State of Kerala & The Superintending Engineer (N.H.), Central Circle, Thrissur v Hindustan Construction Company Ltd.

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE P.B.SURESH KUMAR & THE HONOURABLE MRS. JUSTICE C.S. SUDHA WEDNESDAY, THE 9[TH] DAY OF MARCH 2022 / 18TH PHALGUNA, 1943 ARB.A NO. 35 OF 2011 AGAINST THE JUDGMENT AND DECREE DTD 16/3/2011 IN OP(ARB.) 64/2007 OF DISTRICT COURT, ERNAKULAM ## APPELLANTS/PETITIONERS: - 1 STATE OF KERALA, REPRESENTED BY THE CHIEF ENGINEER, NATIONAL HIGHWAY, KERALA STATE PUBLIC WORKS DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM. - 2 THE SUPERINTENDING ENGINEERN (N.H.), CENTRAL CIRCLE, THRISSUR-680 020. BY SENIOR GOVERNMENT PLEADER T.K.VIPINDAS ## RESPONDENT/RESPONDENT HINDUSTAN CONSTRUCTION COMPANY LTD., HINCON HOUSE, LAL BAHADUR SASTRI MARG, VIKROLI, (WEST), MUMBAI-400 083. BY ADVS.SRI.M.RAMESH CHANDER SMT.K.A.SANJEETHA SRI.GOVIND G.NAIR THIS ARBITRATION APPEAL HAVING COME UP FOR HEARING ON 24/02/2022, THE COURT ON 09.03.2022 DELIVERED THE FOLLOWING: 2 Arb. Appeal No.35 of 2011 ## P.B. SURESH KUMAR & C.S. SUDHA, JJ. ----------------------------------------------Arb. Appeal No.35 of 2011 ----------------------------------------------Dated this the 9[th] day of March, 2022 ## J U D G M E N T ## C.S. Sudha, J. This is an appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (the Act), filed against the order dated 16/03/2011 in O.P.(Arb) No.64/2007 on the file of the District Court, Ernakulam. The appellants herein are the petitioners before the court below and the respondents in the arbitration proceedings. The respondent herein is the respondent before the court below and the claimant – contractor in the arbitration proceedings. The Arbitral Tribunal (AT) consisting of three Arbitrators passed an award dated 15/11/2006. Aggrieved by the award, the appellants herein moved an application under Section 34 of the Act before the District Court, Ernakulam, which was dismissed by way of the impugned order. Hence the petitioners before the court below are before this Court in this appeal. The parties in this appeal will be referred to as described in the arbitral proceedings. 3 Arb. Appeal No.35 of 2011 2. An agreement dated 16/12/1992 was entered into between the claimant – contractor and the respondents for the “design and construction of link road NH47-A Phase II connecting Wellington Island and Cochin Bypass from chainage 3750M to 5920M excluding the Railway Over Bridge (ROB) portion”. The contract price was ₹ 35.58 crores. The stipulated date of completion was 31/12/1996, which was extended by the respondents till 30/06/1998. The works under the contract were certified by the respondents as substantially completed on 30/06/1998. Certain disputes and difference arose between the claimant – contractor and the respondents in the performance of the contract agreement. The claimant contractor invoked Clause 67 of the Agreement and requested the matter to be referred for arbitration. One arbitrator each was nominated by the claimant – contractor and the respondents. The third arbitrator nominated by the Ministry of Road Transport and Highways, was the presiding Arbitrator of the AT. 3. Before the AT, the claimant – contractor put forward a claim for an amount of ₹ 3,16,94,085.71/- under 15 various heads. Out of the total 15 claims, claim no.1, 4, 5, 7, 8, 9, 10, 11, 13, 14 and 15 were allowed and the others were rejected. Aggrieved, the respondents moved the District Court 4 ## Arb. Appeal No.35 of 2011 under section 34 of the Act. By way of the impugned order, the application was dismissed and the Award confirmed. Hence the present appeal by the respondents/ State. 4. Heard Sri.T.K.Vipindas, the learned Senior Government Pleader for the appellants and Sri.Govind G.Nair, the learned counsel for the respondent. 