State of Kerala and others v. N. Jayaprasad

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** **THE HONOURABLE MR.JUSTICE V.CHITAMBARESH & THE HONOURABLE MR. JUSTICE SATHISH NINAN** **FRIDAY, THE 11TH DAY OF AUGUST 2017/20TH SRAVANA, 1939** **Arb.A.No. 24 of 2011 (S) -------------------------** **AGAINST THE ORDER IN OP(ARB.)29/2002 OF PRL.SUB COURT,TRIVANDRUM DATED 09.11.2009** **APPELLANTS/RESPONDENTS:** **------------------------** **1. THE STATE OF KERALA, REPRESENTED BY THE SECRETARY, IRRIGATION DEPARTMENT GOVERNMENT OF KERALA, SECRETARIAT, THIRUVANANTHAPURAM.** **2. THE CHIEF ENGINEER, PROJECT III, KALLADA, PULAMON P.O., KOTTARAKKARA.** **3. THE SUPERINTENDING ENGINEER, K.I.P.(LB) CIRCLE, KOTTARAKKARA (NOW DEFUNCT) CHARGE HELD BY THE SUPERINTENDING ENGINEER, KIP, RB CIECLE, PULAMON P.O., KOTTARAKKARA.** **4. THE EXECUTIVE ENGINEER, KIP, LB - DIVSION, NO.VI KOTTARAKKARA, (NOW DEFUNCT) CHARGE HELD BY THE EXECUTIVE, ENGINEER, KIP, RB DIVISION, NO.II, PULAMON P.O. KOTTARAKKARA.** **BY ADV. GOVERNMENT PLEADER P.M.SATHEESH** **RESPONDENT/CLAIMANT:** **---------------------** **N.JAYAPRASAD, S/O. NARAYANAN, CONTRACTOR, PUSHPAMANGALAM, PUNALUR KOLLAM DISTRIT, PIN - 691 305.** **BY ADV. SRI.T.S.HARIKUMAR ADV. SRI.K.JAGADEESH ADV. SRI.P.B.SAHASRANAMAN** **THIS ARBITRATION APPEALS HAVING BEEN FINALLY HEARD ON 11-08-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **vdv** **V.Chitambaresh & Sathish Ninan, JJ. ============================== Arb. Appeal No.24 of 2001 ========================== Dated this the 11[th] day of August, 2017** ## **JUDGMENT** ## **Sathish Ninan, J** 1. The order dated 09.11.2009 in O.P (Arb) No.29/2002 of Principal Sub Court, Thiruvananthapuram is under challenge by the respondents in the arbitration proceedings. As per the impugned order the court below refused to interfere with the award passed by Arbitrator in favour of the claimant to recover an amount of Rs.7,98,024/- from the appellants herein. 2. On 29.10.1984 an agreement was entered into by the claimant with the appellants for the work of “KI & TCDB – Formation of Melila West Distributory from Ch:3KM to 10KM Package II Part III from Ch:3750M to 5005M including CD works”. The work was to be completed on or before 14.01.1986. However, the work was completed only on 31.08.1994. The dispute that arose between the parties lead to the appointment of Arbitrator. Before the Arbitrator, as many as 9 Arb. Appeal No.24/2011 2 claims were raised for a total amount of Rs.93,61,59/-. However, the Arbitrator upheld the claims only under two heads namely claim for rock blasting and the claim for earth work. Though the appellants approached the subordinate Judge's Court in an application under Section 30 of the Arbitration act 1940, they were not successful and hence the appeal. 3. Heard the learned Govt. Pleader on behalf of the appellants and Advocate Sri. P.B.Sahasrabaman on behalf of the claimant/respondent. 4. The learned Govt. Pleader would contend that the arbitration proceedings could not have been entertained since the appointment of Arbitrator was sought for beyond the time limit fixed under the Local Competitive Bidding (LCB) specifications. Clause 52 of LCB conditions provides that the Arbitrator is to be appointed within 30 days after expiry of 'defects liability period'. The 'defects liability period' is six months from the date of completion of the work. Arb. Appeal No.24/2011 3 The work in question was completed on 31.08.1994 and the defect liability period expired on 28.02.1995. The request for arbitration was not made within 30 days from 28.02.1995 in terms of clause 52 of the LCB conditions. Therefore, according to the learned Govt. Pleader, the very appointment of the Arbitrator was illegal and consequently the award was vitiated and needs to be interfered with. According to the learned Govt. Pleader, the fact that a completion certificate was not issued is of no consequence since the determining factor is the certified date of completion and not the date of issue of the certificate of completion. Therefore, appointment of Arbitrator should have been sought for within 30 days from 28.02.1995 when the 'defects liability period' expired. 