Arb.Appeal No.43 of 2010

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE P.B.SURESH KUMAR** **&** **THE HONOURABLE MRS. JUSTICE C.S. SUDHA MONDAY, THE 17[TH] DAY OF JANUARY 2022 / 27TH POUSHA, 1943 ARB.A NO. 43 OF 2010** **AGAINST THE JUDGMENT AND DECREE DATED 18.6.2010 IN OP(ARB) 3/1990 OF SUB COURT,KOTTARAKKARA** ## **APPELLANTS/RESPONDENTS:** **1 THE STATE OF KERALA REPRESENTED BY THE THE SECRETARY TO GOVERNMENT, IRRIGATION DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM.** **2 THE SUPERINTENDING ENGINEER KALLADA IRRIGATION PROJECT, R.B.CIRCLE, KOTTARAKKARA. BY ADV.SRI.T.K.VIPINDAS, Sr.GOVERNMENT PLEADER** ## **RESPONDENT/CLAIMANT:** **P.M.MATHEW KORAH GOVERNMENT CONTRACTOR, RESIDING AT PARAKUDIYIL, NELLAD POST, MUVATTUPUZHA-686 721.** **BY ADV SRI.M.C.JOHN** **THIS ARBITRATION APPEALS HAVING COME UP FOR ADMISSION ON** **05.01.2022, THE COURT ON 17.01.2022 DELIVERED THE FOLLOWING:** 2 Arb.Appeal No.43 of 2010 ## P.B.SURESH KUMAR & C.S.SUDHA, JJ. -------------------------------------------------- Arb.Appeal No.43 of 2010 ------------------------------------------- Dated this the 17[th] day of January, 2022 ## J U D G M E N T ## C.S.Sudha, J. This is an appeal filed challenging the judgment dated 18.6.2010 in O.P.Arb.No.3/1990 on the file of the Court of the Subordinate Judge, Kottarakkara. The appellants herein are the respondents in the Arbitration proceedings and in the proceedings before the court below. The parties in this appeal will be referred to as described in the proceedings before the Arbitrator. 2. The dispute involved in this appeal is relating to the execution of the work under Kallada Irrigation Project, namely, 'KIP-RBC-Formation of Edappon Distributory from chainage 0 to 3 Arb.Appeal No.43 of 2010 4990 M - Part II from chainage 1250 M to 4990 M including CD works'. The claimant/contractor was awarded the aforesaid work and an agreement dated 29.06.1985 was entered into between the parties relating to the same. The time for completion of the work was fixed as nine months from the date of handing over of the site. The site was handed over on 05.09.1985 and therefore the claimant/contractor was to complete the work by 04.06.1986. However, the work could not be completed within the period originally agreed to. Hence, the time was extended till 31.12.1986 on the specific request of the claimant. Necessary supplemental agreements were also executed by the parties when time was extended wherein it was agreed by the claimant/contractor that he would execute the work during the extended period on the original rates agreed to earlier. The estimated Probable Amount of Contract (PAC) for the work was ₹89,074/-. The claimant/contractor completed the work on 31.12.1986 and the 4 Arb.Appeal No.43 of 2010 total value of the work done was 12,04,675/-. After completion₹ of the work, some disputes arose between the parties relating to the execution of the work. Relying on clause 52 of the Local Competitive Bidding (LCB), which formed part of the agreement, an Arbitrator was appointed to resolve the disputes between the parties. 3. Before the arbitrator, the claimant/contractor raised 9 claims under various heads, namely, (a) to (i). After completion of the pleadings, the Arbitrator gave opportunity to both sides to adduce oral and documentary evidence. On consideration of the evidence before the Arbitrator and after hearing both sides, an Award dated 30.12.1989 was passed. As per the award claims under heads (a), (b), (c), (d), (h) and (i) were allowed. Claims (e) and (f) were rejected. Claim under head (g) was withdrawn by the claimant. The claimant/contractor filed O.P.Arb.No.3/1990 before the Sub Court, Kottarakkara for a decree in terms of the Award. 5 Arb.Appeal No.43 of 2010 The respondents filed I.A.No.441/1990 under Section 30 of the Arbitration Act, 1940 (the Act) to set aside the entire Award. Vide judgment dated 18.06.2010 the court below passed a judgment and decree confirming the Award relating to claims (c), (d), (h) and (i). The Award relating to claims under heads (a) and (b) were set aside by the court below on the ground that the Arbitrator had misconducted himself. According to the respondents, who are the appellants herein, the court below went wrong in accepting the Award under heads (c), (d), (h) and (i) as those claims were allowed by the Arbitrator without any legal basis and in the absence of any evidence or materials to substantiate the said claims. The court below also went wrong in granting interest at the rate of 12% p.a. for the amounts awarded from the date of Award till the date of decree and thereafter at the rate of 6% p.a. till realisation. The judgment and decree of the court below is without any basis and hence the present appeal. 