5. Before we go into the claims, a brief reference to the law on the point. Section 34 read with Section 5 makes it clear that an arbitral award can be set aside only on the grounds mentioned under Section 34 (2) and not otherwise. Sub-section (2) of Section 34 amended by the Amendment Act 3/2016, came into retrospective effect from 23.10.2015. Section 34, as amended, will apply only to Section 34 applications that have been made to the Court on or after 23.10.2015, irrespective of the fact that the arbitration proceedings may have commenced prior to that date ( Ssangyong Engineering and Construction Co. Ltd. v. NHAI, 2019 KHC 6554 ). Here, O.P.Arb.No.64/2007 has been filed before 23.10.2015. Therefore, it is the unamended provisions of sub-section (2) of section 34 Act that is applicable in this case. 5 ## Arb. Appeal No.35 of 2011 6. Apparently, the challenge in this appeal is mounted based on Section 34(2)(b)(ii) of the Act, which before its amendment in 2015, read- “(ii) The arbitral award is in conflict with the public policy of India. Explanation. - Without prejudice to the generality of subclause (ii) it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption or was in violation of S.75 or S.81.” An Award under the aforesaid provision can be set aside if it is contrary to(a) fundamental policy of Indian law; or (b) the interest of India; or (c) justice or morality, in addition, (d) if it is patently illegal. Illegality must go to the root of the matter and if the illegality is of trivial nature, it cannot be found that Award is against the public policy. Award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the court. Such an Award is opposed to public policy and is required to be adjudged void. What would constitute public policy is a matter dependent upon the nature of transaction and nature of statute. For the said purpose, the pleadings of the parties and the materials brought on record are relevant to enable the court to 6 ## Arb. Appeal No.35 of 2011 judge what is in public good or public interest, and what would otherwise be injurious to the public good at the relevant point, as contra distinguished from the policy of a particular Government. A decision to be considered perverse must be so irrational, that no reasonable person would have arrived at the same. However, it was held that when a court applies the "public policy" test to an arbitration Award, it does not act as a court of appeal and consequently errors of fact cannot be corrected. A possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award. Thus, an award based on little evidence or on evidence which does not measure up in quality to a trained legal mind would not be held to be invalid on that score. Once it is found that the arbitrator’s approach is not arbitrary or capricious, then he is the last word on facts ( Associate Builders Vs. Delhi Development Authority, 2015 (3) SCC 49: AIR 2015 SC 620 ). Therefore, to hold a finding to be perverse, it must be one which is based on no evidence or one that no reasonable person would have arrived at. Unless it is found that some relevant evidence has not been considered or that certain inadmissible material has been taken into consideration, the finding cannot be said to be perverse Furthermore, it is well settled that it is not 7 ## Arb. Appeal No.35 of 2011 permissible for a Court to examine the correctness of the findings of the Arbitrator as if it were sitting in appeal over an award. As such, a Court while considering the objections under S.34 of the Act is not expected to re - appreciate the entire findings and reassess the whole case of the parties. With the aforesaid principles in mind, we will now consider the challenge raised by the respondents against the findings in the Award. 7. Claim No.1 reads - “Towards cost incurred by the Contractor due to increase in height of the bridge. Claim amount _₹_ 94,95,000/-”. According to the claimant – contractor, they had prepared the design of the bridge based on the tender data and initial drawings prepared by the respondents. But while setting it out, it was found that the tendered profile/alignment of the proposed bridge would not fit in the acquired land. The respondents took a few months to finalise the new alignment to fit the proposed bridge within the acquired land, duly accommodating the revised alignment requirements of the Railways for its 110M long ROB. According to the claimant the new alignment caused considerable shift both laterally and longitudinally and this affected the gradients/levels also. After a series of discussions with the respondents including the Ministry of Surface Transport (MOST), the claimant – contractor agreed to revise the design. The 8 ## Arb. Appeal No.35 of 2011 respondents engaged CES for checking the design. The design aspects and other details were communicated by the claimant to the respondents by way of letter dated 21/11/1994. The Chief Engineer PWD, Kerala, conveyed his no objection to the claimant's revised design, subject to the condition that no extra cost would be paid to the claimant on