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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 2726 OF 2004
Ravindra & Associates .... Appellant
Versus
Union of India .... Respondent
O R D E R
1. Heard learned counsel for the parties.
2. This appeal by special leave has been filed against
the judgment and order dated 15.1.2003 of the High Court of
Kerala at Ernakulam whereby the High Court has allowed the
appeal filed by the respondent herein against the order
dated 9.10.1996 of the Principal Sub Judge, Kochi.
3. It appears that the appellant was awarded a contract
for construction of married accommodation for petty officers
of the Navy at Rameswaram, Kochi. The value of the work
awarded was Rs. 5,44,47,087/-. The work which commenced on
24.12.1990 had to be completed by 23.6.1993 and admittedly
it was completed by the said date.
4. Disputes arose between the parties and the parties
invoked the arbitration clause provided in the General
Conditions of Contract. The claimant-appellant made claims
under 25 heads. The arbitrator awarded to the claimant a
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sum of Rs. 70,94,265/- and allowed simple interest at the
rate of 18% from the date of accrual for cause of action
till date of reference, from the date of reference till date
of award and from the date of award till the date of decree
or date of payment whichever is earlier. An application by
the appellant-claimant was filed before the Principal Sub
Judge, Kochi to make the award a Rule of the Court. The
respondent-Union of India also filed an application for
setting aside the award of the arbitrator. The Sub-Judge
allowed the application of the appellant and made it a Rule
of the Court, but awarded 12% interest on the amount awarded
from the date of decree till realization and dismissed the
application of the respondent-Union of India. Aggrieved
against the order dated 9.10.1996 of the Sub-Judge, Kochi
the respondent herein preferred an appeal before the High
Court which has been allowed by the impugned judgment and
order. Hence, the present appeal.
5. In our opinion, the High Court wrongly interfered
with the arbitration award and practically acted as a Court
of Appeal, which it could not do (See : State of Rajasthan
Vs. Puri Construction Co. Ltd. (1994) 6 SCC 485; Trustees of
Port of Madras Vs. Engineering Construction Corporation Ltd.
(1995) 5 SCC 531; EOC India Ltd. Vs. Bhagwati Oxygen Ltd.
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(2007) 9 SCC 503 and G. Ram Chandra Reddy & Company Vs.
Union of India & Anr. (2009) 6 SCC 414).
6. As regards the allegation that while in the contract
mixture provided for in the contract is M/15, but in fact,
M/20 was used, it has been held by the arbitrator that this
was done at the insistence of the Department. The
arbitrator also held that the relevant drawing for M/15
mixture and the drawing relied upon by the respondent did
not find place in the list of drawings forming part of the
tender documents. Hence, in our opinion, the High Court has
wrongly interfered with the findings of the arbitrator as
regards claim Nos. 1 and 9.
7. As regards claim No. 10(b) relating to payment of
over-time to labour it has been contended by the learned
counsel for the appellant that there was a delay in supply
of stores by the respondent and therefore the labour had to
be retained for a longer period of time than envisaged under
the contract and hence overtime charges had to be paid to
the labour.
8. In this connection, the learned counsel appearing
for the respondent has relied upon the decision of this
Court in the case of Ramnath International Construction (P)
Ltd. Vs. Union of India (2007) 2 SCC 453. We have gone
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through the said decision. In our opinion that decision has
no application to the case at hand as in that case the
contractor sought and obtained extension of time for
execution of the contract whereas in the present case
neither extension of time was sought for, nor in fact,
granted for completion of the contract. Hence, the
aforesaid decision is clearly distinguishable. Clause 11(c)
of the General Conditions of Contract has no application in
this case at all.
9. As regards Claim No. 12 relating to difference in
price of wood frames for doors and windows, it is stated
that no doubt the contract provided for teak wood but it was
changed to second class hard-wood at the insistence of the
Department. The High Court has in this regard relied upon
the decision of the Board of Officers who has made its
assessment by relying upon Clause 62(G) of the General
Conditions of Contract which provided that the decision of
the Garrison Engineer would be final unless it was set aside
in appeal. In the present case, the price was not fixed by
the Garrison Engineer at all. Moreover, the Board of
Officers had made an inquiry in the matter after three years
and the arbitrator, in our opinion, rightly held that such
an inquiry was of no consequence.
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10. As regards Claims No. 20 and 23 relating to
escalation in prices of material, in our opinion, the
arbitrator has given his findings of fact and the High Court
misread Clause 18 of the Special Conditions of Contract.
11. For the reasons given above, we are of the opinion
that the High Court has wrongly interfered with the
arbitration award. Accordingly, the appeal is allowed and
the impugned judgment and order is set aside.
12. We may also point out that in para 12 of the
judgment there appears to be a typographical error inasmuch
as the Principal Sub-Judge Kochi has reduced the interest
from 18% to 12% and not 10%, as wrongly recorded in the
impugned judgment. We make it clear that the appellant is
entitled to interest @ 12%, as awarded by the Principal Sub
Judge, Kochi.
Appeal allowed. No order as to the costs.
.....................J.
(MARKANDEY KATJU)
.....................J.
(ASOK KUMAR GANGULY)
NEW DELHI;
OCTOBER 21, 2009