6 Arb.Appeal No.43 of 2010 4. Here we are called upon to consider whether the sole Arbitrator misconducted himself in allowing claims (c), (d), (h) and (i). The claim under head (c) related to compensation for loss alleged to have been sustained by the claimant/contractor for re-handling and conveyance of cut earth to different chainages. According to the claimant, as per the terms of the agreement, cutting and filling were to be done simultaneously. The length of the distributory as per the contract is 3.7 kms. The land acquired was just sufficient for the formation of the distributory. No vehicular traffic was possible through the alignment. Surplus cut earth of good quality had to be heaped at convenient places from where they had to be re-handled and re-conveyed for filling the chainages, wherever it was found necessary. Such mode of rehandling and conveyance was not expected by the claimant at the time of submission of the bid. According to the claimant he had conveyed 5,000 cubic meter surplus cut earth for filling at various 7 Arb.Appeal No.43 of 2010 chainages. The claimant/contractor contended that he had incurred an expenditure of ₹38/- per cubic meter for this work. Therefore, he claimed reimbursement at the said rate. On the other hand, the respondents contended that the claimant was bound to execute the aforesaid work as per the conditions of the agreement entered into between the parties. The rate quoted by him was inclusive of all expenses for cutting and filling. Therefore, they contended that the claimant is not entitled to any additional amounts under this head. 5. The Arbitrator, inspected the site in the presence of both parties. According to the Arbitrator, during the site inspection he verified the length of the distributory from the layoff plan. He was then convinced that the land acquired was not sufficient for conveyance of a lorry. The distributory passed through remote areas having no sufficient access to the public road. It was also seen that the cutting and filling were at distant chainages beyond 8 Arb.Appeal No.43 of 2010 the lead provided in the estimate. This was revealed on a perusal of the estimate and other connected records. The Arbitrator therefore concluded that simultaneous cutting and filling as contemplated in the agreement was not feasible. The Arbitrator also states that during his site inspection he had enquired into the mode of conveyance used as alleged by the claimant. From all these facts, the Arbitrator concluded that he was convinced that the claimant/contractor had incurred additional expenditure for conveying cut earth and for filling up the chainages. The claimant had demanded ₹38/- per cubic meter for a quantity of 5,000 cubic meter. The respondents had admitted that 5,827.04 cubic meter filling had been done by the claimant. The Arbitrator verified the final bill and the measurement books relating to cutting and filling at the various chainages. He also verified and checked the distance between different chainages. The quantity of cut earth used for filling beyond the lead provided in the estimate was found to be 9 Arb.Appeal No.43 of 2010 2886 cubic meter. Thus, taking into account all these factors, the Arbitrator found that the claimant was entitled to be paid at the rate of ₹22.50/- cubic meter for a quantity of 2886 cubic meter under this head. Therefore, the respondents were directed to pay an amount of 64,935/- under this head.₹ 6. According to the respondents, the Award relating to the claim under the aforesaid head, namely, (c) is without any basis or evidence, which is liable to be set aside. The respondents contended before the court below that the rate quoted by the claimant in the bid was inclusive of expenses for cutting and filling also. The respondents further contended that the Arbitrator has misconducted himself by going beyond the terms of the reference and beyond the scope of the agreement. The Arbitrator had given undue importance to his site visit to find out the alleged loss caused to the claimant. The court below ought to have noticed that the Arbitrator had conducted the site visit long after the 10 Arb.Appeal No.43 of 2010 execution of the work. The Arbitrator had not seen any materials or evidence to substantiate the claim of the claimant/contractor that he had conveyed cut earth to far off places and thereafter had re-conveyed it to the place of work. No lorry receipt(s) or voucher(s) were produced to substantiate the claim. The Arbitrator ought to have noticed that there was sufficient space for dumping cut spoil earth near the site or within the vicinity so as to use it for re-filling. The Arbitrator blindly believed the claimant without any satisfactory evidence. There is no basis or reason given by the Arbitrator for arriving at the rates granted by him. The same is only a guess work which is not contemplated in arbitration proceedings. This contention of the respondents did not find favour with the court below, which held that except in cases where there is an error apparent on the face of the Award, the court has no jurisdiction to investigate into the correctness of the decision of the Arbitrator on merits either on law or on facts. The Arbitrator's 11 Arb.Appeal No.43 of 2010 decision on matters relating to facts and law are final. The Arbitrator has also given cogent reasons for arriving at the conclusion. Finding so, the court below refused to interfere with the Award of the claim under head (c). 