Country Club India Ltd Vs Choudhury and Choudhury India Ltd - Citation 1183801 - Court Judgment

Judgment:

1. By this petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 (for short the said Act ), the petitioner has impugned the arbitral award dated 8th August 2012 made by the learned arbitrator thereby allowing some of the claims made by the respondent. The petitioner herein was the original respondent whereas the respondent herein was the original claimant in the arbitral proceedings. Some of the relevant facts for the purpose of deciding this arbitration petition are as under:-

2. Sometime in the year 2007, the petitioner through their Architects, G.D.Sambhare and Co. invited tenders for the work of construction of Club House, Swimming Pools, Health Spa, Guest Rooms, Mediation Centers and Convention Halls on Gat No.496 at Village-Bhuvan, Off Kolad, Taluka Mangaon, District Raigad. On 24th September 2007, the respondent submitted their bid for the said work and thereafter, revised and re-submitted the bid for an aggregate tendered amount of Rs.14,64,49,410/-. The said bid submitted by the respondent was accepted by the petitioner on 12th October 2007. The time period stipulated for completion of work was 12 months inclusive of monsoon. The construction activities were to be commenced at site from 12^th October 2007 and the stipulated date of completion of work was 11^th October 2008.

3. It is the case of the petitioner that the respondent failed to complete the work in all respects by April 2009 and completely stopped work at site from 30th April 2009 and had accordingly abandoned the work. It is the case of the petitioner that the respondent had carried out various defective work which had not been rectified by the respondent in accordance with the terms of the contract. On 11^th August 2009, the petitioner issued a show cause notice to the respondent calling upon the respondent to show cause as to why the contract should not be terminated in view of the alleged abandonment of work by the respondent. The respondent, however, did not respond to the said notice nor took any steps to execute the balance work of the contract.

4. The respondent through their advocate's notice demanded a sum of Rs.1,97,05,428/- along with interest thereon @ 30% p.a. totaling to Rs.3,13,97,099/- and invoked arbitration agreement. The petitioner, thereafter, terminated the contract and called upon the respondent for taking joint final measurements of the work. On 15th July 2009, the petitioner also informed the respondent about the amount alleged to be due to the petitioner. The petitioner through their advocate's letter dated 13th July 2009 furnished a list of proposed arbitrators to the respondent. On 13th August 2009, the respondent agreed to the nomination of former Judge of this Court as a sole arbitrator out of the names suggested by the petitioner. The petitioner accordingly appointed a former Judge of this Court as agreed by both the parties as a sole arbitrator by letter dated 17th August 2009. It was the case of the petitioner that by the said letter, the learned arbitrator was appointed to adjudicate upon the specific claims as referred in the letter of the respondent and also the counter claim of the petitioner.

5. On 29th August 2009, the petitioner conveyed about the appointment of the learned arbitrator to the respondent. It is the case of the petitioner that even in the said letter dated 29th August 2009, the specific terms of reference of the arbitration was conveyed to the respondent. The learned arbitrator accepted the reference made and called a preliminary meeting for issuing directions to the parties.

6. Pursuant to the liberty granted by the learned arbitrator, the respondent submitted statement of claim with the documents. It is the case of the petitioner that in the said statement of claim filed by the respondent, the respondent included various other claims which were not forming part of the terms of reference. On 26th February 2010, the petitioner filed their written statement with copies of documents and also filed counter claim before the learned arbitrator. The petitioner raised a preliminary objection raising an issue of jurisdiction in respect of some of the claims made by the respondent which were alleged to be beyond the scope of terms of reference.

7. Before the learned arbitrator, the respondent led oral evidence of two witnesses and also proposed to lead evidence of the Project Architect. The respondent, however, did not examine the Project Architect. The petitioner led oral evidence of their Chief Engineer.

8. On 8th August 2012, the learned arbitrator made an award directing the petitioner to pay an amount of Rs.1,65,64,239.69 towards claim nos.1 to 5 together with interest @18% p.a. on delayed payments upto date of 15th RA Bill and further interest on the amount of Rs.1,65,64,239.69 from 19th June 2009 till the date of award and future interest. The learned arbitrator also directed the petitioner to pay to the respondent an amount of Rs.5,00,000/- together with interest thereon @18% p.a. from the date of passing of the award till payment. The learned arbitrator directed the petitioner to pay an amount of Rs.1,33,040/- towards claim no.11 together with interest @18% p.a. and for an amount of Rs.21,61,808/- towards costs of arbitration to the respondent herein. The learned arbitrator made it clear that the petitioner shall be entitled to set-off the amount held as due under the counter claim no.4 awarded in favour of the petitioner while making payment of the amounts awarded in favour of the respondent. This award of the learned arbitrator made on 8th August 2012 has been impugned by the petitioner under Section 34 of the Arbitration Act on various grounds.

9. Mr.Apte, learned senior counsel for the petitioner invited my attention to the correspondence exchanged between the parties prior to the date of appointment of the arbitrator and more particularly the letter dated 19th June 2009 addressed by the advocate for the respondent, letter dated 15th July 2009 addressed by the petitioner and the letter dated 29^th August 2009 addressed by the petitioner conveying about the appointment of the learned arbitrator to the respondent.

10. It is submitted by the learned senior counsel that scope of the arbitration before the learned arbitrator was limited to the claims referred in the letter dated 19th June 2009 addressed by the learned advocate for the respondent and the letter dated 15th July 2009 addressed by the petitioner. He submits that the respondent had invoked arbitration agreement vide their letter dated 19th June 2009 seeking reference to the arbitration of claims of the value of Rs.3,13,97,099/- which included a principal sum of Rs.1,97,05,428.22 and interest thereon totalling to Rs.3,13,97,099/-. He submits that the respondent, however raised claim for an amount of Rs.7,18,87,248/- in their statement of claims.

11. It is submitted that the respondent could make a claim before the learned arbitrator restricted to the amount and only those claims which were made by the respondent in their advocate's letter dated 19^th June 2009. He submits that the petitioner while appointing the learned arbitrator confirmed the terms of reference set out in the letter dated 29^th August 2009 which letter was received by the respondent without any protest. He submits that the amounts claimed by the respondent over and above the amount restricted in the letter dated 19th June 2009 and the claims different than the claims mentioned in the said letter dated 19^th June 2009 were thus beyond the scope of reference to arbitration.

12. In support of this submission, learned senior counsel for the petitioner placed reliance on the judgment of the Supreme Court in the case of Indian Aluminum Cables Ltd. reported in (1996) 5 SCALE 768 and in particular paragraph 16 thereof. Reliance is also placed on the judgment of this Court in the case of Patel Engineering Co. Ltd. Vs.B.T. Patil and Sons Belgaum (Construction) Pvt. Ltd. and Anr., reported in 2016 (3) Bom.C.R. 128.

13. It is submitted that under clause 43 of the contract which recorded arbitration agreement between the parties, either party to the contract was required to follow the procedure for invoking arbitration agreement by issuing a written notice contemplated therein. He submits that the respondent had invoked arbitration agreement and had raised claims only to the extent of Rs.1,97,05,428/- plus interest thereon whereas in the statement of claim, the petitioner had substantially raised the said claims to the extent of Rs.7,18,87,248/- with interest thereon. He submits that in view of the learned arbitrator allowing the claims more than the amount of claims made in the notice invoking arbitration agreement i.e. the amounts beyond the scope of his jurisdiction, the entire award shall be set aside by this Court on that ground itself.

14. It is submitted that the parties in this case had not agreed to refer the additional disputes to the arbitration and has not authorised the learned arbitrator to decide them though the same were made in the notice invoking the arbitration agreement as contemplated in clause 43 of the agreement. He submits that the learned arbitrator, however, ignored all the contentions raised by the petitioner on the issue of jurisdiction in the impugned award and accepted all the contentions of the respondent without giving any reasons on the issue of jurisdiction. It is submitted that the award is thus contrary to the public policy of India and contrary to law.

15. Learned senior counsel invited my attention to the objection raised by the petitioner about the jurisdiction of the learned arbitrator in the written statement filed by the petitioner, rejoinder filed by the respondent herein and the averments made in the sur-rejoinder filed by the petitioner and also the findings rendered by the learned arbitrator on the preliminary objection raised by the petitioner in the impugned award and would submit that though the petitioner had raised objection and demonstrated as to how the claims made by the respondent were beyond the scope of reference, the learned arbitrator totally brushed aside the objection raised by the petitioner in the casual manner.

16. The next submission of the learned senior counsel for the petitioner is that the learned arbitrator has relied upon two certificates purported to have been issued by the Project Architect on 6th March 2009 and 25th May 2009 which were disputed by the petitioner in toto. The petitioner had also disputed the certificate dated 6th October 2008 alleged to have been issued by the Project Architect. He submits that though the respondent had not examined the Project Architect as their witness, existence and contents of those three certificates dated 6^th October 2008, 6th March 2009 and 25th May 2009 were not proved by the respondent, the learned arbitrator, however, placed reliance on unproved and inadmissible evidence. The award is in violation of principles of natural justice and is in violation of the provisions of the Evidence Act.

17. It is submitted by the learned senior counsel that since the three certificates alleged to have been issued by the Project Architect were not proved and could not be relied upon, the learned arbitrator could not have rejected the contention of the petitioner that the quality of the material used by the respondent which was poor and inferior and the poor workmanship of the workers engaged by the respondent. It is submitted that though the certificate dated 6th March 2209 recording that the respondent had completed Spa building consisting of ground plus one floor which was contrary to the deposition of the witness no.2 examined by the respondent who had admitted that the respondent had not cast the slab for the 1st floor in the Spa block, learned arbitrator accepted the said purported certificate dated 6th March 2009 as conclusive. He submits that the award shows perversity on this ground also.

18. Learned senior counsel invited my attention to the findings recorded by the learned arbitrator in paragraph 108 and 109 on the issue whether the learned arbitrator could have relied upon the alleged certificate issued by the Project Architect. Reliance is also placed on the written arguments filed by the petitioner on this issue before the learned arbitrator. Reliance is placed on paragraph 13 of the statement of claim in support of the submission that it was admitted by the respondent that the Project Architect did not certify the bills/measurements. He submits that the Project Architect had only certified first two bills submitted by the respondent.

19. It is submitted by the learned senior counsel that though the respondent was entitled for interim payment based on certificates being issued by the Project Architect within the time period of honouring such certificate in accordance with the contract and more particularly as per clause 35 of the General Conditions of Contract read with clause 9 of the Appendix to the conditions of contract, learned arbitrator ignored these conditions of contract while awarding the claim of interest made by the respondent. He submits that the petitioner was liable to make payment against RA bills within 7 days from the date of receipt of certified bill by the petitioner from the Project Architect and that also provided the value of work for interim payment was to be a minimum of Rs.35 lacs in each of the RA bills.

