Bharat Coking Coal Limited vs Annapurna Construction <BR> Annapurna Construction Vs Bharat Coking Coal Limited

Prasun Kumar Deb, J.—Both these cases have been heard analogously as the matter involved is same i.e. the same award is in question in both the appeal and the revision petition.

Miscellaneous Appeal No. 169 of 1995(R) has been filed against the judgment. dated 3.6.1995 passed in Title (Arbitration) Suit No. 109 of 1994 by the Subordinate Judge, 4th Court, Dhanbad, After the judgment was delivered in the abovementioned title (arbitration) suit, a petition was filed by the Plaintiff-Respondent i.e. M/s Annapurna Construction for modification of the judgment and decree with respect to payment of interest as contemplated u/s 29 of the Arbitration Act (the Act). That petition was disposed of vide order dated 12.12.1995 holding that the judgment and decree was challenged in the miscellaneous appeal. At that stage, the original Court should not interfere regarding the interest portion as claimed from the side of the Plaintiff-Respondent, hence against that order Civil Revision No. 12 of 1996(R) has been filed.

The Plaintiff filed an application u/s 20 of the Act for order of reference of the dispute appertaining to the construction of 140 numbers of hutments (120 numbers for staff hutments and 20 numbers for officers'' hutments). On the tender being accepted and agreement being arrived at between the Plaintiff-Respondent and the Defendant-Appellant, a dispute arose regarding payment as the-Defendant denied to make payment of the claims being raised from the side of the Plaintiff Respondent. After hearing both the parties, one Shri P. Banerjee was appointed as sole arbitrator on consent of both the parties and direction was given by the learned Court below to given a reasoned award adjudicating the claims and counter-claims of the parties. The time limit fixed by the Court expired and before expiry, the arbitrator sought for extension of time and on consent of both the parties, the time was extended to and ultimately award was passed with reasons thereof and several claims made for and on behalf of the Plaintiff-Respondent had been allowed and on filling of the award, a prayer was made from the side of the Plaintiff-Respondent to make the same award as a rule of the Court, but the Defendant-Appellant raised objection and filed a petition u/s 30 of the Act on the ground that the arbitrator has misdirected himself in the proceeding when he did not consider the counter-claim of the Defendant and also the documents filed on their behalf had not been considered in their proper perspective. It was further stated in the objection that the award as per the direction of the Court was not limited to the point of reference and hence the arbitrator exceeded his jurisdiction. A feeble plea was also made regarding the award being filed as time barred and as such the same cannot be made as rule of the Court. The learned Court below, on the basis of the pleading of the parties, framed the following issues:

(1) Whether the Arbitrator has mis-conducted himself or the proceedings?

(2) Whether there is error of law apparent on the basis of the Award?

(3) Whether the Award submitted by the learned Arbitrator is fit to be made Rule of the Court or is liable to be set aside?

(4) Whether the Plaintiff is entitled to the amount awarded?

(5) Whether the Plaintiff is entitled to get interest on the amount awarded?

Issue Nos. (1) to (4) were inter-related. The learned Court below decided issue Nos. (1) and (2) conjointly while issue Nos. (3) and (4) separately.

As I have mentioned earlier, the award given by the arbitrator is reasoned award as directed by the Court and there was submission on the part of the Defendant-Appellant before the learned Court below that the reasoning given in respect of separate claims are not proper and is subjected to scrutiny by the learned Court below. It is now a well settled principle of law that the Court does not sit as appellate Court to scrutinise the reasonableness of the award that too when the award is a reasoned one. Scrutinising of the reasonings given by the arbitrator cannot be made unless there is any error on fact or law on the face of it. The arbitrator has been selected by the parties and when that forum has been chosen, the parties have submitted to the jurisdiction of the arbitrator and abide by its decision. The arbitrator remains as a sole Judge of the quality as well as the quantity of the evidence and on consideration of the same, he is to give award either with reasons or without reasons. If reasons are given then it is well and good and if reasons are not given then also the award cannot be challenged on the ground of non-furnishing of reasons.

