M/S. Ravindra & Associates vs Union Of India

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 2

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. 3

(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 4

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