20. Learned senior counsel placed reliance on the oral evidence of witness no.2 examined by the respondent and would submit that the said witness had admitted in his answer to the question no.233 that only in respect of RA bill no.1, joint measurements were taken. He submits that the impugned award rendered by the learned arbitrator is thus contrary to clause 35 of the General Conditions of Contract and contrary to the evidence before the learned arbitrator.

21. Learned senior counsel invited my attention to paragraph 113 of the award and would submit that the learned arbitrator has erroneously accepted the claim for interest by accepting the Annexure-I forming part of the Chart given by the petitioner to the respondent showing the date of part payment made by the petitioner, the alleged due date for making payment by the petitioner to the respondent and the actual date of part payment. He submits that the finding of the learned arbitrator that the respondent was admittedly entitled to a sum of Rs.1,31,52,175.62 due and payable by the petitioner is totally contrary to the evidence on record and is perverse.

22. Learned senior counsel for the petitioner invited my attention to the Annexure-I referred by the learned arbitrator in the impugned award and also Annexure-I annexed to the statement of claim and would submit that the learned arbitrator while accepting the figure of Annexure-I relied upon by the respondent had missed out an amount of s.25 lacs admittedly received by the respondent from the petitioner and has not given credit in respect of the said amount in the impugned award. He submits that there is an error apparent on the face of the award. It is submitted that an amount of Rs.25 lacs was paid by the petitioner to the respondent as an initial advance and thus while preparing the final bill, the credit of the said amount ought to have been reflected in the impugned award.

23. Learned senior counsel for the petitioner invited my attention to the findings recorded in paragraph 117 of the impugned award stating that the petitioner has not disputed the certification or the signatures of the Chief Engineer on RA Bill No.15 recommending payment. He submits that the Chief Engineer of the petitioner neither signed the RA Bill No.15 nor recommended the RA Bill No.15 for payment. He submits that the finding recorded by the learned arbitrator is ex-facie incorrect and contrary to the evidence on record. He submits that prior to the request of the Project Architect, the petitioner had in fact released Rs.60 lacs to the respondent on 11th November 2008 which amount had not been accounted for by the Architect and further Rs.50 lacs was paid on 7th January 2009 which was also not accounted for. He submits that as against the recommendation of Rs.1 crore made by the Project Architect, the petitioner had made payment of Rs.1,10,00,000/- to the respondent.

24. The next submission of the learned senior counsel for the petitioner is that the learned arbitrator has exceeded his jurisdiction by allowing some of the claims which fell under the category of excepted matters. Reliance is placed on clause 43 of the Conditions of Contract in support of the submission that the disputes and differences other than those in respect of which the decision of any person was by the contract expressed to be final and binding only could be referred to arbitration. He submits that since there was discrepancy in respect of the quantities involved as claimed by the respondent, as per clause 8 of the General Conditions of Contract, such disputes were to be decided by the Architect whose decision was final and binding. He submits that quantities dispute which was a major dispute forming part of the claim no.1 was a decision to be rendered by the Architect and consequently no such claim could be raised by the respondent before the learned arbitrator being an excepted matter.

25. It is submitted by the learned senior counsel that the finding of the learned arbitrator that the petitioner had never contended earlier that the claims fell under the category of excepted matters and still it is allowed to raise the contention is ex-facie perverse. He submits that the petitioner had never given up such contention before the learned arbitrator. In support of this submission, learned senior counsel placed reliance on the arbitration agreement and clause 8 of the General Conditions of Contract read with clause 16 and clause 21 of the contract.

26. Learned senior counsel relied upon the claim notice issued by the respondent on 19th June 2009 invoking arbitration and the response of the petitioner vide letter dated 13th July 2009 and would submit that the petitioner had clearly notified to the respondent that the petitioner raised all contentions before the learned arbitrator that none of the disputes of the respondent were arbitrable or maintainable or within the ambit of the arbitration or within the jurisdiction of the learned arbitrator.

27. It is submitted that it was not necessary for the petitioner to set out the entire reasons for the defence of excepted matters while dealing with the claim notice dated 19th June 2009 of the respondent. He submits that the issue of excepted matter is the issue of jurisdiction and since the claims being outside the jurisdiction of the learned arbitrator, the learned arbitrator was bound to decide the said issue before considering the claim on merit. He submits that though while appointing the learned arbitrator by the petitioner vide its letter dated 29th August 2009, it was clearly notified to the learned arbitrator and to the respondent that the appointment of the sole arbitrator was without prejudice to the contentions that the petitioner would be entitled to raise an issue of jurisdiction of the learned arbitrator in accordance with the provisions of Section 16 of the Arbitration Act, the learned arbitrator ignored the pleadings, documents and the provisions of the contract and has awarded a substantial amount of claim which fell under the category of excepted matters.

28. It is submitted by the learned senior counsel that the respondent had included various extra items in RA Bill Nos.15 and 16 for which the respondent had not given any rate analysis and thus no decision could be rendered on those bills as regards the rates which were to be determined by the Project Architect. He submits that in any event, the issue of extra items was to be exclusively within the purview of the Project Architect and the same being an excepted matter, the learned arbitrator could not have determined the rates himself in respect of the extra items. He submits that though the Project Architect had not determined the rates for extra items under the provisions of the contract, the learned arbitrator allowed the entire claim relating to payment of the extra items in 15th and 16th RA bills. He submits that the learned arbitrator could not have stepped into the shoes of the Architect while allowing the claim no.1 by granting rates or extra items as claimed by the respondent. It is submitted by the learned senior counsel that though there was an express prohibition in the contract, the learned arbitrator has awarded the payment for extra items under claim no.1 and has determined also the rates payable therein which was exclusively within the domain of the Project Architect. He submits that the learned arbitrator has thus acted contrary to the provisions of the contract and thus the award deserves to be set aside on that ground alone.

29. It is submitted by the learned senior counsel for the petitioner that the respondent had received copy of the 16th RA bill as corrected and certified by the Architect along with the bill measurement sheet jointly signed by the parties. The respondent did not raise any issue regarding correction made by the petitioner in respect of the 16^th RA bill. Learned arbitrator, however, awarded amounts under 15th and 16th RA bills as claimed by the respondent without taking into account the corrections made by the petitioner therein relating to the rates which were never challenged by the respondent before the Project Architect. He submits that this part of the award is contrary to clause 39 of the General Conditions of Contract and thus the award deserves to be set aside.

30. Reliance is placed on clause 21.3 of the General Conditions of Contract read with clause 39 of the General Conditions of Contract and it is submitted that it was for the Architect to decide the rates for extra items of work and his decision is final and binding and was not arbitrable. My attention is invited to paragraph 105 of the impugned award and it is submitted that the finding recorded by the learned arbitrator that none of the claims of the respondent could be decided by the Project Architect or Employer is contrary to the terms of the contract. It is submitted by the learned senior counsel that there was nothing on record produced by the respondent to show that the respondent had applied for a decision of the Architect but no decision was taken by the Architect. The procedure of adjudication through Architect in respect of various works including determination of rates for payment of extra items was not followed by the respondent.

31. Learned senior counsel invited my attention to part of the award in which the learned arbitrator placed reliance on the judgment of the Supreme Court in the case of J.G. Engineers Private Limited Vs. Union of India and Anr., reported in (2011) 5 SCC 758 and also the judgment of the Supreme Court in the case of BSNL Vs. Motorola India Pvt. Ltd., reported in (2009) 2 SCC 337. He submits that the finding of the learned arbitrator that no claim falls under the category of excepted matter is totally perverse and contrary to the evidence on record and also contrary to the terms of the contract.

32. It is submitted by the learned senior counsel for the petitioner that various findings of the learned arbitrator on the issue of issuance of execution of work, drawings and Bar Chart are perverse and contrary to the evidence on record. He submits that the learned arbitrator has not considered the written arguments submitted by the petitioner in the impugned award. It is submitted by the learned senior counsel that the learned arbitrator has completely disregarded various documentary evidence produced by the petitioner in support of the submission that the respondent did not have sufficient resources right from the commencement of the work till abandonment of work by the respondent and was solely responsible for delay. He submits that the work carried out by the respondent was absolutely poor and sub-standard quality work and that the defective work carried out by the respondent was not even rectified by them.

33. It is submitted by the learned senior counsel for the petitioner that the finding of the learned arbitrator on the issue of termination of contract under point no.5 is contrary to the evidence on record, contrary to the contract and contrary to the law. He submits that the finding of the learned arbitrator that the petitioner has not fulfilled the pre-requisites of Section 39 of the Contract Act is without any reasons and shows perversity.

34. It is submitted by the learned senior counsel that though under the terms of the contract, the petitioner had not guaranteed for supply of electric power, the learned arbitrator has rendered an erroneous finding that the petitioner had failed to provide electric connection to the respondent. It is submitted by the learned senior counsel that the amount payable if any by the petitioner to the respondent under RA Bill No.16 was appropriated towards the liquidated damages. He placed reliance on portion of the cross-examination of the witness examined by the respondent and more particularly question nos.231 and 232 in Volume 11 at page 1543 and question nos.84 and 85 in Volume 13 at page 1774. He submits that the respondent never raised any objection in respect of the payment made by the petitioner under RA Bill nos.3 to 13. He submits that in reply to question no.205, witness of the respondent had admitted that the respondent had not raised any objection in respect of RA bill nos.14 to 16. Reliance is placed on letter dated 17th July 2009 from the petitioner to the respondent forwarding RA bill no.16 certified by the petitioner. Reliance is placed on Volume 14 at page 1801 in support of the submission that the joint measurements provided therein were duly certified by both the parties.

35. It is submitted by the learned senior counsel that the Project Architect was required to see the register containing joint measurements also before issuing any certificate. He submits that the Architect in its purported certificate dated 6th May 2009 has admitted that he had not verified the record of joint measurements but in fact prepared the certificate allegedly on the basis of the partial certification of the petitioner's Site Engineer. It is submitted that the purported certificate dated 6th May 2009 of the Project Architect thus was not in accordance with clause 35 and thus could not have been considered by the learned arbitrator as conclusive. It is submitted by the learned senior counsel for the petitioner that the 16th RA bill was scrutinized and corrected by the petitioner which was not challenged by the respondent nor was altered by the Project Architect. He submits that the value of work executed by the respondent thus could not have exceeded Rs.69,68,562/- as shown in the 16th RA bill. He submits that the award of the learned arbitrator is contrary to the evidence on record and contrary to agreed quantum of balance work amounting to Rs.69,68,562/- as recorded in the corrected 16th RA bill.

36. Learned senior counsel for the petitioner submits that the rejection of the corrections made in the 16th RA bill on the ground that the petitioner had not called its Project Manager, Mr.Asif Shaikh to prove the corrections/alterations in the 16th RA bill is totally perverse. He submits that the said 16th RA bill as corrected and altered by Mr.Asif Shaikh has been subsequently sent by the petitioner to the respondent on 17th July 2009 along with 82 sheets of enclosures including extract and measurement sheets jointly signed by the parties which was enclosed to the 16th RA bill which was never objected or controverted by the respondent.

