Sutlej Construction Limited vs Union Territory Of Chandigarh

Reportable IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL No. 20885 of 2017 [Arising from SLP (Civil) No.14451 of 2015]

SUTLEJ CONSTRUCTION …. Appellant

versus

UNION TERRITORY OF CHANDIGARH ….Respondent

JUDGMENT

SANJAY KISHAN KAUL, J.

Leave granted.

1. The appellant was awarded a contract by the respondent of earth excavation

work and loading into trucks and unloading for purposes of widening of the

approach road Sukhna Choe on Chandigarh Kalka Road, Chandigarh vide

memo No.201 dated 5.1.1996. The earth was required to be lifted from the first

source near the regulator and carried through trucks from Golf side initially.

There was a second source of lifting the earth as per permission of the

Superintendent Engineer but it is not necessary to go into the details of the

contract for the present purposes. Suffice to say that the respondent alleges that Signature Not Verified Digitally signed by DEEPAK MANSUKHANI the appellant did not fulfil its obligations while the appellant, on the other hand, Date: 2017.12.14 10:55:59 IST Reason: SIGNER CARD OF MR. DEEPAK MANSUKHANI IS BEING USED BY MR. O.P. SHARMA

alleges that what was required to be done by the respondent to facilitate

11 execution of the contract was not so done. This resulted in the respondent

terminating the contract on 12.11.1996.

2. The conditions of the contract provided for arbitration and despite the appellant

invoking the arbitration clause, the Superintendent Engineer failed to nominate

an Arbitrator resulting in the appellant approaching the Court. In the course of

the said proceedings Mr. R.N. Singal, retired District & Sessions Judge was

appointed as an arbitrator in terms of order dated 31.7.2002 of the learned Civil

Judge (Senior Division), Chandigarh.

3. The parties put forth their respective claims before the arbitrator. The appellant

laid the claims while the respondent filed the counterclaims. The arbitrator

made and published an Award dated 18.12.2013, partly allowing the claim of

the appellant while rejecting the counterclaims of the respondent. The claims

laid and the extent awarded as well as the counterclaims laid are as under:

Claims made Amounts awarded by the Arbitrator by the Appellant S.No. Particulars Amount (in Particulars Amount (in INR) INR)

1. Balance 2,00,014 Claim No.1 and 1,20,299 payment amount 32,000 accruing from deposited by the last running way of earnest bill

2. Payment due on 1,11,231 Claim No.3 65,076 account of transportation or earth not

22 measured by department

3. Payment due on 95,400 Claim No.4 7,74,375 account of less lead paid

4. Idle hour 31,22,280 Claim No.6 45,435 charges of heavy earth moving machinery and labour deployed on the machinery

5. Payment due on 1,69,206 -- --

account of earth eroded by heavy rains due to non-compaction of earth and leaking water pipelines

6. Payment on 90,835 -- --

account of loss of profit on balance work 7. Loss due to 12,80,000 -- -- prolongation of work 8. Litigation 25,000 -- -- expenses Total 50,93,966 Total 10,37,185

Interest @ 12% per annum was also allowed by the arbitrator in favour of the

appellant.

Counterclaims made by the Respondent

1. Liquidated damages and 8,01,808

33 the expenses incurred by it for completion of work

2. Loss due to delay in 20,00,000 completion of work Total 28,01,808

4. The respondent aggrieved by the Award filed objections under Section 34 of the

Arbitration & Conciliation Act, 1996 (hereinafter referred to as the ‘said Act’),

which were, however, rejected by the learned Additional District Judge,

Chandigarh vide order dated 23.7.2013. The respondent thereafter preferred an

appeal before the Punjab & Haryana High Court and the said appeal succeeded

whereby the Award was set aside opining that the contract was rightly

terminated and the Department rightly imposed the penalty.

5. We have heard learned counsel for the parties and have perused the record. The

Award is a reasoned one. The arbitrator has taken note of the peculiar features

of the contract inter se the parties that while the work of excavation of the earth,

its loading into the trucks, unloading and transportation to site of the work was

awarded to the appellant as contractor, the spreading of the earth brought to the

site of the work by the contractor and its compaction was to be done by the

respondent Department itself. It is, thus, that the appellant claimed that even

though they had taken up the work with right earnest to complete it within the

scheduled period, the breaches of the respondent has caused the delay. Such

breaches enumerated are:

a. Obstruction in the disposal area due to overhead lines and poles;

44 b. Delay in making available approached to the disposal site, want of

lighting arrangement at the excavation as well as disposal sites by the

respondent;

c. Inadequate compaction plant and machinery and other auxiliary

equipment.

It is in order to cover up their own lapses it is alleged that the respondent chose to

terminate the contract.

6. The respondent, of course, denies the aforesaid allegations but on the other

hand contended that the work was carried on by the appellant at slow pace

leaving the respondent-Department with no alternative but to levy penalty and

to finally terminate the contract vide letter dated 12.11.1996.

7. In the opinion of the arbitrator the performance of the contractual obligations by

the appellant were dependent on reciprocal performances by the respondent.

On appreciation of evidence on record it was concluded that the respondent had

failed to comply with its obligations and, thus, held the contract to be illegally

terminated. Thereafter the arbitrator, once again, on appreciation of evidence

decided to award the amounts as specified aforesaid.

