant appeal.

(3.) It is the submission of the learned counsel for the appellant that the learned Commercial Court has failed to consider the law as settled by the Hon'ble Supreme Court from time to time, especially, in the case of Kalanithi Maran Vs. Ajay Singh and Anr., 2024 SCC OnLine SC 1876 as well as in the case of Unibros Vs. All India Radio, 2023 SCC OnLine SC 1366 . With respect to examining the aspects in relation to non-arbitral issues, learned counsel has relied on Clause 25 to submit that if there was any grievance relating to any instructions or disregard of demand by the Superintending Engineer, the contractor was required to file an appeal to the Chief Engineer, who afforded an opportunity and passed an order, as per Clause 25(i), if the contractor is dissatisfied with the decision of the Chief Engineer, the contractor was required to give notice within 30 days from the receipt of the decision of the Chief Engineer for appointment of the Arbitrator. However, with regard to the issue as examined by the learned Arbitrator, no such process was adopted by the respondent and, therefore, the Arbitrator, who has been appointed by the Government, was not required to go into the said aspects. He further submits that Arbitrator has passed the award based upon the surmises and conjectures and the contract was rescinded merely on account of not following the time schedule. The opportunity was duly given and the Arbitrator ought to have considered the provisions of the general clauses relating to the aspects under Clause 3, wherein if there is a course adopted by the Engineer-in-charge as noticed, the contractor would have no claim for compensation for any loss. He further submits that learned Arbitrator as well as the Commercial Court have failed to consider that there was no occasion of granting damages for compensation.