account of the proposed change in the design of the bridge. According to the claimant, extra payments on account of rise in superstructure had been admitted by the respondents in the running bills, as the rise in the level of superstructure was consequent to - (i) change in alignment, as the original alignment would not fit in the acquired land. The alignment was revised by the respondent's Engineer giving longitudinal shift of 17.5M and changing the angles of the curves resulting in lateral shift in alignment. Due to the longitudinal shift, the length of embankment at certain areas got reduced. In order to maintain the longitudinal slope within the design parameters for smooth vehicular movements, the height of the bridge at various pier locations had to be changed. The shift of pier location from the original location had an impact on the height of piers at certain areas as there was a navigation channel at the sloping portion of the bridge. Thus, the longitudinal shift called for extra height of the piers for maintaining the navigation clearance; (ii) there was 9 ## Arb. Appeal No.35 of 2011 change in location of the ROB and the headroom requirement of the railways. As per the original drawing approved by the Engineer, the railway line was exactly at the center of the ROB. However, due to the change in design, the centerline of the railway line was 71.5M on the western side and 36M on the eastern side from the railway boundaries. This resulted in increase in height at one end of the ROB to maintain minimum clearance; (iii) the raising of NH 47 in the process of 4 laning of the old road by several courses of road layers; (iv) change in soil strata and inconsistencies in bearing capacities because of change in alignment and fear of unequal settlement and consequential damage to continuous structure and (iv) reduction in thickness of wearing course to 56 mm as against 168 mm as provided in the Notice Inviting Tender (NIT) drawing. The reduction in thickness necessitated the increase in height of the deck slab to maintain the longitudinal slope in line with the connecting roads at both ends. 8. The claimant contended that the respondents were convinced after a series of discussions that extra payment was due to the claimant as contemplated in the contract based on Variation Schedule VIII serial item III of the Bill of Quantities (BOQ). The extra payment was rejected by the respondents as MOST did not agree to the revised estimate on 10 ## Arb. Appeal No.35 of 2011 the ground that the claimant had agreed not to revise the lump sum contract value on account of change in design. According to the claimant, by agreeing not to revise the lump sum contract, they had not surrendered their right to invoke the aforesaid provision in the BOQ to claim payment for the cost incurred due to rise in the level of superstructure. The Superintending Engineer (NH) PWD, Kerala by Ext.C-53 letter dated 19/08/1997 had approved the claim and in fact payment was also made. Exts.C-54, C-55 and C-34 letters of the respondents would substantiate this claim. Since the payment for increase in height of bridge is not an extra item, but a variation activity as provided in the Variation Schedule of the Agreement, an amount of ₹ 94.95 lakhs is due, contended the claimant. 9. The respondents on the other hand contended that the claimant – contractor had specifically agreed vide letter dated 21/11/1994 that no extra cost for the execution of the project on account of change in the design of the bridge/superstructure would be claimed. The claimant had also been informed that no extra cost would be paid for the completion of the project on account of the proposed change in the type of superstructure. During the course of the work, a sum of ₹ 72,39,000/- was inadvertently paid 11 ## Arb. Appeal No.35 of 2011 to the claimant overlooking the undertaking given by the claimant. The respondents are empowered as per Clause 60.5 of the Conditions of Contract to correct or modify any interim payment certificate. At the time of settlement of final bill, this Clause was invoked and the over payments made were adjusted in the final account. The respondents had included this item while submitting the revised estimate as suggested by the claimant – contractor. However, inclusion of an item in the revised estimate does not confer any right on the claimant. Due to the change of design, progress of the work suffered for which the claimant was paid idling charges to the tune of ₹2,90,58,356/-. Having received compensation on account of idling charges due to the change in design, on the basis of an amicable settlement, the claimant-contractor cannot thereafter raise further claims on the same head, especially when they had agreed that they would not claim any extra cost on account of change of design, contended the respondents. 