37. It is submitted by the learned senior counsel that format of interim certificate relied upon by the respondent was totally different and was not in accordance with the format used for certificate in respect of the RA bill nos.1 and 2. He submits that since the respondent was liable to pay liquidated damages in the sum of Rs.73,22,430/- and since the said amount was adjusted by the petitioner against the RA bill no.15, no amount was due and payable by the petitioner to the respondent.

38. It is submitted by the learned senior counsel that though the certified amount in the certificate relied upon by the respondent was at Rs.6,92,54,580/-, the learned arbitrator has considered the figure at Rs.7,10,78,939.71 which shows non-application of mind on the part of the learned arbitrator.

39. It is submitted by the learned senior counsel for the petitioner that the learned arbitrator has awarded the claim for refund of 2% retention money twice. The petitioner had already returned 2% towards the security deposit.

40. It is submitted by the learned senior counsel for the petitioner that the Project Architect was all throughout available for the Project awarded to the respondent. He submits that though the petitioner had denied the payment of escalation on the ground that the delay was attributable on the part of the respondent, the learned arbitrator had erroneously recorded the finding that there was no dispute raised by the petitioner about calculation of the escalation. He submits that the findings of the learned arbitrator that non-certification of the Project Architect on the bills submitted by the respondent cannot act to the prejudice to the respondent is also perverse. It is submitted that the learned arbitrator has proceeded on the premise that the Architect did not certify the escalation claim and had kept it pending for discussion. It is submitted by the learned senior counsel that though the respondent had failed to furnish any particulars for claim of escalation in the sum of Rs.19,47,733.46 nor proved the said amount in the oral evidence and the reliance was merely placed on PWD formula for escalation, the learned arbitrator had allowed the entire claim for escalation in paragraphs 156 to 158 of the impugned award. He submits that the claim for escalation awarded by the learned arbitrator is based on no evidence and shows non-application of mind. It is submitted by the learned senior counsel that the rates provided in the contract were firm and were no escalation payable under clause 45 of the Contract.

41. It is submitted by the learned senior counsel for the petitioner that the witness no.2 examined by the respondent in his cross-examination in question nos.197 and 198 admitted that he was unaware of the computation of escalation on the record of the learned arbitrator and thus the learned arbitrator could not have awarded an amount of Rs.19,47,733.46 ps. merely based on the pleadings on the claim without any supporting evidence. He submits that the award in respect of the claim for escalation is thus based on no evidence and is without application of mind.

42. It is submitted by the learned senior counsel for the petitioner that no notice under the provisions of the Interest Act, 1978 was issued by the respondent for claiming interest at the rate of 18% p.a. or otherwise. He submits that the maximum rate of interest of the Scheduled Banks is not more than 8 to 9 percent and thus the learned arbitrator could not have awarded the interest at the rate of 18% p.a. which was exorbitant. It is submitted that there was no provision for payment of interest in the contract. He submits that the learned arbitrator could not have awarded interest after expiry of 30 days from the date of claim raising interim bills and the award is thus contrary to the terms of the contract which stipulated that the bills were to be paid within 7 days from the date of certification by the Architect. It is submitted that the learned arbitrator failed to give any finding as to on what amounts such interest was payable in respect of the payments because of the alleged delay in payment of R.A. Bills. He submits that the petitioner had already released a sum of Rs.70.00 lacs against the certified bill of Rs.69,36,735/-. The respondent had however, had made the claim for interest on the billed amount of Rs.84,16,874/- and not on the certified amount of Rs.69,36,735/-.

43. It is submitted by the learned senior counsel for the petitioner that the learned arbitrator has awarded access amount of Rs.52,00,561/- erroneously under claim no.1 and further amount of Rs.1,28,632/- in respect of further material advanced, though there was no material or evidence produced by the respondent before the learned arbitrator that the respondent had stocked material of the value of Rs.62,78,766/- at the site of the work.

44. It is submitted by the learned senior counsel that the finding of the learned arbitrator that the petitioner had installed an electric meter is based on no evidence. The learned arbitrator has awarded an amount of Rs.1,33,040/- to the respondent in respect of the claim made by the respondent for the electricity charges though such a claim was never made by the respondent at any point of time during the course of execution of the work and such a claim was raised for the first time in the statement of claim and that also without any break up or the details. He submits that the award in respect of the said claim is contrary to clause 8 of the Letter of Intent and clause 33 of the Special Conditions of Contract.

45. It is submitted by the learned senior counsel that the finding of the learned arbitrator that the petitioner under the contract had no right to claim liquidated damages under clause 31.2 is totally perverse. He submits that under clause 31.2, the petitioner was entitled to compensation in addition to the liquidated damages under clause 31.1 for other breaches set out in clause 31.2.

46. It is submitted by the learned senior counsel that under the provisions of the contract, it was the exclusive liability of the respondent for payment of royalty. The respondent had failed to pay the royalty even after the demand raised by the revenue authorities and thus the respondent was required to settle and pay the royalty amount of Rs.37,11,546/- to the revenue authorities. He submits that the sister concern of the petitioner i.e. M/s.Amruta Estate and Hospitality Private Limited had leased the land to the petitioner and being the owner of the land, had cleared the royalty amount to the revenue authorities. He submits that the payment of royalty by the sister concern of the petitioner was proved in the oral evidence of the witness examined by the petitioner. He submits that the respondent had failed to obtain necessary permission from the revenue authorities which necessitated the payment of the additional liability of Rs.37,11,546/-, which was paid by the sister concern of the petitioner to the revenue authorities. He submits that the rejection of the counter claim for reimbursement of the payment of royalty is contrary to the terms of the contract and is without application of mind on the part of the learned arbitrator.

47. It is lastly submitted by the learned senior counsel that the learned arbitrator could not have awarded the arbitration cost without any documentary evidence in favour of the respondent and the impugned award is based on no evidence insofar as the claim for the award of cost is concerned.

48. Learned senior counsel for the petitioner submits that though the respondent was totally responsible for the delay and several documents were produced by the petitioner to prove the delay on the part of the respondent, the learned arbitrator rejected the claims for compensation made by the petitioner and allowed the claim for compensation made by the respondent without application of mind.

49. Mr.Kapadia, learned counsel for the respondent on the other hand submits that M/s.G.D. Sambhare was appointed as an Architect by the petitioner. He submits that the said Architect had certified only two RA bills i.e. RA bill nos.1 and 2. He submits that the petitioner did not send all RA bills to the Architect for certification and made certain adhoc payments without any basis.

50. Insofar as the jurisdiction of the learned arbitrator raised by the petitioner is concerned, the learned counsel for the respondent invited my attention to the letter dated 19th June, 2009 addressed by his client through their advocates to the petitioner and more particularly paragraphs 1 and 6 to 13 thereof. He submits that by the said notice of demand, the respondent had demanded payment of crystallized as well as uncrystallized the claims. My attention is invited to the letter dated 29^th August, 2009 addressed by the petitioner to the learned arbitrator and would submit that in the said letter, the petitioner had referred to the letter dated 19th June, 2009 addressed by the respondent through their advocates raising the disputes and differences between the parties to the petitioner.

51. It is submitted that even if the said letter dated 29th August, 2009 addressed by the petitioner to the learned arbitrator is considered as terms of reference , the said letter specifically refers to the disputes and differences notified by the respondent in their advocate's letter dated 19^th June, 2009. It is submitted that the arbitration clause does not contemplate any procedure for notifying the claims by the respondent to the petitioner or to the Project Architect first or does not provide for any mandatory condition that only such notified claims could be referred to arbitration. He submits that in the claim letter dated 19th June, 2009 issued by the respondent through their advocates, the respondent had not restricted their claim to any particular amount. The respondent had specifically made claim for the work done and also for the damages due to the delay and breaches on the part of the petitioner. He placed reliance on clause 43 of the Contract which recorded an arbitration agreement.

52. In his alternate submission, the learned counsel for the respondent submits that there was no bar recorded in the arbitration agreement from making any additional claims outside the notice invoking the arbitration agreement and thus even the additional claims also could be made in the arbitration.

53. Learned counsel for the respondent invited my attention to paragraphs 11 to 35 of the statement of claim and also the summary of the claims made by the respondent. He also invited my attention to the findings and the conclusion recorded by the learned arbitrator on the issue of jurisdiction raised by the petitioner. He submits that after interpreting the arbitration agreement recorded in clause 43, the learned arbitrator has held that clause 43 of the Contract was wide and clear and would include all the claims made by the respondent in the statement of claim. He submits that all the claims made by the respondent in the statement of claim were made in the notice invoking arbitration though some of those claims were not crystallized.

54. Learned counsel for the respondent placed reliance on the judgment of the Supreme Court in case of State of Orissa vs. Asis Ranjan Mohanti, (1999) 9 SCC 249 and in particular paragraphs 2, 3, 5, 10 and 11. He also placed reliance on the judgment of this Court in case of Smt.Veena wd/o Naresh Seth and Anr. Vs. Seth Industries Limited and Ors. delivered on 29th October, 2010 in Arbitration Petition No.180 of 2007 and in particular paragraph 17. He also placed reliance on the judgment of the Supreme Court in case of Indian Aluminum Cables Limited (supra).

55. Learned counsel for the respondent distinguished the judgment of this Court in case of Patel Engineering Company Limited vs. B.T. Patil and Sons Belgaum (Construction) Private Limited and Anr., 2016(3) Bom.C.R. 128 by inviting my attention to paragraphs 54, 71 to 76, 91 to 93 and 99 to 143 and would submit that the facts before this Court in the said judgment were totally different and on the ground that the disputes in this case had already arisen in respect of the claims which were made in the notice dated 19th June, 2009 issued by the respondent. 56. It is submitted by the learned counsel for the respondent that the submission of the petitioner that the respondent had demanded a specific amount in the letter dated 19th June, 2009 is factually incorrect in view of the fact that the respondent had not only demanded the crystallized claims but had also demanded un-crystallized claims.

57. Insofar as the submission of the learned senior counsel for the petitioner that some of the claims considered and awarded by the learned arbitrator were covered by excepted category are concerned, it is submitted by the learned counsel that no specific objection was raised by the petitioner before the learned arbitrator with particulars as to which claim out of several claims made by the respondent were falling under the category of excepted matters . He invited my attention to paragraph 88 and other paragraphs of the impugned award in which the learned arbitrator had recorded the statement made by the learned counsel for the petitioner that the issue of jurisdiction based on the claims being excepted matters was given up before the learned arbitrator. He submits that no application was admittedly made by the petitioner under section 33 before the learned arbitrator contending that such statement recorded by the learned arbitrator was wrongly recorded though the same was not alleged to have been given up by the learned counsel for the petitioner. He submits that the petitioner had not raised any ground in the petition that though such objection was not given up by the petitioner, the learned arbitrator has erroneously recorded such statement alleged to have been made by the learned counsel.