7. The law regarding the scope and ambit of the jurisdiction of the Courts to interfere with the award passed by an arbitrator has been settled in a catena of judgments of the Apex Court. The scope of interference by Courts with regard to arbitral awards is limited. A Court considering an application under S.30 or 33 of the Act, does not sit in appeal over the findings and decision of the arbitrator. Nor can it reassess or re - appreciate evidence or examine the sufficiency or otherwise of the evidence. The award of the arbitrator is final and the only grounds on which it can be challenged are those mentioned in S.30 of the Act. The settled position is that the arbitrator is the final arbiter for the dispute between the parties and it is not open to challenge the 12 Arb.Appeal No.43 of 2010 award on the ground that the arbitrator has drawn his own conclusion or has failed to appreciate the facts. Where reasons have been given by the arbitrator in making the award, the Court cannot examine the reasonableness of the same. When the parties have selected their own forum, the deciding forum must be conceded the power of appraisement of evidence. 8. In M/s.Arosan Enterprises Ltd. v. Union of India, (1999 KHC 1547) : [(1999)9 SCC 449] the Apex Court reiterated that, reappraisal of evidence by the Court is not permissible and as a matter-of-fact exercise of power by the Court to reappraise the evidence is unknown to proceedings under S.30 of the Arbitration Act. In the event of there being no reasons in the award, question of interference of the Court would not arise at all. Even if there are reasons, the interference would still be not available within the jurisdiction of the Court unless of course, there exist a total perversity in the award or the judgment is based 13 Arb.Appeal No.43 of 2010 on a wrong proposition of law. Even when two views are possible on a question of law, the Court would not be justified in interfering with the award. In the said decision, the Apex Court further held that, the common phraseology 'error apparent on the face of the record' does not itself, however, mean and imply closer scrutiny of the merits of documents and materials on record. The Court as a matter of fact cannot substitute its evaluation and come to the conclusion that the Arbitrator had acted contrary to the bargain between the parties. If the view of the Arbitrator is a possible view, the award or the reasoning contained therein cannot be examined. A few among the catena of decisions of the Apex Court which laid down the aforesaid principles are - State of Rajasthan v. Puri Construction Co. Ltd. 1994 KHC 1068: (1994) 6 SCC 485; Sudarsan Trading Co. v. Govt. of Kerala, 1989 KHC 130 : (1989) 2 SCC 38; Municipal Corporation of Delhi v. Jagan Nath Ashok Kumar, 1987 KHC 1106 : 14 Arb.Appeal No.43 of 2010 (1987) 4 SCC 497; In Kwality Manufacturing Corporation v. Central Warehousing Corporation, 2009 KHC 4579 : (2009) 5 SCC 142. 9. In the light of the aforesaid settled position, we do not find any reason(s) to justify the argument that interference by this Court is called for into the finding of the Arbitrator or the court below relating to the claim under head (c). 10. Now coming to claim (d) which relates to compensation for expenditure incurred in cutting and removal of the canal prism. The claimant/contractor alleged that the land that had been acquired by the respondents was just sufficient for the formation of the distributory. Consolidation of the embankment wherever found to be necessary was not possible with the land that had been acquired. The top width of the bund was only one meter. Proper consolidation using power roller was not possible within the said width of the bund. The claimant/contractor had 15 Arb.Appeal No.43 of 2010 been instructed to fill and consolidate the entire portion including the canal prism so that proper compaction could be achieved. Accordingly, he cut and removed the canal prism to lines and levels. He removed 2800 cubic meters of earth from the prism incurring an expenditure of ₹30/- cubic meter. The claimant/contractor contended that there was provision in the agreement to carry out such work and therefore extra expenditure incurred by him is liable to be paid to him. On the other hand, the respondents contended that the mode of formation of the embankment was within the full knowledge of the claimant. He had formed the embankment with the required quantity as per the terms of the agreement and hence he is not entitled to any extra payment. 11. According to the Arbitrator, proper consolidation had been effected in forming the embankment. This fact was admitted by the officials of the respondents and the same was 16 Arb.Appeal No.43 of 2010 revealed from the records also. It was revealed from the records that power roller had been issued to the claimant for consolidation. During the enquiry of the Arbitrator at the site, the field Engineers admitted to him that the entire portion including the embankment had been consolidated and thereafter canal formation was effected by cutting and removing the prism. The Arbitrator also found that the required compaction could not have been secured without deploying power roller. Hence, the Arbitrator concluded that the formation of the embankment as claimed by the claimant had in fact been done. The claimant had incurred extra expenditure for the said mode of formation of the embankment. The claimant demanded an amount of 30/- per cubic meter for cutting and₹ removing consolidated earth to a quantity of 2,800 cubic meter. After the Arbitrator verified and checked the different chainages where the embankment formation had been effected, he found as per his calculation, the quantity to work done to be 1,850 cubic 17 Arb.Appeal No.43 of 2010 meter. Therefore, he held that the claimant is entitled to payment at the rate of 20/- per cubic meter and hence directed the₹ respondents to pay an amount of 37,000/- under this head.