Arb.Appeal Nos. 44 of 2013 & 63 of 2013, High Court of Kerala at Ernakulam

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE V.CHITAMBARESH** ## **&** ## **THE HONOURABLE MR. JUSTICE R. NARAYANA PISHARADI** **TUESDAY ,THE 04TH DAY OF DECEMBER 2018 / 8TH AGRAHAYANA, 1940** ## **Arb.A.No. 44 of 2013** **AGAINST THE ORDER DATED 15-12-2012 IN OP(ARBITRATION) 53/2011 of THE DISTRICT COURT,ERNAKULAM** ## **APPELLANT:** **KERALA STATE SPORTS COUNCIL REPRESENTED BY ITS SECRETARY, THIRUVANANTHAPURAM.** **BY ADV. SMT.P.K.RADHIKA,SC,STATE SPORTS COUNCIL SRI.K.ANAND (SR)** ## **RESPONDENTS:** **1 MRS. ROHINI PRASAD W/O. KRISHNA PRASAD, ROHINI PRASAD ASSOCIATES, 501, LAND MARK ENCLAVE, SAHODARAN AYYAPPAN ROAD, VALANJAMBALAM, KOCHI-19. 2 SANTHOSH JOHN B. ARCH., 2ND FLOOR, 29/1333-A, NEAR ROZY BAZAR, VYTTILA P.O., ERNAKULAM, KOCHI-19.** **BY ADV. SRI.B.JAYASANKAR** **THIS ARBITRATION APPEAL HAVING BEEN FINALLY HEARD ON 29.11.2018, ALONG WITH ARB.A.63/2013, THE COURT ON 04.12.2018 DELIVERED THE FOLLOWING:** Arb.Appeal No.44/2013 & 2 66/2013 **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE V.CHITAMBARESH** **&** **THE HONOURABLE MR. JUSTICE R. NARAYANA PISHARADI** **TUESDAY ,THE 04TH DAY OF DECEMBER 2018 / 8TH AGRAHAYANA, 1940** ## **Arb.A.No. 63 of 2013** **AGAINST THE ORDER DATED 15-12-2012 IN OP(ARBITRATION) 53/2011 of THE DISTRICT COURT,ERNAKULAM** ## **APPELLANT/1ST RESPONDENT/CLAIMANT:** **MRS.ROHINI PRASAD AGED 55 YEARS W/O.MR.KRISHNA PRASAD, ROHINI PRASAD ASSOCIATES, 501, LAND MARK ENCLAVE, SAHODARAN AYYAPPAN ROAD, VALANJAMBALAM, KOCHI - 682 016, NOW SHIFTED TO 48/1783 A1, PERUMBOTTA ROAD, ELAMAKKARA, KOCHI - 682 026.** **BY ADV. SRI.B.JAYASANKAR** ## **RESPONDENTS/PETITIONER/2ND RESPONDENT:** **1 M/S.KERALA SPORTS COUNCIL REPRESENTED BY ITS SECRETARY, KERALA SPORTS COUNCIL, THIRUVANANTHAPURAM, PIN - 695 001.** - **2 SRI.SANTHOSH JOHN B.ARCH M.S F.I.I.** **A REGISTERED ARCHITECT & APPROVED VALUER, THE SOLE ARBITRATOR, 2ND FLOOR, 29/1333-A, NEAR ROSY BAZAR, VITTILA P.O., PIN - 682 019.** **SMT.LATHA KRISHNAN SC KERALA STATE SPORTS COUNCIL SMT.P.K.RADHIKA SC STATE SPORTS COUNCIL SRI.K.ANAND (SR) FOR R1** **THIS ARBITRATION APPEAL HAVING BEEN FINALLY HEARD ON 29.11.2018, ALONG WITH ARB.A.44/2013, THE COURT ON 04.12.2018 DELIVERED THE FOLLOWING:** Arb.Appeal No.44/2013 & 66/2013 3 ## **V.CHITAMBARESH &** ## **R.NARAYANA PISHARADI, JJ.** ************************** Arb.Appeal Nos.44 of 2013 & 63 of 2013 ---------------------------------------------Dated this the 4[th] day of December, 2018 ## **JUDGMENT** ## **R.Narayana Pisharadi, J** These appeals arise out of the order passed by the Second Additional District Judge, Ernakulam in O.P (Arb) No.53 of 2011. 2. An agreement was executed between the Kerala State Sports Council (hereinafter referred to as 'the Council') and Mrs.Rohini Prasad (hereinafter referred to as 'the claimant'), an architect, regarding the construction of Jinachandra Memorial Stadium at Kalpetta. After execution of the agreement, the claimant prepared a plan of the proposed project and submitted it to the Council and claimed the initial fees. Then, the Council took the stand that the agreement was entered into with her not with the concurrence of the technical/finance committee of the Council Arb.Appeal No.44/2013 & 4 66/2013 and also that the Secretary of the Council had no authority to enter into the agreement. The Council wanted the claimant to execute a fresh agreement but she was not amenable to it. The Council terminated the agreement by sending a letter dated 28.05.2008. Then the claimant approached this Court and filed Arb.Request No.10/2009 and as per the order of this Court, the dispute was referred to arbitration. 