58. Learned counsel for the respondent also invited my attention to the written arguments filed by the respondent (Volume 16, page 2251) and would submit that the respondent had also recorded in its written arguments that the issue of excepted matters was given up by the petitioner before the learned arbitrator. He submits that though the petitioner had given up the said argument, in the written argument filed by he petitioner, the petitioner could not raise that issue. He submits that the record of the arbitration proceedings is binding on both the parties. The petitioner cannot be allowed to wriggle out of the concession made before the learned arbitrator.

59. In his alternate submission, the learned counsel for the respondent invited my attention to the written statement filed by the petitioner and more particularly from paragraph (C) at page 618 in which it was vaguely contended by the petitioner that none of the disputes were arbitrable being excepted matters . My attention is also invited to the findings recorded by the learned arbitrator on this issue on pages 148 to 158 of the impugned award. He submits that though the petitioner had given up the objection in respect of the alleged excepted matters and though the pleading of the petitioner was totally vague, the learned arbitrator still dealt with the submissions made by the petitioner before the said plea was given up at pages 148 to 158 of the impugned award by dealing with various clauses of Contract and has rendered a finding of fact that no claims made by the respondent had fallen in the excepted category of matters. The learned arbitrator also placed reliance on various judgments of the Supreme Court referred to aforesaid. He submits that in any event the interpretation of the Contract by the learned arbitrator on pages 148 to 158 of the impugned award is not only a possible interpretation but is a correct interpretation and even if the interpretation of the Contract by the learned arbitrator is a possible interpretation, the possible interpretation of the learned arbitrator cannot be substituted by another interpretation by this Court under section 34 of the Arbitration and Conciliation Act, 1996.

60. The learned counsel for the respondent invited my attention to the work order issued by the petitioner on 24th September, 2007, Letter of Intent, Appendix to Contract, clauses 3, 8, 11 and 12, scope of work clauses 16, 20, 35, 37, 39 and 45 and various other provisions of the Contract. It is submitted by the learned counsel that the Architect appointed by the petitioner in their letter dated 24th November, 2008 addressed to the petitioner had certified on account payment of Rs.1.00 crore. The bills were not sent by the Site Engineer of the petitioner but the Site Architect for certification. The respondent vide their letter dated 10th November, 2008 addressed to the petitioner had placed on record that the petitioner had failed to pay the huge outstanding amount of Rs.1,48,29,255/- as on 3rd November, 2008.

61. My attention is invited to the RA bill no.15 annexed on page 1456 of Volume 10 in the sum of Rs.1,31,52,175.62 ps. signed by Mr.Asif Shaikh, the Site Engineer of the petitioner. He submits that this certificate is falsely disputed by the petitioner. He submits that some of the RA bills were marked to Mr.Asif Shaikh. He relied upon pages 196 to 201 of Volume 10 and on pages 220 to 222 and 223 of Volume 2.

62. It is submitted by the learned counsel that admittedly RA bill nos.3 to 14 were not sent for certification to the Project Architect by the petitioner. The petitioner admittedly did not examine the Site Engineer or the Project Architect as its witness. The measurement sheets along with RA bill no.16 were produced by the petitioner before the learned arbitrator. He invited my attention to the examination in chief of the witness examined by the respondent in Volume 10 and in particular paragraphs 4 to 37. He submits that the respondent had made a grievance in respect of ad-hoc payment made by the petitioner. My attention is also invited to the cross-examination of the said witness and more particularly to questions 57 to 59 and 228 to 232 insofar as the submission of various bills are concerned. He also invited my attention to various portions of the evidence of the witness examined by the petitioner.

63. It is submitted that RA bill no.16 was signed by Mr.Asif Shaikh showing the amount payable to the respondent as Nil. He submits that all RA bills were also certified by Mr.Asif Shaikh, Site Engineer showing more than Rs.1.00 crore amount payable by the petitioner to the respondent. The last RA bill showed as per the said certificate was Rs.69,68,562/-. He submits that the dispute had already arisen between the parties when the said RA bill no.16 was purported to have been certified by Mr.Asif Shaikh.

64. Learned counsel also invited my attention to various portions of the cross-examination of the witness examined by the petitioner and more particularly to the answers to the questions 251, 295, 296, 300, 302, 310, 314 to 320, 323 and 324. He submits that the witness examined by the petitioner admitted that no other measurements were produced before the learned arbitrator. No other measurements were taken at site. No joint measurement was taken along with the respondent when RA bill no.16 was made. He submits that the respondent had submitted the measurement along with RA bill has been established.

65. It is submitted by the learned counsel that in the Contract period which was for the period of 12 months, only 50% of the work could be done. He submits that there was gross delay on the part of the petitioner to submit the drawings and in making payment. Several other breaches were committed by the petitioner. He submits that though the petitioner was responsible for the gross delay and had committed breaches, the petitioner illegally terminated the contract. He submits that the learned arbitrator has rejected most of the claims made by the respondent and has made a reasonable and fair award. The claims are allowed also on the basis of the approval granted by the Project Architect of the petitioner. He submits that the findings of fact rendered by the learned arbitrator being not perverse, cannot be interfered with by this Court under section 34 of the Arbitration and Conciliation Act, 1996.

66. Insofar as the delay in making payment to the respondent by the petitioner is concerned, the learned counsel invited my attention to Annexure - I on page 164 i.e. annexure to statement of claim and would submit that the contents of the Annexure - I were factually not in dispute. The part payments made by the petitioner were also not in accordance with any contractual terms. He invited my attention to pages 168 to 170, which was the letter addressed by the Protect Architect to the petitioner stating that RA bill nos.3 to 8 were duly checked and scrutinized but not received from the site. He submits that the Project Architect had certified ad-hoc payment of Rs.1.00 crore by the said letter. He also invited my attention to the various findings of fact rendered by the learned arbitrator in paragraphs 115 and 116 of the impugned award on this issue.

67. Insofar as the payments of interest is concerned, it is submitted by the learned counsel that there was no bar under the contract from making payment of interest. The petitioner was under an obligation to make payment to the respondent within seven days of certification and in case of any delay was under an obligation to make ad-hoc payment. He submits that the bills were not paid by the petitioner for allegedly not being in accordance with the format. No such grievance was however made by the petitioner at any point of time.

68. Learned counsel for the respondent invited my attention to the various portions of the impugned award in which the learned arbitrator has rendered various findings of fact on the issue of delay attributed on the part of the petitioner i.e. in submission of drawings and in complying with various other obligations of the petitioner. He also invited my attention to the findings of the learned arbitrator on the issue of termination illegally effected by the petitioner. He submits that the petitioner has not denied the signature of Mr.Asif Shaikh on RA bill no.16. Reliance is placed on paragraph 10 at page 1797 of Volume 14 i.e. the averments made by the petitioner.

69. Insofar as the claim no.1 is concerned, it is submitted that the learned arbitrator has considered the amount of Rs.1,31,52,175.60 ps. as per amount of work done upto RA bill no.15 and has considered the additional work done between RA bill nos.15 and 16 at Rs.5,79,239/-. He submits that the learned arbitrator has considered the escalation as shown in RA bill no.16, which was signed by Mr.Asif Shaikh at Rs.19,47,733.46 ps. In paragraphs 156 to 158, 163 and 164 of the impugned award, the learned arbitrator has allowed the claim for escalation based on the PWD formula provided under the contract.

70. Insofar as the claim for liquidated damages made by the petitioner is concerned, it is submitted by the learned counsel for the respondent that no delay was committed by the respondent. The termination of the contract effected by the petitioner was illegal.. The learned arbitrator has rendered a finding to that effect in the impugned award. The petitioner thus could not have adjusted any amount towards the liquidated damages from the amount payable to the respondent. He submits hat in any event the petitioner neither suffered any loss nor proved the same which could be recovered as liquidated damages from the respondent. He submits that since the contract was illegally terminated by the petitioner, the question of recovery of any liquidated damages by the petitioner did not arise.

71. Insofar as the submission of the learned senior counsel for the petitioner that the learned arbitrator has not given credit of Rs.25.00 lacs to the petitioner in the impugned award is concerned, learned counsel for the respondent invited my attention to the last column on page 32 of the statement of claim, Annexure-I and would submit that the total payment received by the respondent from the petitioner was Rs.6.31 crores inclusive of Rs.25.00 lacs towards the advance. He submits that the respondent has given the credit of Rs.6,31,43,350/- to the petitioner while calculating the amount payable under the claim no.1 which is inclusive of Rs.25.00 lacs which was received by the respondent from the petitioner towards the advance. He submits that there is thus no substance in the submission of the learned senior counsel for the petitioner that the learned arbitrator did not give credit of Rs.25.00 lacs to the respondent while allowing claim no.1.

72. It is submitted by the learned counsel for the respondent that RA bill no.16, which was certified by Mr.Asif Shaikh, Site Engineer also did not include the amount of Rs.25.00 lacs. If according to the petitioner the said amount of Rs.25.00 lacs was recoverable by the petitioner from the respondent, the petitioner could have shown the said payment of Rs.25.00 lacs in RA bill no.16 as recoverable. He submits that the respondent had received about Rs.7.00 lacs between RA nos.15 and 16, hence the said difference is shown in RA bill no.16.

73. It is submitted by the learned counsel for the respondent that the respondent was not liable to make any payment for royalty to the petitioner. In any event, the petitioner had failed to produce any proof of payment of royalty alleged to have made to the revenue authorities.

74. Insofar as the refund of the security deposit of Rs.8,85,091.61 ps. and the earnest money deposit of Rs.5.00 lacs is concerned, it was urged by the learned senior counsel for the petitioner that the said amount was deposited by the respondent with the Project Architect under the terms of the contract and thus the respondent could not claim any payment for refund of the said amount from the petitioner. It is submitted by the learned counsel for the respondent that the Project Architect was appointed by the petitioner. The said Project Architect was not under the control of the respondent. It was not the case of the petitioner that the said amount was refunded by the Project Architect to the respondent. He submits that the petitioner could not refuse to refund the said amount, which was refundable by the petitioner to the respondent upon completion of the work and/or upon illegal termination of the contract.

75. Insofar as the payment of electricity charges claimed by way of counter claim by the petitioner is concerned, the learned arbitrator has already allowed the said claim. Insofar as the submission of the learned senior counsel for the petitioner that the counter claim in respect of the electricity charges was allowed by the learned arbitrator, though the said payment was made by the sister concern of the petitioner, however, the learned arbitrator rejected the claim for reimbursement of the royalty amount on the ground that the said payment was not made by the petitioner is concerned, it is submitted by the learned counsel for the respondent that they had submitted an opinion of their advocate that since excavated material from the site was used on the same site, no royalty was payable. In support of this submission, learned counsel invited my attention to page 312 of Volume 3 and paragraphs 203 and 204 of the impugned award. It is submitted that the learned arbitrator has rendered a finding of fact which is not perverse and cannot be interfered with by this Court.

