| SooperKanoon Citation | sooperkanoon.com/1102698 |
| Court | Mumbai High Court |
| Decided On | Apr-04-2013 |
| Case Number | Arbitration Petition No. 891 of 2010 |
| Judge | ANOOP V. MOHTA |
| Appellant | Patel Engineering Co. Ltd. |
| Respondent | B.T. Patil and Sons Belgaum (Construction) Pvt. Ltd. |
Oral Judgment:
The Petitioner (Original Respondent) has challenged Award dated 25 January 2010, under section 34 of Arbitration and Conciliation Act, 1996 (for short Arbitration Act).
2 The operative part of the award is as under:-
âCLAIM NO.1:-
25 The claimant has claimed an amount of Rs.11,55,23,065/- being balance of the Award amount pertaining to Vol. I.
25.1. It is an admitted fact that, the Respondents have received Award amount of Rs.31,40,60,958/-towards Vol. I Award. As per the terms of the subcontract/ piece work contract the Respondent is entitled for margin/commission of 11.5%. The same works out Rs.3,61,17,010/- Thereby the share of BTP/SBP together works out to Rs.27,79,43,948/- Out of this BTP has received an amount of Rs.15,50,98,891/- leaving balance payable by Respondent to BTP and SBP which works out to Rs.12,28,45,057/- SBP has not at all received its share out of Vol. I Award and accordingly, in the claim statement, SBP has claimed its full share to the tune of Rs.5,37,17,487/- The details of the same are depicted in Annexure C-153 page-3, as well as in Annexure C-47. It is an admitted fact that the Respondents have not denied these calculations made available in Annexure C-153 nor produced any counter calculations against demands of the Claimant to defend the differences, if any. On the contrary, the Respondent's witness No. 2 Sri Muraleedharan, who is the accountant of the Respondent, who was examined as a witness has not denied the correctness of this computation, therefore, SBP is entitled for Rs.5,37,17,487/- for which separate award is being made. As stated herein supra, the total balance receivable by BTP and SBP aggregates to Rs.12,28,45,057/- If the claim of SBP is deducted from this amount the balance amount payable to BTP is Rs.6,91,27,570/- and this amount has to be awarded in favour of BTP along with the interest thereon at 18% p.a. from 15.06.2001 till the date of award. The interest subsequent thereto is awarded under the separate head of interest.
26. The Claimant BTP has claimed an amount of Rs.4,14,88,793/- being balance of the Award amount pertaining to Vol. II.
26.1 It is an admitted fact that, the Respondents have received Award amount of Rs.24,09,25,965/- towards Vol. II Award. As per the terms of the subcontract/ piece work contract, the Respondents are entitled for margin/commission of 11.5 %. This works out to Rs.2,77,06,486/- Therefore, the share of BTP/SBP together works out to Rs.21,32,19,479/- Out of this BTP has already received an amount of Rs.10,54,37,033/- The balance payable by Respondent to BTP and SBP works to Rs.10,77,82,446/- SBP has not at all received its share out of Vol. II Award and accordingly, in the claim statement SBP has claimed its full share to the tune of Rs.6,15,23,377/- The details of the same are set out in Annexure C-153 page-5 as well as in Annexure C48. Respondents have not denied these calculations made available in Annexure C-153 nor produced any counter calculations against demands of the Claimant to defend the differences, if any. On the contrary, the Respondent's witness No. 2 Sri Muraleedharan, who is the accountant of the Respondent, who was examined as a witness has not denied the correctness of this computation. Since SBP is entitled for Rs.6,15,23,377/- and a separate ward is being made in that regard the amount payable to BTP would be Rs.4,62,59,069/- This amount is legitimately due to BTP herein, as against their claim of Rs.4,14,88,793/- As the Claimant has claimed lesser amount than what is due to them the Claimant BTP herein is entitled for only Rs.4,14,88,793/- Along with the interest thereon at 18% p.a from 13.04.2000 till the date of award. The interest subsequent thereto is awarded under the separate head of interest.
CLAIM NO.3:
27. The Claimant BTP has claimed an amount of Rs.26,12,08,613/- towards its share of the Award amount payable to it under the Award of amount pertaining to Vol. IV and V. The details of the calculations are made available by the Claimants in document marked as AnnexureC-151 page 53 and C49. It is noticed from the summary sheet/abstract of financial implications that the Claimants have not deducted 11.5% margin/commission which Respondent is entitled to. After deducting this margin amount, the remaining amount works out to Rs.23,11,69,623/- The Respondents were given ample opportunity to verify and submit counter calculations, if any, to this effect. On the contrary, the Respondent's witness No. 2 Sri Muraleedharan, who is the accountant of the Respondent, who was examined as a witness has not denied the correctness of this computation.