10. The AT after considering the documentary evidence produced by either side found that the claimant-contractor had in fact agreed that they would not claim any extra cost incurred for execution of the project on account of change in superstructure. In view of the claimant's clear and unconditional undertaking for execution of change in design without any 12 ## Arb. Appeal No.35 of 2011 extra cost, it was held that no amount was payable to them for increase in height of the bridge. Further, the AT also found that the contract permitted the Engineer to make necessary corrections or modifications in the previous interim payment certificates and that the Engineer was justified in subsequently adjusting the overpayments found to have been made to the claimant – contractor. However, the AT found that due to the change in alignment both longitudinally and laterally, there was change in the height of piers at various locations. The road level at the time of NIT and after the execution of the work did not show any difference. From the materials on record, it was found that there was an average increase in height by 52.1 cm. This increase was due to the change in design of the bridge/superstructure. The increase in height, after deducting the increase in height, due to the change in design of superstructure, was found to be 3.5 cm. Therefore, the AT accepted the claim for payment for this additional increase at the rate provided in the BOQ. The AT concluded that the claimant is entitled only to the extent of cost incurred due to increase in the height of the bridge due to change in alignment alone, i.e., for an increase in height of 3.50 cm. The amount payable was found to be ₹ 5,25,000/- i.e., at the rate of ₹ 1.50 lakh 13 ## Arb. Appeal No.35 of 2011 per cm. It was submitted by the learned Senior Government Pleader appearing for the respondents that this finding of the AT is against the provisions of the agreement and the express agreement made by the claimant that they would not claim any extra cost due to the change in design. This finding is against the materials on record and hence perverse. 11. The AT has given cogent reasons for arriving at its conclusion. Charges were not given for the cost incurred due to increase in height of the bridge due to change in design, which had alone been agreed to by the claimant. The cost incurred due to increase in height because of the change in alignment only has been allowed. This change in alignment was brought in by the respondents and so the claimant cannot be held responsible for the same. Moreover, the AT manned by technical experts appear to be more competent to decide on this technical aspect rather than the court which lacks expertise in this field. We find no infirmity in the finding of the AT on this claim. 12. Claim No.4 reads “Cost towards idling charges due to bundhs. Claim amount is _₹_ 7,72,641.25/-”. According to the claimant, in a meeting convened by the Chief Engineer (NH) on 13/05/1998, the claim of 14 ## Arb. Appeal No.35 of 2011 the claimant had been accepted in principle in accordance with the provisions of the contract. This was communicated to them vide Ext.C-59 letter dated 18/05/1998. The respondents vide letter dated 11/02/1999 had communicated the minutes of the meeting held on 10/02/1999, in which also it is clearly stated that the claim regarding bundh, after excluding the number of affected days up to July 1995 would be cleared. However, in the respondent's letter dated 16/11/1999, it has been stated that the work under the project was not affected due to national/state level bundhs. Subsequently, the respondents excluded 12 days under this head while granting extension of the contract by 6 months’ due to various hindrances not attributable to the claimant. Thus, the respondents did recognise the fact that bundhs could not even be remotely attributed to the claimant. In such circumstances, the claimant contended that they are entitled to compensation towards idling charges of labour and equipment in terms of Clause 20.4 of the General Conditions of Contract (GCC). 