76. It is lastly submitted by Mr.Kapadia, learned counsel for the respondent that the impugned award rendered by the learned arbitrator is well reasoned award and is rendered by considering the documentary and oral evidence led by the parties and after interpreting the terms of the contract which interpretation is possible interpretation and thus this Court cannot substitute the possible interpretation with another interpretation. He submits that the petitioner has impugned the findings of fact. This Court cannot interfere with the findings of fact and cannot re-appreciate the evidence appreciated by the learned arbitrator.

77. Mr.Apte, learned senior counsel for the petitioner in rejoinder submits that the certificate of the Site Engineer cannot be equated with the certificate of the Project Architect. All ad-hoc payments made by the petitioner under various RA bills were subject to the final measurement and final certification which was to be certified by the Project Architect. He submits that various findings recorded by the learned arbitrator are perverse and thus can be interfered with by this Court under section 34 of the Arbitration and Conciliation Act, 1996.

REASONS AND CONCLUSIONS:-

Whether the learned arbitrator had travelled beyond the scope of reference?

78. The dispute between the parties had arisen prior to 19th June, 2009. On 19th June, 2009, the respondent through their advocates' notice demanded a sum of Rs.1,97,05,428/- alongwith interest thereon totaling to Rs.3,13,97,099/- and invoked arbitration agreement. In the said notice, the respondent made a demand for not only the dispute arising out of the crystallized claims but also the uncrystallized claims. The petitioner responded to the said notice invoking arbitration agreement vide their advocates' letter dated 15th July, 2009. There was a reference to the letter dated 19th June, 2009 addressed by the respondent through their advocates invoking arbitration agreement. The petitioner thereafter vide their letter dated 29th August, 2009 appointed the learned arbitrator and referred to the said two letters addressed by the respondent and the petitioner respectively in the said letter of appointment.

79. Clause 43 of the General Conditions of Contract provided for arbitration for settlement of disputes. The relevant portion of the said clause is extracted as under:-

43. SETTLEMENT OF DISPUTE:

All disputes or differences of any kind whatsoever which shall at any time arise between the parties hereto touching or concerning the works or the execution or maintenance thereof of this contract or the rights touching or concerning the works or the execution of maintenance thereof of his contract or the construction remaining operation or effect thereof or to the rights or liabilities of the parties or arising out or in relation thereto whether during or after determination for closure or breach of the contract (other than those in respect of which the decision of any person is by the contract expressed to the final binding) shall after written notice by either party to the contract to the other of them and to the Employer hereinafter mention be referred for adjudication to a sole arbitrator to be appointed as hereinafter provided. For the purpose of appointing the sole Arbitrator referred to above, the Employer will send within thirty days of receipt of the notice, to the Contractor a panel of three names of persons who shall be presently unconnected with the organisation for which the work is executed.

80. A perusal of the arbitration agreement indicates that there is no procedure prescribed under the said clause for notifying the claims before invoking the arbitration agreement by either party which only can be referred to the arbitration in accordance with the said clause. In my view there is no bar under the said clause from making any additional claims or for increasing the claim amount in the arbitration proceedings after invoking the arbitration agreement. Section 23(3) of the Arbitration and Conciliation Act permits a party to amend or supplement his claim or defence during the course of the arbitral proceedings, unless otherwise agreed by the parties. Admittedly clause 43 does not record any such agreement not to amend the statement of claim or defence during the course of the arbitration proceedings.

81. The learned arbitrator has dealt with this issue of jurisdiction in the impugned award at length in paragraphs 82 to 87. After interpreting the arbitration agreement and the correspondence exchanged between the parties, it is held by the learned arbitrator that the opening sentence of clause 43 is very clear and wide to include the increased amount of claim made by the claimant in the statement of claim without restricting to the amount which is stated in the notice dated 19th June, 2009 and the said clause including all the disputes and differences of any amount whatsoever which shall at any time arise between the parties. It is held by the learned arbitrator that under section 23(3) of the Arbitration Act, the law contemplates the right of the party to amend their claims or statement of defence as the case may be. The learned arbitrator also adverted to the judgment of Supreme Court in case of State of Orissa (supra) and an unreported judgment of this court in case of Smt.Veena wd/o Naresh Seth and Anr. (supra).

82. Supreme Court in case of State of Orissa vs. Asis Ranjan Mohanti (supra) has construed the similar arbitration clause and has held that since the subsequent claims pertains to the disputes which were in existence at the time the arbitration clause was invoked, they were within the scope of arbitration clause and the reference. It is held that the arbitration must be confined to the disputes which were subject matter of the arbitration before the first arbitrator. In this case the respondent (original claimant) had raised the disputes in respect of the crystallized as well as uncrystallized claims including the escalation etc. It was not the case of the petitioner that the respondent raised any new claim in respect of which the disputes had arisen after issuance of the notice invoking arbitration agreement. In my view the learned arbitrator had rightly interpreted clause 43 of the General Conditions of Contract and has held that the said clause being very wide would include all disputes or differences which had arisen between the parties.

83. This court in a judgment delivered on 29th October, 2010 in case of Smt.Veena wd/o Naresh Seth and Anr. (supra) has distinguished the judgment of Supreme Court in case of Aluminium Cables Ltd. vs. Haryana State Electricity Board and Ors., 1996(5) SCALE 768 and has held that the said judgment cannot be read to hold as an absolute proposition that the claims made in the arbitration must in every case be limited to the claim stated in the notice/letter invoking arbitration. In my view the judgment of Supreme Court in case of State of Orissa (supra) and judgment of this court in case of Smt.Veena wd/o Naresh Seth and Anr. (supra) squarely applies to the facts of this case. I am respectfully bound by those judgments.

84. Insofar as judgment of this court in case of Patel Engineering Company Limited (supra) relied upon by Mr.Apte, learned senior counsel for the petitioner is concerned, this court had considered a situation where some of the disputes had arisen much after invocation of the arbitration agreement and in view of the arbitration clause being different in nature, this court took a view that those additional claims in respect of which disputes has not arisen on the date of invocation of the arbitration agreement were beyond the scope of reference. In my view the judgment of this court in case of Patel Engineering Company Limited (supra) is thus clearly distinguishable in the facts of this case and would not assist the case of the petitioner.

85. In my view since the arbitration agreement does not provide for any mandatory procedure for notifying the claims of dispute with quantification or otherwise to the employer or to the Project Architect in this case as a condition precedent before invoking arbitration agreement for referring only such claims or disputes to the arbitration, the claimant cannot be precluded from making additional claims in the statement of claim or from increasing the claim amount in the statement of claim. Section 23(3) of the Arbitration Act also permits both the parties to seek amendment to the statement of claim and/or defence as the case may be before the learned arbitrator.

86. I am not inclined to accept the submission of the learned senior counsel for the petitioner that the respondent had made any claims before the learned arbitrator in their statement of claim which were beyond the scope of reference. Be that as it may, the notice invoking arbitration agreement issued by the respondent did not quantify the entire claims or did not crystallize all the disputes with quantification. I do not find any infirmity with the views of the learned arbitrator holding that none of the claims made by the respondent were beyond the scope of reference and that the arbitration clause being very wide in its nature, all the claims made by the respondent were within the jurisdiction of the learned arbitrator.

Whether any of the claims made by the respondent fell within the category of excepted matters ?

87. The petitioner placed reliance on clauses 2, 8, 10, 17, 20, 21, 23, 30(a), (b) and (f) and 39,43 of the General Conditions of Contract and would submit that decision, opinion, direction or certificate except for payment of the Project Architect arising out of those clauses were excepted matters and were not arbitrable under clause 43 of the General Conditions of Contract. In support of this submission, the petitioner placed reliance on the objections raised by the petitioner in the written statement before the learned arbitrator. It is submitted that several claims allowed by the learned arbitrator were not arbitrable in view of those claims falling under the category of excepted matters . It is also the case of the petitioner that though the said issue was vehemently raised by the petitioner before the learned arbitrator, in the impugned award the learned arbitrator has erroneously recorded the concession which was not made by the petitioner allegedly giving up this issue of jurisdiction.

88. Be that as it may, a perusal of the written statement filed by the petitioner before the learned arbitrator clearly indicates that this plea of jurisdiction based on the premise that some of the claims fell under the accepted category was totally vague and without particulars.

89. A perusal of the award clearly indicates that though this issue of jurisdiction was raised in the written statement and was initially pursued before the learned arbitrator by the petitioner, the said issue was given up during the course of arguments. The learned arbitrator in paragraph (104) of the impugned award has recorded the statement made by the learned counsel for the petitioner that the petitioner had given up the objections through their learned counsel and were therefore estopped from raising the same subsequently. In the written arguments filed by the respondent also, the respondent had placed this fact on record. The petitioner admittedly did not apply for clarification of the impugned award under section 33 of the Arbitration Act. In my view in this situation, the statement recorded by the learned arbitrator recording concession made by the petitioner thereby giving up the issue of jurisdiction cannot be challenged and the statement being part of the record which remained unchallenged till this petition is filed has to be accepted.

90. A perusal of clause 43 read with clause 39 of the General Conditions of Contract clearly indicates that the disputes other than those in respect of which the decision of any person is by the contract expressed to the final and binding are arbitrable. The dispute arising out of certificate for payment made by an architect is also arbitrable. In my view a dispute raised out of the decision, opinion, direction or certificate (accept for payment) would fell under excepted category and cannot be referred to arbitration provided any such decision, opinion, direction or certificate (except for payment) is issued by the architect in respect of the aforesaid clauses mentioned in the General Conditions of Contract. The petitioner neither could demonstrate in the written statement filed before the learned arbitrator nor could demonstrate before the learned arbitrator whether in respect of any of the claims made by the petitioner before the learned arbitrator arose out of any such decision or opinion or direction or certificate issued by the Project Architect under clauses 2, 8, 10, 17, 20, 21, 23, 30(a), (b) and (f) and 39,43 of the General Conditions of Contract.

91. In my view unless the decision, opinion, direction or certificate are issued by the architect under those provisions and conveyed to the contractor, employer cannot take the plea of jurisdiction based on the premise that the claims filed under those clauses fell under excepted category of matters and were not arbitrable. In this case the petitioner has totally failed to raise any such plea specifically in the written statement nor could satisfy the condition under section 39 read with section 43 of the General Conditions of Contract.