5. However, we are unable to agree with the said contention. Clause 18 of the LCB conditions provides that the defects liability period commences from the 4 Arb. Appeal No.24/2011 date of certificate of completion. It is only when the authority certifies that the work has been completed could it be reckoned that the work is completed. Therefore, the contention of the learned Govt. Pleader that the issuance of completion certificate is insignificant, cannot be accepted. Admittedly, certificate of completion has not been issued. We turn down the contention that the claim is not brought before the Arbitrator within the time stipulated. 5. Next contention of the learned Govt. Pleader is that though the work was executed before 1986, the Arbitrator has adopted the 1992 schedule of rates. As noted supra, it is the case of the appellants that the work was completed only on 31.08.1994 though the same was to be completed before 14.01.1986. The Aarbitrator considered the evidence and has passed an award adopting the 1992 schedule of rates. The Arbitrator has taken into consideration the period during which the work was carried on and completed. Though claims 5 Arb. Appeal No.24/2011 were made under several heads, most of the claims were rejected by the Arbitrator. The Arbitrator has looked into the measurement book to ascertain regarding the quantity of work done. The court below has in the application under section 34 found that "the rates allowed by the Arbitrator were very reasonable which does not call for any interference from the court." The Apex Court has repeatedly cautioned the scope of interference with an award of the Arbitrator. If the view taken by the Arbitrator is a possible one, the award is not liable to be interfered with. The reasonableness of the reasons given by the Arbitrator is not to be gone into by the court (See **Arosan Enterprises Ltd. v. Union of India and Another** ([1999] 9 SCC 449) **, Ispat Engineering & Foundry Works, B.S.City, Bokaro v. Steel Authority of India Ltd., B.S.City, Bokaro** ([2001] 6 SCC 347) **, Oil & Natural Gas Corporation Ltd. v. Saw Pipes Ltd.** ([2003] 5 SCC 705) **, Kwality Manufacturing Corporation v. Central** 6 Arb. Appeal No.24/2011 **Warehousing Corporation** ([2009] 5 SCC 142] **, Madhya Pradesh Housing Board v. Progressive Writers and Publishers** ([2009] 5 SCC 678) **, O.P.Pathrose v. State of Kerala and Another** ([2010] 12 SCC 100), **Ravindra Kumar Gupta and Company v. Union of India** ([2010] 1 SCC 409) **, State of Rajasthan v. Puri Construction Co.Ltd.** ([1994] 6 SCC 485) **, G.Ramachandra Reddy and Company v. Union of India and Another** ([2009] 6 SCC 414) **, Continental Construction Ltd. v. State of U.P.** ([2003] 8 SCC 4) **, State of U.P. v. Allied Constructions** ([2003) 7 SCC 396) **, Bhagavati Oxygen Ltd., v. Hindustan Copper Ltd.** ([2005] 6 SCC 462) and **Municipal Corporation of Delhi v. M/s.Jagan Nath Ashok Kumar and Another ([1987] 4 SCC 497)** . The court below has found the award to be reasonable. 6. It is seen that the Arbitrator has granted interest at the rate of 18% per annum which we feel is excessive considering the prevalent Bank rate of interest. In tune with the law laid down by the Apex 7 Arb. Appeal No.24/2011 Court in **State of Rajasthan and Another v. Ferro Concrete Construction Private Limited** ([2009] 12 SCC 1), we re-fix the interest at the rate of 9% per annum. We do not find any grounds to interfere with the award except regarding the rate of interest. 7. In the result the appeal is allowed in part. The rate of interest payable is re-fixed at 9% per annum. The impugned award stands confirmed in all other respects. No costs. ## **V.Chitambaresh, Judge** **Sathish Ninan, Judge** vdv //True copy// P.A to Judge