13. The respondents on the other hand denied this claim. According to them they are also not responsible for the bundhs and as such, they also cannot be held liable to compensate for the loss alleged to have 15 ## Arb. Appeal No.35 of 2011 been sustained by the claimant. Clause 20.4 of the GCC dealing with“Employers Risk”, bundh is not included as an item for which compensation can be claimed. Furthermore, bundhs are declared in advance, and hence the claimant-contractor ought to have re-deployed their men and machinery to avoid any loss on this account. The claimant has not also furnished details of the number of men and machineries that had been deployed during the bundh days. The minutes of the meetings vide Ext.C-59 dated 18/05/1998 and Ext.C-57 dated 11/02/1999 are not directions to pay the claimant under this head, but only a direction to the Executive Engineer to verify the claims based on the agreement. As the contract does not provide for any compensation to be paid on this account, the claimant is not eligible for any amount, contended the respondents. 14. The AT after taking into consideration Clauses 12.2 and 20.4 of the GCC, held that, had the contractor attempted to carry out works during the bundh days, there was every possibility of disorder being caused at the work site, as it is well known that the trade unions/political parties calling for bandhs would never allow any work to be done on the said days. As per Clause 12.2, the contractor is eligible for extension of time as well as compensation if they encounter any physical obstruction or physical 16 ## Arb. Appeal No.35 of 2011 condition by which they are not able to carry out their works. While granting extension of time, the respondents had taken into account 12 days due to various hindrances and obstructions caused which were not attributable to the claimant. In the meeting held by the Chief Engineer NH on 13/05/1998, it was only decided that the bundh claim of the claimant could be accepted in principle in accordance with the provisions of the contract. In the meeting, the Executive Engineer was also directed to verify the details of the claim submitted by the contractor and submit the proposal for approval. 15. The AT found that none of the officials had taken any steps to comply with the direction of the Chief Engineer NH. No attempt to verify the records of the men and machinery that was supposed to have been kept idle during the bundh days was seen made. The AT noted that it is a known fact that no work is possible during the bundh days. Furthermore, it was also not possible to redeploy men and machineries at short notice at which bundhs are declared. The AT was convinced of the loss that had been suffered by the claimant under this head and hence the claim for an amount of ₹7,72,641.25/- was allowed. We do not find any infirmity or perversity in the reasons given by the AT for allowing this claim. 16. Claim No.5 reads - “Cost towards Cleaning of Deck Slab. 17 ## Arb. Appeal No.35 of 2011 Claim Amount Rs.88,500/-”. According to the claimant, the cleaning of the deck slab had been seen personally by the Executive Engineer and the same was confirmed vide Ext.C-60 letter dated 14/09/1998. This work was done during the Defects Liability Period. The respondents never denied the fact that the claimant had done this work. The rejection of this claim by the respondents on the ground that the earlier AT had disallowed it, is patently incorrect, as the claimant had suitably modified the claim amount in accordance with the award of the earlier Arbitrators. The respondents on the other hand contended that the cleaning of deck slab is an integral part of the wearing course and so the claim cannot be allowed. 17. The AT found that the work claimed to have been done by the claimant had not been specifically denied by the respondents. The AT also found that the claim had been suitably modified by the claimant in accordance with the earlier arbitral award. Hence the claim of ₹ 88,500/was accepted. 