3. No oral evidence was adduced by the parties before the Arbitrator. The documents produced by the claimants were marked as Exts.A1 to A14 and the documents produced by the Council were marked as Exts.R1(a) and R1(b). The Arbitrator found that the Council illegally terminated the agreement and that the claimant is entitled to realise an amount of Rs.5,00,000/- from the Council with interest @ 18% per annum from 28.05.2008 till the date of realisation. 4. Aggrieved by the award passed by the Arbitrator, the Council filed O.P.(Arb) No.53/2011 in the District Court, Ernakulam. Learned Additional District Judge found that the claimant is entitled to get the amount for the work done till the termination of the agreement and that it comes to Rs.75,000/-. Therefore, the Arb.Appeal No.44/2013 & 5 66/2013 Learned Additional District Judge allowed the application filed under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act') in part and set aside the award of the Arbitrator in part and allowed the claimant to realise only an amount of Rs.75,000/- with interest @ 18% per annum from 28.05.2008 till the date of realisation. Aggrieved by the order passed by the Learned Additional District Judge, the Council has filed Arb.Appeal No.44 of 2013 and the claimant has filed Arb.Appeal No.63 of 2013. 5. We have heard learned counsel for the parties and perused the records. 6. The Council has got a plea that the agreement with the claimant was executed by the Secretary without the concurrence of the technical/finance committee and that the Secretary had no authority to enter into the agreement. As rightly pointed out by the Learned Additional District Judge, whether the Secretary of the Council had obtained the concurrence of the technical/finance committee of the Council was of no concern to the claimant. The agreement was entered into by the Secretary, on behalf of the Council, representing the Council. Execution of the agreement by Arb.Appeal No.44/2013 & 6 66/2013 the Secretary is not disputed by the Council. The Arbitrator has found that the agreement is genuine. Learned Additional District Judge has rightly found that there is no sufficient ground to interfere with the aforesaid finding of the Arbitrator. 7. The agreement contains a schedule of payment in Clause ## 5 which reads as follows: ## _**“5. Schedule of Payment**_ _Our fee shall be paid in the following stages consistent with the work done plus other charges and reimbursable expenses as agreed upon:_ |_5.1 _|_Non-refundable retainer on_|_Rs.50,000/-_| |---|---|---| ||_appointment_|| ||_(To be adjusted in the final_|| ||_bill)_|| |_5.2 _|_Design Stage_|_15% of the total fee payable_| |_5.3 _|_Submission Stage_|_35% of the total fee payable_| |_5.4 _|_Working Drawing Stage_|_50% of the total fee payable_| |_5.5 _|_Appointment of contractors_|_70% of the total fee payable_| ||_stage_|| |_5.6 _|_Construction Stage_|_100% of total fee”_| ## 8. Clause 12 of the agreement deals with termination of the agreement. It reads as follows: ## _**“12. Termination**_ _12.1 This agreement may be terminated by either one giving a written notice of not less than 30 (thirty) days, should either fail substantially to perform his part of responsibilities/duties, so long as the failure is not caused by_ Arb.Appeal No.44/2013 & 7 66/2013 ## _the one initiating the termination._ _12.2 Upon termination the Owner shall pay Architect the fees incurred for the wor_ k completed till that date.” 9. The claimant has got a plea that the agreement was terminated by the Council without giving written notice of thirty days, as required under the agreement. The Council has got no plea that notice of 30 days was given before termination of the agreement. But, the termination clause in the agreement does not provide for the consequence of an illegal termination. Clause 12.2 only provides that upon termination, the Owner shall pay the Architect the fees incurred for the work completed till that date. Therefore, on termination of the agreement, the claimant is entitled to the fees incurred for the work completed by her till the date of termination. 