92. A perusal of the award indicates that though the petitioner had given up the issue of jurisdiction initially raised in the written statement on the ground that the claims fell in the excepted category of matters, the learned arbitrator still dealt with the oral submissions made by the petitioner through their learned counsel on this issue at great length in paragraphs 89 and 105 of the impugned award and has rejected the submission of the learned counsel for the petitioner on merits after interpreting the terms and conditions of the contract. In my view the interpretation of the learned arbitrator on the issue whether any of the claims made by the respondent fell under excepted category of matters or not is not only a possible interpretation but is a correct interpretation. In my view even if the interpretation of the learned arbitrator on the provisions is a contract is a possible interpretation, such a possible interpretation cannot be substituted by another interpretation by this court under section 34 of the Arbitration Act.

93. Supreme Court in case of J.G. Engineers Private Limited (supra) has after interpreting the identical clause has held that the question as to whether the other party has committed breach or not cannot be decided by the party alleging breach. A contract cannot provide that one party will be the arbiter to decide whether he committed breach or the other party committed breach. That question can only be decided by an adjudicatory forum, that is, a court or an arbitral tribunal. It is held that if the contractor admits that he is in breach, or if the arbitrator finds that the contractor is in breach and was responsible for the delay, the decision of the Superintending Engineer will be final in regard to those issues as per the clause in question. A perusal of the impugned award clearly indicates that the learned arbitrator has after considering the oral and documentary evidence has dealt with the issue of alleged delay in submission of drawings and various other delays attributable on the part of the petitioner which caused prolongation of contract. The principles laid down by the Supreme Court in case of J.G. Engineers Private Limited (supra) squarely applies to the facts of this case.

94. A perusal of the impugned award indicates that after considering various submissions which were initially made by the petitioner on the plea of excepted matters , the learned arbitrator has held that he has not decided any of the excepted matters as no claims fell under the category of excepted matters . In my view the findings recorded by the learned arbitrator being not perverse, cannot be interfered with by this court under section 34 of the Arbitration Act.

Whether the findings of the learned arbitrator on the issue of delay, breaches of contract, illegal determination of the contract rendered against the petitioner are perverse?

95. The learned senior counsel for the petitioner invited my attention to some of the correspondence exchanged between the parties in support of his submission that the respondent were responsible for delay in carrying out the work and not the petitioner and in support of his submission that there was no delay in supply of drawings or in making timely payment to the respondent. It is the case of the petitioner that the respondent had not submitted bills in the proper format to the petitioner for certification through the Project Architect.

96. A perusal of the correspondence and oral evidence which were relied upon by both the parties for perusal of this court read with the findings rendered by the learned arbitrator on this issue clearly indicates that the learned arbitrator has dealt with this issue at great length in paragraphs 106 to 140 of the impugned award.

97. The learned arbitrator has rendered the following findings of fact:-

(a) The petitioner had failed to prove that the work done by the respondent was of poor or inferior quality from the Project Architect who was an authority under the contract ? The Project Architect had cleared 15th RA bill and had given clean chit to the work carried out by the respondent. None of the bills were withheld by the Protect Architect for want of quality and material work.

(b) The petitioner has to be blamed for the delay in making payment to the respondent which finally resulted in delay in completion of the work.

(c) The witnesses examined by the petitioner had admitted that various changes were required to be made in various drawings by the petitioner. The executable drawings were not given by the petitioner as required under clause (3) of the General Conditions of Contract nor were provided on piece meal basis. The petitioner had conceded that the petitioner had not supplied all the executable drawings at one go to the respondent.

(d) There was gross delay in making payment of various bills on the part of the petitioner to the respondent due to which the respondent suffered in every respect.

(e) The delay in implementation of the project was largely on account of the inaction of the petitioner particularly in making payment and supplying drawings on time. There was also failure on the part of the petitioner to provide electricity connection on time.

(f) The pre-requisite of section 39 of the Contract Act had not been fulfill by the petitioner before terminating the contract.

98. In my view various findings of fact on delay and breaches committed by the petitioner rendered by the learned arbitrator are rendered after considering the oral and documentary evidence led by both the parties and being not perverse cannot be interfered with by this court under section 34 of the Arbitration Act. I am thus not inclined to accept this submission of the learned senior counsel that the learned arbitrator did not consider the evidence produced by the petitioner in the impugned award. On the contrary the arbitral award indicates that the issue of delay and breaches raised by both the parties against each other had been dealt with at extensively in the impugned award by the learned arbitrator and cannot be interfered with by this court.

Whether claim no.1 for payment of the work done upto 16 th RA Bill is awarded contrary to the provisions of the contract and is based on evidence or not?

99. There is no dispute that G.D.Sambhare and Co. were appointed as the Project Architects under clause 1.2 of the General Conditions of Contract. Clause 16 of the General Conditions of Contract provides for role of the architect which included recording of measurements, certification of bills, preparing extra deviation items, excess/saving statement, preparing minutes of meeting etc. The said clause provides that the architect shall jointly record the measurements with contractors representative for all items of works and on completion shall hand over the records to the employer. Clause 20 of the contract provides for measurement of works. Clause 21 provides for prices for extra items/work. Clause 31 provides for liquidated damages. Clause 35 provides for certificate and payment.

100. Under clause 35, it is provided that the contractor shall be entitled for an interim payment based on the amount stated in an interim certificate issued by the Project Architect, within the period of honouring certificates in accordance with the contract. It is provided that in case of delay due to some reason in processing of such bills for payment, an adhoc advance of 70% of the billed amount may be paid, on the request of the contractor, for the smooth progress of the work. The contractor shall be entitled under the certificate to be issued by the architect, to receive 50% of the retention amount after virtual completion against the final certificate and balance 50% at the end of the defects liability period, provided the defects are made good according to the true intent and meaning hereof after due completion of work. It is provided that the contractor shall submit interim bills only after working out the appropriate measurements jointly recorded with site engineer at site in a register and showing the register to the architect. The final bill shall be submitted by the contractor within three months of Virtual Completion Certificate received from the contractor duly endorsed by the architect and such bill shall be settled and certified for payment by the architect within 45 days of the submission of the bill.

101. There is no dispute that in this case the respondent had submitted 16 bills to the petitioner. Out of those bills submitted by the respondent, RA Bill Nos. 1, 2 and 15 were certified by the Project Architect. It was the case of the petitioner before the learned arbitrator that the other bills submitted by the respondent were not in a proper format. It was the case of the petitioner that the other bills were not certified by the Project Architect. The petitioner however continued to make ad-hoc payment to the respondent under those bills. There was a dispute raised by the petitioner before the learned arbitrator about certification of Bill nos. 15 and 16. The petitioner had also disputed the signatures of the Chief Engineer on RA Bill No.15. It was the case of the petitioner that against the recommendation of the Project Architect to pay Rs.1 crore to the respondent as and by way of ad-hoc payment, the petitioner had paid the amount more than what was recommended by the Project Architect to the respondent. According to the petitioner, prior to the recommendation of the Project Architect, the petitioner had released Rs.60 lacs to the respondent on 11th November, 2008 and further Rs.50 lacs on 7th January, 2009 which amount was not accounted for in the 15^th RA Bill by the respondent.

102. A perusal of the record indicates that vide their letter dated 24th November, 2008, the Project Architect had certified an 'on account' payment of Rs.1 crore and had directed to pay the said amount. In the said letter, the Project Architect had categorically stated that the very same bill was received by the architect from the respondent. The bills were not sent by the Site Engineer of the petitioner to the Project Architect but their site architect for certification.

103. A perusal of the record indicates that the learned arbitrator has considered various certificates issued by the Project Architect in favour of the respondent appreciating the work carried out by the respondent. In my view there is no substance in the submission of the learned senior counsel for the petitioner that those certificates relied upon by the learned arbitrator were disputed by the petitioner or that the same were not proved.

104. Insofar as the delay in not certifying the RA Bill nos. 3 to 14 submitted by the respondent is concerned, the learned arbitrator has considered the submission of the petitioner that those bills were not submitted in the prescribed format and on that ground the bills were not certified and denial of the same was a consequential denial of full payment. The learned arbitrator has held that the petitioner was unable to explain how the architect had certified RA Bill nos. 1, 2 and 15 which were similar in format in RA Bill Nos. 3 to 14. The petitioner also did not explain as to how the petitioners had verified RA Bill no.16 internally which was also in the similar format. In paragraph 113 of the impugned award, the learned arbitrator has prepared a table showing the details of the RA bill amount and the payment received by the respondent.

105. The learned arbitrator has held that it was not known and there was nothing on record to show that why the Project Architect who was appointed by the petitioner had not certified the RA Bill nos. 3 to 14. The petitioner however continued to make only part payment. The learned arbitrator after considering the oral and documentary evidence held that the Project Architect had finally certified 15th RA Bill dated 16^th April 2009 for an amount of Rs.1,31,52,175.62 out of the total bill for Rs.1,97,05,428.22. Since the said amount was not paid though certified, the said amount was carried forwarded in the 16th RA Bill dated 25th May, 2009 for an amount of Rs.2,01,83,449/- which included the entire amount of unpaid bill from 1st RA Bill to 16th RA Bill.

106. The learned arbitrator also considered the letter dated 24^th November, 2008 from the Project Architect addressed to the petitioner stating that the RA Bill nos. 1 and 2 were certified by them after receipt of certificate for measurement and were executed at site by the site engineer of the petitioner. The architect had received certified bill no.8 however since various issues were raised by the Site Engineer, the Project Architect did not issue certificate for bill no.9. The architect of the Project Architect had been visiting the site from time to time. The Project Architect opined that it was necessary to disburse the payment against the work executed and that the issue of debate could be sorted out by sitting together the payment against non-debated item, could be paid. The Project Architect accordingly certified an on account payment of Rs.1 crore. The learned arbitrator held that inspite of the said certificate of the Project Architect to pay on account of Rs.1 crore, the petitioner did not pay the said amount.

107. The learned arbitrator held that the petitioner only was responsible for delay in making payment. It is held that the format of RA Bill was consistent from 1st RA Bill to 16th RA Bill. The learned arbitrator also considered the oral evidence of the witness examined by the petitioner who admitted that for deciding the abandonment of the project, the petitioner did not issue any letter to the respondent pointing out that the RA Bills were not in a prescribed format.

108. Insofar as RA Bill no.15 is concerned, the learned arbitrator after perusing the said RA Bill (which was also perused by this court) has held that Mr.Asif Shaikh, Project Architect of the petitioner had recommended payment for an amount of Rs.1,31,52,175.62 which bill included all the details in respect of the work done by the respondent till the date of the said bill i.e. 16th April, 2009. The said amount was certified on 6th May, 2009. In the said bill, he had left the issue of payment of service tax, escalation and interest open for discussion.