18. This is a finding arrived at on the basis of facts and materials produced before the AT. It is fairly well settled that once it is found that the arbitrators’ approach is not arbitrary or capricious, then the AT is the 18 ## Arb. Appeal No.35 of 2011 last word on facts. We are unable to find any infirmity in the finding of the AT. 19. Claim No.7 reads - “Towards reimbursement of Sales Tax on aggregates (Amount claimed Rs.3,52,466/- as against Rs.2,91,617/admitted by the Respondent.)” According to the claimant, the quantities of aggregates was arrived at as per the methodology mutually accepted by both sides, as evidenced by Ext.C-59 letter of the respondents dated 18/05/1998. The materials used which are not included in BOQ attract the same benefits as applicable to materials for BOQ items. The rate paid by the claimant has been included in the portion of Sales Tax, which fact was agreed during the discussions held at the relevant time. According to the respondents, it was the duty of the contractor to provide this service, and so the claim is not justified. 20. The AT based on the minutes of the meeting held on 18/05/1998 held that the claim for sales tax on aggregates was payable under the Kerala Finance Act, 1994, by virtue of Clause 70.2 of the GCC and also as per the NIT. Sales tax on aggregates had been introduced during the currency of the contract. The dispute was only regarding the amount to be reimbursed. The AT found the argument of the claimant that though certain 19 ## Arb. Appeal No.35 of 2011 items are not mentioned in the BOQ of a lump sum contract, the said works may have to be carried out for the successful completion of the work, to be justified. The claimant had also submitted the details of the quantities of materials for which the sales tax was to be paid along with the final account. Since both the parties agreed to reimbursement of sales tax as per the relevant conditions of the agreement and as the claim was supported by materials produced by the claimant, the AT accepted the claim for an amount of ₹3,52,466/- claimed by the claimants as against ₹ 2,91,617/- admitted by the respondents. 21. As is evident from the Award, the claim under this head is not disputed. It is only the amount due to the claimant that is disputed. The AT on the basis of the materials produced by the claimant, has allowed the claim. The respondents have not shown in what way the same is infirm or perverse. So, we are unable to find any infirmity in the finding of the AT under this head. 22. Claim No.8 reads - “Towards escalation for cement used in anti corrosive treatment (ACT) and for grouting pre-stressed cables (Claimed Amount Rs.1,91,439/- as against admitted amount of Rs.1,17,428/- by the Respondents.”. According to the claimant, the claim towards cement used in 20 ## Arb. Appeal No.35 of 2011 ACT and for grouting pre-stressed cables is ₹ 1,91,439/- whereas according to the respondents, as per Ext.RH-2 it is only ₹ 1,17,428/-. According to the claimant, the quantity of cement used for ACT was 166.64 MT @ 50 Kg/MT as per the methodology specified for the same and this quantity has been recorded in Ext.C-22 measurement book. The respondents made a revision in the quantities used amending the earlier measured quantity. The quantity of steel used for treatment was 3332.829 MT. The respondents without any documentary proof have now limited the usage of cement to 36.5 Kg per MT. The quantity of steel considered is 3146.125 MT as against 3332.829 MT used by the claimant. The respondents contended that, as per actual measurements, the quantity of steel used is 3146.125 MT and the cement required for ACT is 36.5 Kg per MT of steel. Based on this, the total consumption of cement comes to 115.95 MT and so the Department has calculated the escalation accordingly, which comes to ₹ 1,17,428/-. The respondents further contended that only the theoretical quantity of cement consumed can be taken into account for calculation of escalation and not the actual quantity consumed. 23. The AT rejected the respondents’ contention as the 21 ## Arb. Appeal No.35 of 2011 contract conditions do not stipulate that for the purpose of calculation of escalation, only theoretical quantity should be considered. Therefore, the respondents were found to be not justified in restricting the payment based on theoretical quantity. Similarly, in the case of quantity of steel, the quantity of wastage involved was also directed to be taken into account. Hence, the claimant was found entitled to 1,91,439/- as against ₹ ₹,17,428/- admitted by the respondents. 24. Here again the claim is not disputed, but it is only the amount due to the claimant that is disputed. The AT on the basis of the materials on record, has found the claim in favor of the claimant. The respondents have not shown in what way the finding is infirm or perverse. 