₹ 12. The court below refused to interfere with the Award relating to the claim under (d) also for the same reasons as stated earlier. According to the respondents, the Arbitrator had erroneously arrived at a finding that the acquired land was not sufficient for conveyance of cut earth. They contended that the Arbitrator had failed to notice the conditions embodied in paragraph 22 of the canal specifications, which form part of the agreement. As per the said clause, the claimant is to use man handled rollers instead of power rollers. The respondents had never asked the claimant to use power rollers. When the agreement expressly required the claimant to use man handled rollers, it was beyond the scope of the Arbitrator to award additional amounts on the plea that the contractor had used power 18 Arb.Appeal No.43 of 2010 roller for formation of the embankment. From this itself, it is apparent that the Arbitrator has travelled beyond the terms of the contract. As he had travelled beyond the terms of the contract, the same can be termed as misconduct. The court below failed to appreciate this in the right perspective, goes the argument. 13. As held by the court below we find no infirmity in the findings of the Arbitrator. The finding was arrived at on the basis of the oral and documentary evidence before the Arbitrator. Therefore, the re-appreciation of evidence by the court below or by this Court is not possible. In the light of the settled position of law referred to earlier, no interference is called for on this score also. 14. Now coming to the Award for claims under head (h) and (i). Claim (h) relates to payment of final bill. In the Award it is stated that the respondents had filed the final bill in respect of the work, in which they have admitted a sum of ₹4,974/- to be due 19 Arb.Appeal No.43 of 2010 to the claimant. Hence, the respondents were directed to pay the said amount to the claimant. Claim (i) relates to payment of interest on the amounts due to the claimant. It was contended by the claimant that he had carried out the work with borrowed capital for which he paid exorbitant rates of interest. Huge amounts due to him had been wrongfully withheld by the respondents resulting in loss to him. Therefore, he claimed interest at the rate of 18% p.a. for the amounts due to him. The respondents disputed this claim and contended that they had not wrongfully withheld any amount(s) due to the claimant and also that as per the terms of the agreement, the claimant is not entitled to any interest. The Arbitrator taking into account the facts and circumstances of the case, awarded interest at the rate of 12% p.a. for the amounts awarded. 15. The respondents had filed I.A.No.441/1990 before the court below, challenging the validity of the Award passed by 20 Arb.Appeal No.43 of 2010 the Arbitrator. In the impugned judgment it is stated that though the entire Award was challenged by the respondents, at the time of arguments, the learned Government Pleader addressed the court only relating to claims (a), (b), (c) and (d) in the Award. The court below has noted that regarding the Award on claims (h) and (I), the respondents do not have much grievance. The court below noted that the claim under (h) was passed without any protest from the respondents. Therefore, the court below concluded that the claimant is entitled to get a decree in respect of the Award on claims (h) and (i). However, in the present appeal the Award under claims (h) and (i) is also challenged. According to the respondents, grant of interest at 12% is excessive and the same ought to have been rejected. As far as claim (h) is concerned, it is contended that there is no dispute that an amount of ₹4,974/- is due to the claimant towards the final bill. Hence it is contended that there was no necessity for the Arbitrator to have passed an award for the 21 Arb.Appeal No.43 of 2010 said amount, and that the court below ought to have noticed that the said amount became due only because of the reluctance of the claimant to receive the amount. 16. We find that the wisdom of the Arbitrator in arriving at the conclusion regarding Award on claims under heads (h) and (i) call for no interference as the same appears to based on sound reasoning. Therefore, the court below was justified in not interfering with the Award of the Arbitrator. The appeal is found to be without any merits and hence it is dismissed with costs. Pending applications, if any, shall stand disposed of. Sd/- ami/ **P.B.SURESH KUMAR JUDGE** Sd/- **C.S.SUDHA JUDGE**