109. Learned senior counsel for the petitioner could not dispute before this court that the RA Bill no.15 which was signed by Mr.Asif Shaikh, had also signed all previous bills on behalf of the petitioner. It is an admitted position that the petitioner neither examined the site engineer nor examined the Project Architect before the learned arbitrator for proving the certificate issued by the site engineer and the Project Architect as false. The petitioner also did not lead any oral evidence to prove the measurement unilaterally recorded if any, or their internal working insofar as RA Bill nos. 3 to 15 were concerned. The learned arbitrator in my view rightly held that the petitioner had neither disputed the certification nor the signatures of their Chief Engineer or Site Engineer on the RA Bills certifying payments.

110. RA Bill no.15 was dated 16th April, 2009 and was for Rs.1,97,05,428.22 which was signed by Mr.Asif Shaikh the site engineer of the petitioner who had corrected the figures in the said bill and had reduced the claim to Rs. 1,31,52,175.62. The RA Bill was forwarded by the site engineer of the petitioner to the Project Architect for issuance of the certificate for payment. The Project Architect had sent the said 15^th RA Bill to the respondent on their letterhead dated 6th May, 2009 after certifying the amount to the tune of Rs.1,31,52,175.62. The Project Architect had certified the said amount of payment as corrected by the Site Engineer as payable to the respondent i.e. Rs.1,31,52,175.62. The Project Architect however left the claim of escalation, service tax and interest to be decided after discussion in due course subject to deduction of payment made, earlier recovery if any, for meter supplied and for water and electricity charges paid directly by the petitioner and tax deducted etc.

111. The petitioner had objected to the certification of the 15th RA Bill for the first time only by their letter dated 24th June, 2009. The learned arbitrator rightly held that the petitioner had failed to produce the original of the 15th RA Bill which was certified on 22nd May, 2009 according to them. The petitioner also did not produce on record any communication calling upon the Project Architect to examine the certificate.

112. No allegations of fraud or collusion are made by the petitioner against the Project Architect either before the commencement of the arbitration or during the arbitration proceedings. The petitioner also did not deny the signatures and the recommendation made on copy of 15th RA Bill produced by the respondent. The learned arbitrator also considered the oral evidence of the two witnesses examined by the petitioner and also compared the signatures of the Site Engineer of the petitioner on RA Bill nos. 15 and 16 and held that their signatures on both the RA Bills tallied.

113. The learned arbitrator also considered affidavit of Mr.Prabhu, Chief Engineer of the petitioner who had produced the photocopy of the 16th RA Bill as corrected by Mr.Asif Shaikh, Site Engineer of the petitioner certifying the payment of Rs.69,68,562/-. The said Mr.Asif Shaikh however made an endorsement on the said bill that the said amount was appropriated against the part recovery of liquidated damages of Rs.69,68,562/- against total recovery of Rs.73,22,430/- against the liquidated damages and thus no amount was due and payable to respondent. The learned arbitrator took the cognizance of the fact that the petitioner did not examine Mr.Asif Shaikh to prove the so called correction, alterations in the 16th RA Bill and to prove the correctness of endorsement made by him on that bill.

114. It is held by the learned arbitrator that even if RA Bill no.16 was not certified for payment by the Project Architect, he had also not rejected the said bill. Merely because the Project Architect did not certify the said bill, the petitioner cannot escape from liability to make the payment under the said RA Bill. It is held that the work reflected in the 16th RA Bill had been acknowledged and accepted by the site engineer though he did not agree to the amount in the bill. In my view the learned arbitrator rightly held that since the Project Architect had not certified the 16th RA Bill, such disputes and differences could be resolved by him.

115. A perusal of the record indicates that the Project Architect had certified the same amount what was certified by the site engineer of the petitioner keeping debated issue open. It was not the case of the petitioner that the respondent was responsible in the Project Architect not certifying any RA Bills i.e. RA Bill nos. 3 to 14 or RA Bill No.16. The Project Architect was appointed by the petitioner. It was the grievance of the Project Architect that the petitioner was not sending bills for certification of the Project Architect. It was the case of the petitioner themselves that the Project Architect was in place all throughout till the contract was terminated or even thereafter. In my view if the Project Architect has not certified the bills due to the reasons attributable to the petitioner, the petitioner could not have withheld the legitimate dues of the respondent for the work done or for compensation. The petitioner did not produce their measurements before the learned arbitrator showing the different amount of the work done. The learned arbitrator thus had jurisdiction to himself adjudicate upon the dispute upon the measurement raised by the parties under the wide arbitration clause recorded in clause 43 of the General Conditions of Contract.

116. In my view there is no substance in the submission of the learned senior counsel for the petitioner that the learned arbitrator has considered the different amount than what was certified by the Project Architect or has awarded any access amount of Rs. 52,00,561/- or any amount towards material advance which was not payable by the petitioner to the respondent. The learned senior counsel could not demonstrate as to how excess amount is awarded by the learned arbitrator.

117. Insofar as submission of the learned senior counsel that the respondent was responsible for delay and had committed breaches resulting termination of the contract by the petitioner lawfully and thus the petitioner was entitled to adjust the liquidated damages amount against the amount payable if any to the respondent is concerned, in my view the learned arbitrator having rendered the finding of fact that the delay was attributable on the part of the petitioner and various breaches having committed by the petitioner and the termination of the contract by the petitioner being illegal, has rightly held that the petitioner could not recover any amount towards liquidated damages from the respondent. The learned arbitrator also rightly held that the petitioner in any event not having proved any loss or damages suffered could not have appropriated any amount payable to the respondent by the petitioner for the work done towards liquidated damages. In my view since the petitioner had illegally appropriated the amount payable to the respondent towards their untenable claim for liquidated damages, the learned arbitrator rightly rejected the claim for liquidated damages made by the petitioner and rightly allowed the claim by the respondent for the work done.

118. Insofar as submission of the learned senior counsel for the petitioner that the learned arbitrator allowed the claim for escalation based on no evidence is concerned, a perusal of clause 45 of the General Conditions of Contract read with Appendix to the Conditions of Contract indicates that the rates quoted by the contractor were to remain firm for all items except for which the basic rates were given. In the Appendix to the conditions of contract, it was provided that the rates were fixed for a period of one year and thereafter escalation shall be payable based on the standard escalation formula of P.W.D., State Government of Maharashtra. The basic rates of cement and re-enforcement is provided in clause 45 as well as in the appendix to the Conditions of Contract. It is also provided that the escalation for plus minus 5% will not be asked for or paid.

119. There is no dispute that the work was not over within 12 months' period. The respondent had made a claim towards the escalation charges from 24th September, 2008 i.e. after expiry of one year under claim no.4 and prayed for an amount of Rs.19,47,733/-. The learned arbitrator has rendered a finding that the project was delayed for the reasons attributable to the petitioner. The learned arbitrator rightly considered the appendix to the Conditions of Contract while allowing this claim beyond the period of one year. It is held by the learned arbitrator in paragraph 156 of the impugned award that the respondent was entitled to the claim of escalation of the work done after 24th September, 2008 in accordance with the standard escalation formula of P.W.D., State of Maharashtra provided in the appendix of the General Conditions of Contract. The respondent had calculated escalation based upon the said formula and had claimed the said amount in the 15th and 16th RA Bill. The witnesses examined by the respondent had produced the said formula in his oral evidence which was marked as Ex.CW-1/1.

120. The learned arbitrator has rightly held that the respondent herein had clearly discharged their burden of proving their claims while leading oral evidence of Mr.Anand Gupta. The petitioner had not produced any material to show that the amount claimed by the respondent was not as per escalation formula of P.W.D. State of Maharashtra. The Project Architect had also not rejected the claim for escalation in 15th RA Bill but had merely deferred it for discussion. In my view the learned arbitrator after considering the oral and documentary evidence and after interpreting the terms of the contract has rightly allowed the said claim for escalation for the period beyond 12 months in accordance with clause 45 read with Appendix to this General Conditions of Contract. No infirmity can be found with the award insofar as this claim is concerned. I am not inclined to accept the submission of the learned senior counsel for the petitioner that the claim allowed by the learned arbitrator was contrary to the terms of the contract or was based on no evidence.

121. Insofar as the submission of the learned senior counsel for the petitioner that the learned arbitrator could not have stepped into the shoes of the Project Architect and could not have determined the rate of extra items claimed by the respondent on the ground that the decision of the Project Architect for determination of the rate for extra item being final is concerned, a perusal of clause 21 of the General Conditions of Contract indicates that the contractor is entitled to the payment for extra work which are not of similar character and/or not executed under similar condition or if any additional work is ordered by the architect. The rates in respect of such extra items has to be fixed by the architect as reasonable and proper.

122. A perusal of the record does not indicate that the petitioner had raised any such issue before the learned arbitrator. It is not the case of the petitioner that the respondent had not carried out any extra work. In paragraph 153 of the impugned award, the learned arbitrator has compared the 15th and 16th RA Bills and had identified the additional work done by the respondent between raising the 15th RA Bill and 16th RA Bill and had rightly awarded for the additional work between 15th RA Bill and 16th RA Bill as claimed. The findings of fact rendered by the learned arbitrator being not perverse, cannot be interfered with by this court.

123. Insofar as submission of the learned senior counsel that the claim of Rs.1,33,040/- allowed by the learned arbitrator towards electricity charges without any break up or details or that the same is awarded contrary to clause 8 of General Conditions of Contract and Clause 33 of the Special Conditions of Contract is concerned, it was the case of the respondent that as and when the work commenced at site, there was no electricity connection provided by the petitioner. The petitioner had only made available the generators for carrying out the construction activities. The petitioner however belatedly got the electricity connection at site with a common meter to be shared between the respondent and one Oceanic Enviro who was carrying out the work of water park at the site. It was the case of the respondent that it was agreed that the bill was to be shared in the ratio 75:25 between the respondent and the said Oceanic Enviro. The respondent claimed the amount of Rs.1,33,040/- at the rate of 50% for the payment being made towards the electricity bill. In the written statement filed by the petitioner, the petitioner admitted that from April 2008, the petitioner had got the electricity connection at site. The petitioner however denied that the electricity bills had to be shared as claimed by the respondent.

124. A perusal of the letter of intent and more particularly clause 8 thereof indicates that the electric power required for the purpose of work was to be borne by the respondent. A perusal of paragraph 180 of the impugned award indicates that the learned arbitrator has awarded this claim on the premise that since the common meter could be installed by the petitioner and/or with their consent, the other agency working for the petitioner on the site may have made such arrangements for sharing the electricity bill in the proportionate of 75:25. In my view, this part of the evidence is contrary to the terms of the contract and is based on presumption and surmises and not based on evidence and thus deserves to be set aside.