27.1 It has been argued by the Senior Counsel for the Respondent that the claim in respect of Vol IV and V (Claim no.3) is in the nature of an interim Order and that while passing a final award, such direction cannot be issued by the arbitrator. The Claimant's counsel has submitted that the relief in respect of claim No.3 which relates to award pertaining to Vol. IV and V is not in the nature of an interim order. The relief sought as is apparent from Para 67 of the claim statement, is for the payment of entire amount of Rs.26,12,08,613/- along with interest. Incidentally, it has been stated in the pleadings that the Claimant is entitled to the same treatment as the Respondent, and as an adhoc measure, during the pendency of the present proceeding, for a direction to pay 60% of the amount.
27.2 It is an admitted fact that the Claimant has carried out the works in respect of part of the claims in Vol. IV and V and these works have been completed prior to February 2000. When these works have been completed, the Claimant is entitled to receive moneys in respect thereof. It is also an admitted fact that the claim made in Vol IV and V do not have elements of profit, but are the cost of work. The Respondent being the main contractor under whom the Claimant is working has a duty and obligation to pay to the Claimant for the works carried out by it and this has been so stated in the Sub Contract Agreement. MOU/Piece Work Agreement. When that be so, the Respondent is duty bound to pay the amount relating to work carried out by the claimant and which are covered by Vol. IV and V. The claim is not in the nature of an adhoc/ interim measure, but a final relief as is clear from paragraph 67, wherein, the entire amount has been sought for. Undisputedly an award has been passed by the arbitrators in respect of claim IV and V. Merely because it is challenged that does not mean that the Respondent's obligation to pay this amount ceases. In view of the same, this claim has to be awarded.
27.3 Therefore it has to be accepted that the Claimant has correctly calculated their dues. Claimant is therefore entitled to the above amount of Rs.23,11,69,623/- along with the interest thereon at 18% p.a. from 29.2.2008 till the date of award. The interest subsequent thereto is awarded under the separate head of interest.
CLAIM NO. 5
28. The Claimants have claimed an amount of Rs.70 crores in respect of this claim. However while justifying the details in Annexure C-152, page 245 to 320, while considering point no. (xi), I have come to the conclusion that BTP is entitled to this claim. At page 245, the amount payable works to to Rs.34,50,72,254/- Here also it is noticed that the Claimant has not passed on 11.5 % margin/commission to the Respondent. After deducting the impact of this contractual provision, principal amount payable to the Claimant herein works out to Rs.30,53,88,945/- along with the interest thereon at 18% p.a. from 22.2.2000 till the date of award. The interest subsequent thereto is awarded under the separate head of interest.
CLAIM NO.6
29. The Claimant has claimed an amount of Rs.2,92,07,110/- being illegal excess deduction towards escalation by adopting wrong methodology as admitted as can be seen from the Respondent witness admission during the course of examination. The Claimant has submitted detailed calculations on this aspect in C-152 page 194 to 243, according to which the balance receivable on this account has been worked out at Rs.2,81,55,742/- The Respondent although having opportunity has not challenged the calculations nor submitted counter calculations during the arbitral process which amounts to acceptance of submission made by the Claimant under C-152, Sri Muraleedharan's statement of not examining the each AnnexureC-151 to C-153. The details of the same are already discussed herein supra under point no.(xiii) para 20. Hence, the Claimant is entitled for reimbursement of illegal deduction, short payment on account of wrong calculations etc., pertaining to escalation. This amount aggregates to Rs.2,81,55,742/- and is payable to Claimant along with the interest thereon at 18% p a. from 22.2.2000 till the date of award. The interest subsequent thereto is awarded under the separate head of interest.
CLAIM NO.7:-
30. The Claimant submitted a claim for Rs.5,19,22,824/- being the amount payable towards running and final bill i.e illegal excess deduction made by the Respondent which includes escalation element also. Claimant's witness Sri Mahendrappa in his cross-examination has admitted that the amount claimed under this head includes the claim in the previous head namely claim for illegal deduction regarding escalation. Therefore, the amount awarded in the previous claim has to be deducted from out of the claim under this head. Consequently, the amount payable under this head works out to Rs.2,37,67,082/- after deducting the amount directed to be paid under the previous head. After deducting the amount awarded under claim no. 6, balance amount works out to Rs,.2,37,67,082/- which represents the element of illegal excess deduction which are discussed in point No.(xiii) para 21 supra. The aggregate illegal deduction admitted and elaborated under this paragraphs works out to Rs.2,46,78,339/- As the Claimant themselves restricted their demand to the tune of Rs.2,37,66,082/- excess deduction over and above this, although admissible cannot be granted under law. Hence, restricted amount claimed by the Claimant is only admitted and accordingly an amount of Rs.2,37,66,082/- is awarded along with the interest thereon at 18% p.a. from 22.2.2000 till the date of award. The interest subsequent thereto is awarded under the separate head of interest.