25. Claim No.9 reads - “Towards restoring amount arbitrarily recovered by the Employer (turfing, cover slab, pitching) Rs.96,352/-.” According to the claimant, the respondents had not at any time earlier, particularly during the Defects Liability Period, which ended satisfactorily on 20/06/1999, notified any defects to be rectified. During a meeting convened by the Chief Engineer NH, PWD on 28/08/2000, certain recoveries not consistent with the contractual provisions made were objected to by the 22 ## Arb. Appeal No.35 of 2011 claimant. The claimant admitted vide letter dated 16/03/2001 for recovery of an amount of ₹ 59,352/- under various heads. The respondents on the other hand contended that an amount of 96,352/- is deductible.₹ 26. The AT found that respondents had not timely notified the defects. The amount of ` 96,352/- deducted by the respondents was found to be not justified, instead it was found that only an amount of ` 59,352/- is liable to be deducted on this account. Thus, the balance amount of ` 37,000/was held to be payable by the respondents. Here again we do not find any infirmity in the findings of the Arbitral Tribunal. 27. Claim No.10 is - “Towards recovery of amount paid to CES. Claim Amount Rs.2,20,000/-”. According to the claimant the redesign of the bridge was necessitated on account of the erroneous alignment provided in the tender documents given by the respondents. In the overall interest of the project, the claimant took up the task of rectifying the alignment after thorough soil investigation and redesigning of the bridge. The contract does not contain any clause for engaging a third party as consultant for checking the design and so the recovery of ₹ 2,20,000/- effected by the respondents under this head is in contravention of the contractual provisions. 23 ## Arb. Appeal No.35 of 2011 The respondents on the other hand contended that the claimants had accepted a sum of ₹ 2.91 crores by way of amicable settlement towards the expenses incurred due to change in alignment and so the claimant cannot now insist for any further sums. 28. The AT held that the contract between the parties contained no provision for appointing a consultant for checking the designs. This was squarely the responsibility of the respondents, though changes in the design was brought in by the contractor. There is no mutually agreed term as per which the claimant had agreed to bear the expenses under this head, hence an amount of ₹ 2,20,000/- recovered from the contractor, was held liable to be returned to the claimant. 29. We have found no infirmity in the finding of the AT that the design of the bridge had to be changed due to change in the alignment of the bridge and that this alignment change had been brought in by the respondents. This fact coupled with the absence of any clause providing for engagement of a consultant making the claimant liable for the same, justifies the finding of the AT. We find no infirmity in this finding also. 30. Claim No. 13 is- “Towards excess recovery of Works 24 ## Arb. Appeal No.35 of 2011 Contract Sales Tax at 0.7 percent, claim amount ₹ 2,995/-”. The claimant contended that out of a sum of ₹ 9,413/- recovered from the escalation bill paid in June 1998, refund @ 0.7% comes to ₹ 2,995/-. The respondents have to bear the difference of 0.7% or alternatively pay to the claimant, the excess separately as a refund. The respondents on the other hand contended that the amount of escalation bill is ₹ 5,71,520/- against the claim of ₹ 4,27,864/made. The sales tax recoverable is ₹ 9,413/-. The amount to be recovered at 1.5% comes to ₹ 8,573/-. Thus, the excess recovery is only ₹ 840/-. 31. The AT found that even though the escalation bill was for ₹ 5,71,520/, an amount of ₹ 4,27,864/- has been admitted and released for payment as escalation. Therefore, recovery of ₹ 2,995/- is an excess recovery and hence the claim is liable to be accepted. Here also the respondents have not been able to point out any infirmity in the finding. 