125. Insofar as submission of the learned senior counsel that while allowing claim no.1, the learned arbitrator did not give credit of Rs.25 lacs which was admittedly received by the respondent as advance from the petitioner is concerned, a perusal of Annexure (1) to the statement of claim which provides details of the running account bill including the amount of the payment received. A perusal of the column (6) which provides for details of the part payment received by the respondent from the petitioner indicates that the respondent had included a sum of Rs.25 lacs in that column. A gross total of the part payment received was Rs.6.31 crores which was inclusive of the said amount of Rs.25 lacs which is deducted by the respondent in the summary of claims at page (31) of the statement of claim. The learned arbitrator while allowing the claim no.1 of the respondent has given credit of the entire amount paid by the petitioner to the respondent while calculating the net amount payable.

126. In my view if according to the petitioner, the respondent had not included the amount of Rs.25 lacs received towards advance in the RA Bill no.16, the site engineer of the petitioner who had certified the said bill would have shown the said amount payable by the respondent to the petitioner. In my view the respondent themselves had given credit of the said amount by including the said amount in the payment received and thus the learned arbitrator having accepted the said amount as payment received by the respondent, I am not inclined to accept the submission of the learned senior counsel for the petitioner that no credit of the said amount was given by the learned arbitrator. The petitioner did not make any application under section 33 of the Arbitration Act before the learned arbitrator alleging any credit of the said amount not having been given by the learned arbitrator.

127. Insofar as submission of the learned senior counsel for the petitioner that the learned arbitrator could not have directed the petitioner for payment of security deposit or the retention amount to the respondent since the said amount was admittedly deposited by the respondent with the Project Architect and not with the petitioner is concerned, a perusal of the written statement indicates that no such issue was raised by the petitioner before the learned arbitrator. The petitioner had alleged that the earnest money deposit of Rs.5 lacs made by the respondent was refundable only on completion of the work and since the work was not completed by the respondent, the said amount had been forfeited by the petitioner and had been appropriated against the dues of the petitioner against the respondent. In my view the submission now made across the bar is contrary to the defence raised before the learned arbitrator and also contrary to the provisions of the contract. The said amount was liable to be refunded by the petitioner to the respondent upon completion of the work or in case of termination of the contract which the petitioner admittedly failed to refund.

128. Be that as it may, the respondent had no privity of contract with the Project Architect appointed by the petitioner who was under the control of the petitioner. It is not the case of the petitioner that the said Project Architect was entitled to retain the said amount even after completion of the work or even when the final bill was required to be paid by the petitioner to the respondent.

129. Insofar as submission of the learned senior counsel for the petitioner that the learned arbitrator could not have awarded interest for the period beyond seven days from the date of submitting the RA Bills or that the said part of the award is contrary to clause 35 of the General Conditions of Contract is concerned, a perusal of the award indicates that the learned arbitrator in paragraph 113 of the impugned award has prepared a chart showing the details of the RA Bill amounts, submission of the RA Bills, due date, date of part payment and the balance amount payable. There is no dispute about the details recorded in paragraph 113 of the impugned award. In paragraph 159 of the impugned award, the learned arbitrator has held that though the respondent had claimed interest at the rate of 30% per annum, the learned arbitrator awarded interest at the rate of 18% per annum. It is held that the respondent would be entitled to calculate the interest on the amount except those dues under 1^st and 2nd RA Bill after expiry of 30 days from the date of raising of the respective bills being a reasonable period for an architect to certify/reject the bill.

130. It is an admitted position that there is no bar under the provisions of the contract entered into between the parties against the payment of interest on the delayed payment. Under clause 35 of the General Conditions of Contract, the contract is entitled for an interim payment based on the amount stated in an interim certificate issued by the Project Architect. Under Appendix to the contract, payment of the interim bill have to be made within 21 days from the date of receipt of the certified bill by the petitioner. The payment of final bill has to be made within three months from the date of certified bill by the petitioner. It is not in dispute that the respondent had submitted 16 RA Bills. Only first two RA Bills were certified by the Project Architect. RA Bill no.15 was subsequently certified. The petitioner was not sending all the RA Bills to the Project Architect for certification. The petitioner did not take any joint measurement of the work done admittedly. The petitioner continued to make ad-hoc payment to the respondent without any basic and did not bother to get the final measurement done of the entire work and to get those bills certified from the Project Architect.

131. In my view the learned arbitrator in these circumstances was justified in awarding claim for interest after expiry of 30 days from the date of raising of the respective bills by considering the said period as the reasonable period for the Project Architect to certify or reject those bills. In my view since the petitioner had committed default in releasing the payment of the due amount under the running account bills to the respondent, the learned arbitrator was empowered to consider the period of interest from the due date till payment. I do not find any infirmity with the impugned award insofar as payment of interest is concerned. There is no substance in the submission of the learned senior counsel for the petitioner that the learned arbitrator has awarded interest contrary to the terms of the contract.

132. Insofar as submission of the learned senior counsel for the petitioner that since no notice under the provisions of Interest Act, 1978 was issued, no interest for the past period could be awarded by the learned arbitrator is concerned, in my view there is no merit in this submission of the learned senior counsel for the petitioner. Under section 31(7) of the Arbitration Act, the learned arbitrator is empowered to award interest on the payment of money at such rate as it deems reasonable on the whole or any part of the money for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made. In my view in view of the power vested in the learned arbitrator for awarding interest from the due date till the date of payment and at the reasonable rate of interest as the learned arbitrator may deem fit, the respondent was not required to issue any notice under the provisions of Interest Act, 1978. In my view the said provisions of the Interest Act, 1978 did not apply in view of the self contained provisions empowering the learned arbitrator to award interest from due date till payment.

133. Insofar as submission of the learned senior counsel for the petitioner that the learned arbitrator has awarded payment of the arbitration cost in favour of the respondent without any evidence and proof is concerned, clause 43 of the General Conditions of Contract provides that the fees if any of the arbitrator to be paid before the award is made and published has to be paid equally by both the parties by sharing and . Under clause 31(8) of the Arbitration Act, the learned arbitrator is empowered to award cost of arbitration.

134. A perusal of the record indicates that both the parties had claimed cost of arbitration towards fees paid to the learned arbitrator, advocates' fees and cost incurred in conducting the arbitration proceedings. The respondent herein had submitted a detail bill of cost supported by the documentary proof of cost incurred. The petitioner had also submitted bill of cost however without any documentary proof. The learned arbitrator directed the payment of actual cost towards the fees and the expenses of (i) the learned arbitrator and witnesses, (ii) legal fees and expenses, and (iii) amount for organizing the arbitration meetings. The learned arbitrator did not allow the additional amount paid by the respondent for cancellation of the arbitration meetings at their behest. The learned arbitrator also allowed the payment of cost of Rs.9,02,810/- towards the payment made by the respondent to their advocates. The petitioner themselves had paid an amount of Rs.7,84,000/- to their advocates. The learned arbitrator also allowed the total claim of hotel room bookings and costs of stenographer of Rs.3,18,998/-. The total cost awarded by the learned arbitrator in favour of the respondent was to the extent of Rs.21,61,808/-. These amounts were allowed by the learned arbitrator considering the detailed bill of cost submitted by the respondent submitted by the respondent supported by the documentary proof of having incurred the said cost. The arbitration cost allowed by the learned arbitrator towards various heads is in conformity with the provisions under section 31(8) of the Arbitration Act and based on the proof produced by the respondent who had succeeded in the arbitration proceedings. No infirmity with this part of the award thus can be found. I am thus not inclined to accept the submission of the learned senior counsel for the petitioner that the award of cost was based on no evidence.

135. Insofar as submission of the learned senior counsel for the petitioner that though the learned arbitrator while allowing the counter claim for reimbursement of the electricity bills though the said payment was made by the sister concern of the petitioner, however rejected the claim for payment of royalty though made by the sister concern of the petitioner is concerned, it was the case of the respondent that the petitioner had failed to produce any proof of payment of royalty alleged to have been made by the petitioner to the revenue authority. It was also the case of the respondent that the respondent had submitted an opinion from an advocate who had opined that since the escalation material from the site was used on the same site, no royalty was payable.

136. A perusal of the award indicates that the learned arbitrator had rejected this counter claim on the ground that the land in respect of which the royalty was claimed to have been paid by the petitioner belongs to Amrutha Estate and Hospitality Pvt.Ltd. The respondent had specifically pleaded in the reply to the counter claim that the escalation on site was for the purpose of utilizing the material escalated on the same site and thus no royalty was payable which averment of the respondent was not denied by the petitioner. The respondent had intimated the petitioner well in advance that in view of the judgment of this court in case of RCF vs. State of Maharashtra, AIR 1993 Bombay 144 that the use of excavated material on the same site, it would not attract payment of royalty. The learned arbitrator held that the petitioner could not satisfactorily explain as to why the royalty was payable inspite of the view taken by this court in case of RCF vs. State of Maharashtra (supra).

137. The learned arbitrator rejected this counter claim also on the ground that in their pleadings, it was the case of the petitioner that the petitioner was the owner of the land and that the royalty payments were made by the petitioner to the Government authorities. The witness examined by the petitioner admitted in his cross examination that neither the petitioner nor the said Amrutha Estate and Hospitality Pvt. Ltd. had any holding in excess of one percentage in each other. The learned arbitrator rejected the contention of the petitioner that the petitioner and the said Amrutha Estate and Hospitality Pvt. Ltd. were sister concerns. The petitioner also could not produce any proof to show that the petitioner had made any payment to the said Amrutha Estate and Hospitality Pvt. Ltd. towards reimbursement of any payment of royalty alleged to have been made by the said company. In my view the rejection of counter claim for reimbursement of royalty by the learned arbitrator is after considering the oral and documentary evidence produced by both parties and thus cannot be interfered with this court under section 34 of the Arbitration and Conciliation Act, 1996.

138. Though the petitioner has raised few grounds in respect of the rejection of the some of the counter claims made by the learned arbitrator in the arbitration petition, the learned senior counsel for the petitioner could not demonstrate before this court as to how the impugned award insofar as rejection of other counter claims is perverse or in conflict with public policy. I am thus not inclined to interfere with any part of the rejection of the cancellation claim made by the learned arbitrator.

139. A perusal of the award indicates that though the petitioner had made about 16 claims, the learned arbitrator has allowed very few claims and has allowed one counter claim. In my view the award rendered by the learned arbitrator is fair and reasonable and does not warrant any interference except to the extent of claim no.11 which is set aside by this judgment.

140. I therefore pass the following order:-

(a) Arbitration Petition No.29 of 2013 is partly allowed;

(b) Award in respect of claim no.11 alongwith interest awarded thereon is set aside;

(d) There shall be no order as to costs.

Court	Mumbai High Court
Decided On	Oct-20-2016
Case Number	Arbitration Petition No. 29 of 2013
Judge	R.D. Dhanuka
Appellant	Country Club (India) Ltd.
Respondent	Choudhury and Choudhury (India) Ltd.

Country Club (India) Ltd. Vs. Choudhury and Choudhury (India) Ltd. - Court Judgment