In the case of Claimant vs. Opposite Party, the High Court’s order in Civil Revision No.2958/2008 is being contested. The Claimant is dissatisfied with the rejection of various claims and has filed an appeal. Key issues include Claim Nos. 2, 3, 8, 12, and 16, as well as the interest under Claim No.19. The parties involved are seeking justice as the legal battle unfolds.
Facts
- The appellant is challenging the order passed by the High Court in Civil Revision No.2958/2008.
- The High Court allowed the revision partially by approving Claim No.1 of the appellant but rejected the remaining claims upheld by the Trial Court and the First Appellate Court.
- The Arbitrator’s Award was modified to accommodate the partial approval of the appellant’s claim.
- The appellant is dissatisfied with the rejection of the remaining claims and has filed this appeal.
- The specific claims being contested are Claim Nos. 2, 3, 8, 12, and 16, along with the issue of interest under Claim No.19.
- The parties involved in the arbitration proceedings are referred to based on their roles as the claimant and the opposite party.
- The claimant has raised objections to the High Court’s decision and has filed Revision Petitions seeking a review.
- Award made ‘Rule of Court’ as required under Act, 1940
- Opposite party filed objections claiming misconduct by Arbitrator
- Sub-Judge accepted objections regarding Claim No.1 and reduced interest to 12%
- District Judge rejected cross appeal, allowed appeal by State of Punjab, and set aside awarded amount
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Arguments
- Clause 63 of the contract provides for arbitration of disputes and requires that awards above Rs.1 lakh must state reasons for the amount awarded.
- The petitioner’s counsel argues that the rejection of the award by the First Appellate Court and the High Court was unjustified.
- Referring to a past case, it is argued that as long as the inference drawn by the Arbitrator is apparent, lack of detailed reasoning in the award may still be acceptable.
- The estimated cost of the contract is Rs.31 lakhs, but the contract amount is Rs.59,86,732/-, with the difference being the sanctioned premium of 93.12%.
- The petitioner argues that since the contract explicitly mentions the value and the sanctioned premium percentage, the Arbitrator’s decision on the claims related to this basis is valid, even if not elaborated in the award.
- The argument extends to Claim Nos. 3 and 12, stating that they should be treated similarly to Claim No. 2 due to the contract terms.
- The petitioner highlights the communication indicating approval for a percentage above the departmental rates at 35.02% as a limit to the claim calculation.
- For Claim No. 8, the additional amount should be calculated based on the same approved percentage for extra items used.
- The learned Arbitrator did not provide reasons for the conclusion reached on Claim No.2, which was crucial for considering Claim Nos. 3 and 12.
- The basis for the conclusion, as argued by the claimant’s advocate, was the difference between the estimated amount and the contract amount; however, this explanation was deemed insufficient.
- In the case of Raipur Development Authority & Ors. vs M/s Chokhamal Contractors & Ors. (1989) 2 SCC 721, it was noted that if the arbitration agreement or deed of submission requires reasons, an award passed without reasons would not be sustainable.
- The advocate for the respondent also cited the decision in Gora Lal vs Union of India (2003) 12 SCC 459, which emphasized the importance of providing reasons in the award.
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Analysis
- The learned Arbitrator was required to assign reasons for the award and consider the matter appropriately.
- The High Court and First Appellate Court disapproved the 93.12% premium for extra work and set it aside.
- The claimant should have the premium determined at 35.02% for extra items and be awarded accordingly.
- The High Court and First Appellate Court’s decisions on Claims No.2, 3, and 12 were justified.
- Interest under Claim No.18 was reduced to 12% per annum by the First Appellate Court, which was deemed justified.
- The claim should not be rejected solely on technical grounds, especially when extra work was actually carried out.
- Interference in an arbitration award is not available unless there are substantial reasons, total perversity in the award, or a judgment based on a wrong legal proposition.
- A non-speaking award cannot be considered as an error apparent on the face of the award if the arbitrator proceeded without overlooking any contract terms.
- In cases where an arbitrator is not required to provide detailed reasoning like a civil court, the focus should be on the trend of thought process rather than detailed computations.
- When an authority exercises a quasi-judicial function, it must provide reasons in support of its order as per the Indian Oil Corporation Ltd. case.
- Claim Nos.2, 3, and 12 are found to be sustainable at a premium of 35.02% as indicated
- Calculation based on extra items’ extent and measurement cannot be conducted in this context
- Opposite party directed to perform the necessary calculations
- Similar approach should have been followed by us initially
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Decision
- The First Appellate Court and High Court orders are modified based on the judgment.
- Claim No.1 allowed by the High Court is sustained, and additional amounts under Claim Nos. 2, 3, 8, and 12 are also awarded, to be calculated at a premium of 35.02%.
- The amount calculated for these claims is to be paid within six weeks from the date of the judgment, with a 12% per annum interest rate. Delayed payments will incur an 18% per annum interest rate.
- The Registry is instructed to prepare the decree/award as per the directions given.
- Pending applications are disposed of.
- Claimants are entitled to extra items under Claim Nos. 2, 3, 8, and 12 based on the difference in cost on the tender premium at 35.02%.
- Interest at 18% per annum will be applicable for delayed payments beyond the stipulated period.
Case Title: CHANDIGARH CONSTRUCTION CO. PVT.LTD. Vs. STATE OF PUNJAB (2020 INSC 187)
Case Number: C.A. No.-000867-000870 / 2013