8. The learned Additional District Judge, Chandigarh while dismissing the

application of the respondent under Section 34 of the said Act came to the

conclusion that the findings of the arbitrator were based on appraisal of

evidence and it was certainly not the function of the Court to re-appreciate the

55 evidence so long as it is not a case of completely devoid of evidence. Since the

spreading of the earth and its compaction was required to be done by the

respondent, the non-carrying out of that activity would naturally impede the

performance of the obligations by the appellant. Accessibility to the site was

obviously an important part of the execution of the contractual obligations. In

fact, the contract was carried over a period of four and a half years against the

original time period of 45 days, which would show the unpreparedness of the

respondent.

9. The learned single Judge of the High Court, however, appears to have made an

endeavour to re-appreciate the evidence and sought to come to a different

conclusion than what was arrived at by the arbitrator, the objections to which

were dismissed by the learned Additional District Judge, Chandigarh. The

reasoning of the learned single Judge is predicated on the absence of any

contractual obligation that the spreading of the earth brought to site was to be

done by the Department nor was there a stipulation that the overhead lines and

poles had to be removed by the respondent to make the area accessible. The

respondent-Department had not specified any space for unloading of the earth

but only charges up to 5 kilometres were to be paid. Thus, the finding is that

the arbitrator mis-conducted himself by acting contrary to the terms of the

contract.

10. We are not in agreement with the approach adopted by the learned single

Judge. The dispute in question had resulted in a reasoned award. It is not as if

66 the arbitrator has not appreciated the evidence. The arbitrator has taken a

plausible view and, an in our view, as per us the correct view, that the very

nature of job to be performed would imply that there has to be an area for

unloading and that too in the vicinity of 5 kilometres as that is all that the

appellant was to be paid for. The route was also determined. In such a situation

to say that the respondent owed no obligation to make available the site cannot

be accepted by any stretch of imagination. The unpreparedness of the

respondent is also apparent from the fact that even post termination it took

couple of years for the work to be carried out, which was meant to be

completed within 45 days. The ability of the appellant to comply with its

obligations were inter dependent on the respondent meeting its obligations in

time to facilitate appropriate areas for unloading of the earth and for its

compacting. At least it is certainly a plausible view.

11. It has been opined by this Court that when it comes to setting aside of an award

under the public policy ground, it would mean that the award should shock the

conscience of the court and would not include what the court thinks is unjust on

the facts of the case seeking to substitute its view for that of the arbitrator to do

what it considers to be “justice.” (Associate Builders v. Delhi Development

Authority1)

12. The approach adopted by the learned Additional District Judge, Chandigarh

was, thus, correct in not getting into the act of re-appreciating the evidence as

1 (2015) 3 SCC 49

77 the first appellate court from a trial court decree. An arbitrator is a chosen

Judge by the parties and it is on limited parameters can the award be interfered

with. (Sudarsan Trading Co. v. The Government of Kerala2; Harish Chander

& Co. v. State of U.P.3 and Swan Gold Mining v. Hindustan Copper Limited4).

13. The learned single Judge ought to have restrained himself from getting into the

meanderings of evidence appreciation and acting like a second appellate court.

In fact, even in second appeals, only questions of law are to be determined

while the first appellate court is the final court on facts. In the present case the

learned single Judge has, thus, acted in the first appeal against objections

dismissed as if it was the first appellate court against a decree passed by the trial

court.

14. We have, thus, no hesitation in concluding that the impugned order cannot be

sustained and is accordingly set aside and the enforcement of the award in toto

is upheld.

15. The appeal is accordingly allowed but in the given facts of the case we do not

impose costs.

..….….…………………….J. (J. Chelameswar)

...……………………………J. (Sanjay Kishan Kaul) New Delhi.

December 05, 2017.

2 (1989) 1 SCR 665 3 AIR 2016 SC 4257 4 2014 (4) ArbLR 1 (SC)

88 ITEM NO.6 COURT NO.2 SECTION IV-B

S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS

Petition(s) for Special Leave to Appeal (C) No(s). 14451/2015

(Arising out of impugned final judgment and order dated 01-04-2015 in FAO No. 1621/2014 passed by the High Court Of Punjab & Haryana At Chandigarh)

SUTLEJ CONSTRUCTION LIMITED Petitioner(s)

VERSUS

UNION TERRITORY OF CHANDIGARH Respondent(s)

Date : 05-12-2017 This petition was called on for hearing today.

CORAM :

HON'BLE MR. JUSTICE J. CHELAMESWAR HON'BLE MR. JUSTICE SANJAY KISHAN KAUL

For Petitioner(s) Mr. Nidhesh Gupta,Sr.Adv.

Mr. Tarun Gupta, AOR Mr Puneet Varshney,Adv.

For Respondent(s) Ms. Rimali Batra,Adv.

Mr. Ravi Prakash,Adv.

Ms. Nikita Choukse,Adv. Mr. Chandra Prakash, AOR Mr. U.T. Chandra Prakash,Adv.

UPON hearing the counsel the Court made the following O R D E R

Leave granted.

The appeal is allowed, in terms of the signed reportable judgment.

Pending application(s), if any, stand disposed of.

(OM PARKASH SHARMA) (RAJINDER KAUR) AR CUM PS BRANCH OFFICER

(Signed reportable judgment is placed on the file)

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