32. Claim No.14 is- “Towards release of recovered amount for payment to railways. Claim Amount _₹_ 184216.” According to the claimant, it was their contractual obligation to execute the work of access to the railway crossing and the cost involved was to be borne by them. The 25 ## Arb. Appeal No.35 of 2011 respondent's role as the owner of the project was only that of a facilitator. According to the claimant, the Divisional Railway Manager (Works), Thiruvananthapuram, had requested the claimant vide letter dated 21/04/1999 to pay maintenance charges for the upkeep of the railway level crossing. The claimant pointed out that an amount of ₹ 1,84,216/- towards maintenance charges was not payable, as the level crossing was not required by the claimant after the initial period of two years. On the other hand, it was required by the railway contractor who carried out the ROB works. According to the claimant, the respondents have to either refund the amount to them or remit the amount with the Railways. The respondents on the other hand contended that the Department had addressed the Railways and had acted as a facilitator because the Railways would not have otherwise provided the necessary railway level crossing at the request of the contractor. Hence, the cost for the same is to be borne by the contractor. As the level crossing was allowed at the request of the respondents, the Railways has demanded an amount of ₹ 1,84,216/- towards dues from the claimant. Hence, the respondents had recovered the said amount from the claimant. The respondents are ready to release the amount to the claimant if they produce a 26 ## Arb. Appeal No.35 of 2011 clearance certificate from the Railways. If not, the respondents are bound to remit the same to the Railways as and when demanded by the latter. 33. The AT found that the claimant is disputing and objecting the amount claimed by the Railways as they had used the level crossing for two years only. Maintenance charges was found payable by the claimant. However, the dispute was regarding the amount payable, which is a dispute between the Railways and the claimant-contractor. It was found that the respondents had not even remitted the amount to the Railways and had simply held back the amount with them. The deduction of the amount of ₹1,84,216/- by the respondents was therefore found to be not justified and hence, the claim was accepted. The respondents were directed to release the amount to the claimant. 34. The AT has not found the respondents liable on this head, on the other hand it has been clearly found that it is a liability that will have to be cleared by the claimant and that it is a matter between the claimant and the Railways. Therefore, the respondents are not in any way affected by the finding, relating to which also we do not find any infirmity. When two parties agree to have their disputes resolved through arbitration reference, they should be bound by the award of the Arbitral Tribunal unless, of course, 27 ## Arb. Appeal No.35 of 2011 rules of natural justice have been breached or there is something so shocking in the award staring at the face of the court that would prompt the Court to interfere. We find nothing like that in the instant case. 35. Finally coming to the interest granted by the AT. The interest @ 18% was claimed by the claimant. This was found to be on the higher side. Hence interest ranging from 10% to 12% was granted, i.e., for the period from 11/12/1999 to 09/11/2003 @ 12.5%; for the period from 10/11/2003 to 15/02/2007 @ 10% and for the period from 16/02/2007 till payment @ 12.5%. Arbitral reference is seen made in the year 2001. The Arbitral award was passed on 15/11/2006, i.e., before the amendment to Section 31(7)(b) of the Act in the year 2015. We have dealt with the issue of interest for the post Award period in our judgment dated 17.01.2022 in Arb.Appeal No.36/2020, after taking into consideration the decisions of the Hon’ble Supreme Court in Vedanta Ltd. vs. Shenzhen Shandong Nuclear Power Construction Co. Ltd. ( 2019) 11 SCC 465 , State of Haryana vs. S.L. Arora & Co. (2010) 3 SCC 690 and NHAI v. M.Hakeem (2021)9 SCC 1 . Applying the same principle, we are of the view that the appropriate rate of interest to be awarded in this case for the post-award period is 6% per annum. 28 ## Arb. Appeal No.35 of 2011 In the result, the appeal is partly allowed. The award of the Arbitrator is modified to the extent of grant of interest for the post-award period which will be @ 6% p.a. All interlocutory applications, pending if any, shall stand disposed of. Sd/- P.B. SURESH KUMAR, JUDGE. Sd/- C.S. SUDHA, JUDGE. bpr/ami/ 29 Arb. Appeal No.35 of 2011 ## APPENDIX ## APPELLANT'S ANNEXURES ANNEXURE 1 : TRUE COPY OF LETTER NO.F2-1910/03 DATED 29/07/2011 TO THE CHIEF ENGINEER, PWD NATIONAL HIGHWAYS ANNEXURE 2 : TRUE COPY OF LETTER DATED 22.8.2011 TO THE CHIEF ENGINEER, PWD.