In the present case, as I have stated that the learned Arbitrator, as per direction of the Court, had submitted reasoned award and the reasonings were given in respect of the claims and counter-claims made. While giving the reasonings, whether the arbitrator has applied his mind or not would be revealed from the reasons given. Some reasons might not be found to be proper by the Court but for that ground the Court should not interfere with if the reasons are plausible ones as given by the arbitrator. Thus, on this score, the submission of Mr. M.M. Banerjee that the reasons given by the learned arbitrator are not proper have got no foundation and the learned Court below has rightly decided rejecting such objections from the side of the Defendant-Appellant.

The second ground was for non-consideration of the counter-claims made by the Defendant-Appellant. On perusal of the award and on scrutiny of the same, I could find that the arbitrator in page 22 paragraph (b) of the award has adjudicated the counter-claim with figures. This shows the application of mind of the arbitrator in respect of the counter-claims of Rs. 28,47,860.59 with interest as mentioned therein and after due consideration, he found that the counter-claim has no basis and hence the same has been rejected. Thus, it cannot be said that the arbitrator has failed to apply his mind in respect of the counter-claims. Hence, on this score also, the submission of Mr. M. M. Banerjee has got no force as the learned Court below has rightly decided that the objection in that aspect has also got no force. It appears from the award itself that the claim made by the Plaintiff had not been allowed in to after consideration of the documents filed from the side of the Defendant-Appellant in most of the claims, the amount of claimants have been reduced in passing the award although there was plea from the side of the Defendant-Appellant that the documents filed by them had not been considered rather it appears from the award itself from pages 8 to 23 that the documents filed by the Defendant-Appellant had been considered in their proper perspective. Practically, on consideration of those documents, the quantum of claims had been reduced. Hence on all such objections raised, I find that the learned Court below has elaborately discussed in its impugned judgment which I do not want to reiterate as the findings of the learned Court below are based on legal principle enunciated by the Apex Court from time to time.

Lastly Mr. M.M. Banerjee has raised legal objection to the effect that in Claim No. 7, the arbitrator had allowed the claims of the Plaintiff-Respondent towards losses due to prolongation of work i.e. loss of profit and over-head. The claim was to the tune of Rs. 22,77,714/- but on consideration of the statement of claims and objections raised, the loss had been calculated on application of Rudson''s for mula to the tune of Rs. 14,23,670.78 Paise. The explanation with regard to such claim was given by the Plaintiff-Respondent in paragraphs 34.12 (a), (b) and (c) and! 34.12.3 of the statement of claims and the'' claimant-Respondent had also referred to the Rudson''s formula. It could be found, from the facts and circumstances that no laches were there on the part of the Plaintiff-Respondent and such prolongation was safely attributable to the Defendant Appellant. The work was prolonged from 2.9.1986 to 15.1.1988. After considering the counter-claim of the Defendant-Appellant regarding hindrance, the amount of claim has been reduced from Rs. 27,77,714/- to Rs. 14,23,670.78. Again In Claim No. 10, loss was claimed by the claimant-Respondent due to damage, caused due to gale (hail) storm and heavy rain and the claim was made to the extent of Rs. 79,862.00 and after consideration of the loss, the damage was granted to the tune of Rs. 71,250.14 paise.

It is the contention of Mr. Banerjee appearing for and on behalf of the Appellant that for prolongation of work damages had already been granted under Claim No. 7. In that view of the matter further damages due to the gale (hall) storm and heavy rain cannot be under Claim No. 10. According to him, the damage due to gale (hall) stormy and heavy rain was caused due to prolongation of the work and this damage is included within the basic damage claim of the purpose of prolongation. If the prolongation would not have been there (sic) work would have been completed (sic) the gale storm and heavy rain and in that case, such loss or damage could not have occurred. In that view of the matter, damages twice on the said account cannot be granted legally and in this connection Mr. Banerjee has referred to a judgment in Union of India v. Jain Associates 1994 (1) ArbLR 494 wherein it was held that on the same score, on the facts and circumstances of the case, damages cannot be granted twice. In that case, Claim Nos. 11 and 12 were In dispute. In Claim No. 11, damages were granted upon the allegation of delay, laches, negligence and default on the part of the Appellant while Claim No. 12 was found on the similar nature of alleged laches and negligence although wordings were different in two claims and the Apex Court found that practically the damages claimed were of same and similar nature and cannot be granted twice and although it was not held to be misconduct on the part of the arbitrator but the award had been modified by deleting one claim of damages which was allowed in lesser quantum and the higher quantum was allowed only.