10. There is no dispute with regard to the fact that the agreement was terminated on 28.05.2008. The Arbitrator has found that the claimant had done her part of the work which she was expected to do as per the agreement. It is found by the Arbitrator that the claimant prepared the necessary plan and estimates and forwarded the same to the Council with a forwarding letter. The Arbitrator then found that the estimated cost of the Arb.Appeal No.44/2013 & 8 66/2013 work was two crores rupees and as per Clause 4 of the agreement, the fees payable to the Architect is 2½% and it works out to Rs.5,00,000/- and the claimant is entitled to realise that amount from the Council because the agreement was illegally terminated by the Council on account of no fault of the claimant. 11. It is true that in Clause 4 of the agreement, it is provided that the basic fees for the project will be 2.5% of the executed value of the project for rendering consultancy services in architectural, structural, electrical, sanitary and plumbing, HVAC and landscape architecture. But, this clause has to be read along with Clause 12.2 of the agreement which provides that upon termination of the agreement, the owner shall pay the architect the fees incurred for the work completed till that date. The claimant had prepared the plan and drawings and submitted them to the Council. But, there is no material to show that the plan and drawings thus submitted were final in nature ready to be submitted for statutory approval. Different stages of the services to be rendered by the architect are explained in Clause 1 of the agreement. Clause 1.1 refers to the design stage and clause 1.2 refers to the submission stage. Clause 1.2 is explained in the Arb.Appeal No.44/2013 & 66/2013 9 ## agreement as follows: “Prepare drawings and documents necessary for statutory approvals.” When the agreement was terminated, that stage had not reached and the claimant had not completed that work. In other words, the claimant had only completed the design stage of the work. Therefore, she is entitled to get 15% of the total fee payable which comes to Rs.75,000/-. Learned Additional District Judge has rightly found that she is entitled to get only that much amount from the Council. 12. Learned counsel for the claimant would contend that only on the grounds mentioned under Section 34(2) of the Act that an award can be set aside by the court. There can be no dispute with this proposition. It is to be noted that when the arbitral award is in conflict with the public policy of India, it can be set aside by the Court under Section 34(2)(b)(ii) of the Act. In **Delhi Development Authority v. R.S.Sharma : (2008) 13 SCC 80,** the Hon'ble Supreme Court has held that an award which is against the terms of the contract or which is patently illegal could be interfered with by the Court under Section 34(2) of the Act. In the instant case, the award passed by the Arbitrator is against the Arb.Appeal No.44/2013 & 10 66/2013 terms of the agreement between the Council and the claimant, especially Clause 12.2 read with Clauses 4 and 5 of the agreement. The learned Additional District Judge has rightly found so and therefore, the award is liable to be interfered with. 13. The discussion above would lead to the conclusion that there is no sufficient ground to interfere with the impugned order passed by the Learned Additional District Judge. The appeals are liable to be dismissed. Consequently, we dismiss the appeals. No costs. ## (sd/-) **V.CHITAMBARESH, JUDGE** (sd/-) **R.NARAYANA PISHARADI, JUDGE** jsr/03/12/18 True Copy PS to Judge