Mr. Banerjee submits that hail storm (mentioned by the arbitrator as gale storm) and rains are nothing but the act of God and none of the parties had got any hands on it and no damage and compensation can be granted on that accounts. However, if damages had been caused or loss of profit had been caused because of that, the same may be allowed on money value if law permits so. But when the question of hail storm and heavy rains were within the prolongation period for which loss of profit had already been granted under Claim No. 7, further damages cannot be granted under this head of hail storm and heavy rains because the hail storm and heavy rains were within the period of prolongation of work for which damages had been granted for loss of profit.

Mr. Kameshwar Prasad, appearing for and on behalf of the Plaintiff-Respondent submits that for prolongation of work, loss of profit is one thing while damages for hail-storm and heavy rain are different things. Because of the hail storm and heavy rains, the walls already constructed were damaged and the Plaintiff-Respondent had to reconstruct it by which he had not only the loss of profit but also the loss for twice construction. Sharply objecting on it, Mr. Banerjee submitted that as per the agreement Itself, if any damage is there within the construction period, the contractor is bound'' to reconstruct the same. Hence for �and ph reconstruction, he cannot have any right to claim for damages. On the ratio of the submissions made by the Counsel for the both the parties and on proper scrutiny of the materials on record and on going through the award itself, I am convinced that there is force in the submission of Mr. Banerjee, appearing for and on behalf of the Appellant. Loss of profit due to prolongation of work had been considered after hearing the counter-claim made and also on the application of Rudson''s formula, as per the agreement itself. If there is any damage caused during the construction period, the contractor is bound to reconstruct the same. The hail storm or heavy rains caused during the prolongation period. If prolongation would not have been there, damage of the wall might not have been there at that time and when the loss for prolongation had been calculated then the whole thing within that period had been calculated towards loss of profit of the contractor. Hence, in my considered view, Claim No. 10 is superfluous one on the same item which cannot be legally granted as per the law enunciated by the Apex-Court as mentioned above and also under the general principle of natural justice and prudence. Hence the claim granted under item No. 10 to the tune of Rs. 71,250.14 paise is hereby held to be not found on proper reasonings and hence it is rejected by merging the same with the damage granted under item No. 7 to the tune of Rs. 14,23,670.78 Paise.

Thus the appeal is allowed to the extent of modification of rejection of claim No. 10 alone and the other claims granted by the arbitrator had rightly been upheld and made rule of the Court. So from the decree granted by the Court below, only item No. 10 is to be deleted and the other thing should remain intact with interest at the rate of 12 per cent per annum as granted by the learned arbitrator during the interim period.

In the award itself, interest has been granted pendent lite at the rate of 12 per cant and practically the arbitrator has no right to grant interest till the realisation and that remains the power of the Court making the award rule of the Court as per Section 29 of the Act. It appears that in the impugned judgment, the learned Court below although discussed about the interest matter granted pendente lite but it has not passed any specific order while granting decree by making the award rule of the Court regarding the future interest till the date of payment from the date of decree.

Mr. Banerjee vehemently opposes it. According to him, when such interest had not been granted by the learned Court below while dealing with the matter in the impugned judgment, the same should be construed as rejected and there is no scope of correction of decree by filing of second petition u/s 151 of the Code of Civil Procedure. Section 29 of the Act gives jurisdiction to the Court to pass future interest from the date of decree till the date of realisation but it appears that due to inadvertence, perhaps the learned Court below had not passed any order although it had made observation that the arbitrator''s grant of interest pendente lite till the date of realisation is proper and justified. Practically the arbitrator has no right to grant any interest after due date of decree till that date of realisation. He can have the right of grant of interest pendente lite only. As there is defect apparent on the face of it and when interest is a regular rule of law and. unless any circumstances are there not to grant it, then I feel that the learned Court below ought to have granted future interest also u/s 29 of the Act, hence the civil revision application is allowed and the decree granted by the learned Court below is modified to the extent it would include interest not only pendente lite but from the date of decree till realisation at the same rate i.e. at the rate of 12 per cent per annum.

Thus miscellaneous appeal is partly allowed and civil revision is also allowed but, in the circumstances, no order as to costs.