CLAIM NO. 8:
31. This claim is liable to be rejected.
CLAIM NO. 9:
32. Interest is awarded on all the amounts awarded hereinabove at the rate of 18 % p.a. compounded monthly from the date of award till the date of payment.
CLAIM NO. 10:
33. Each parties will have to bear their own costs.â
3 The basic events, as per the Petitioner, Patel Engineering Company Limited (for short, âPECâ) in Arbitration Petition No. 891 of 2010 are as under:-
On 10 March 1992, PEC was awarded a contract by the State of Maharashtra (for short âthe Stateâ) for civil work pertaining to State IV of Koyana Hydro Electric Project (for short, âKHEP Contractâ).
4 On 15 October 1992, PEC entered into a subcontract agreement with the Respondents B.T. Patil and Sons Belgaum (Construction) Private Limited (for short, âBTPâ) for a portion of the work and with the BTP's sister concern SBP and Co. (for short, âSBPâ), a Piece work Agreement.
5 The basic elements of both the subcontracts are:
1. BTP and SBP agreed to executed the stipulated works at the KHEP BOQ rates less 11.50%.
2. If any claims relating to BTP's work were approved and paid by KHEP Authorities to the PEC. It was PEC, to pay such received amounts to BTP after deducting 11.50% therefrom.
3. Price variation claims were, on receipt of payment from the KHEP Authorities to be paid by PEC to BTP after deducting 21.5% therefrom.
4. Disputes were to be referred to two Arbitrators one to be appointed by each party. However, if a party failed to appoint an arbitrator, or if the appointed Arbitrator refused to act, then the Arbitrator appointed by the other Party was to act as the Sole Arbitrator.
After the subcontract agreement was executed, BTP and SBP executed and handed over to PEC two letters stipulating that; (i) Claims paid by the KHEP authorities based on quoted and accepted rates of PEC, would be paid to BTP after deducting 11.5% from the payment received. (ii) other benefits/claims which were settled and paid by KHEP Authorities, were to be shared between PEC and BTP on 50:50 basis, after deducting expenses incurred for executing the works related to such claims/benefits.
6 On 30 May 1996, BTP informed PEC that it would henceforth be executing the work of SBP under the Piece work agreement and that all bills and cheques should be made by PEC in BTP's name.
7 In October 1996, differences had arisen between PEC and the KHEP Authorities and PEC had initiated three separate arbitration proceedings for claims relating to extra items and piece work, other than BOQ items/rates. In October 1999, BTP and SBP completed their work under their sub contracts. On 11 February 2000, in the above Arbitration proceedings, three Awards (Volume Nos. I, II and III:for Rs.31 crores, 24 crores and 2.31 crores) were made in favour of PEC and against the KHEP authorities and the State. In respect of Awards Vols. II and III, the State made payment to PEC.
8 On 22 February 2000, BTP and SBP demanded the âbalanceâ amount of Rs.5,19,22,824/- in respect of R.A. Bill No.139/PEC R.A. Bill No. 81 from the PEC, as per the statement of account prepared by BTP.
9 On 2 April 2000, a meeting was held and after negotiations, the parties âagreedâ that :( i) for the Award/ Vol. II: 11.50 % would be retained by PEC and the balance would be shared on 50:50 basis i.e. PEC's share would be 55.75% and BTP's share would be 44.25 %. (ii) For Award/ Vol. I and all future/other cases the amounts would be shared by PEC and BTP on 52:48% basis. PEC paid BTP a sum of Rs.9,76,93,283/- being its 44.25 % share in the amount received by PEC from the State in respect of the arbitration Award/Volume II.
10 On 2 May 2000, the State had challenged Award/ Vol. I before the Court of the Civil Judge, Senior Division, Satara. On 13 June 2000, pursuant to order dated 2 May 2000, the State deposited the amount awarded by the Award/VolumeI along with interest thereon.
11 On 5 June 2000, the balance amount payable to BTP for Award/ Vol. II relating to works contract tax deducted by the State Rs.77,43,750/- was paid to BTP by PEC. BTP made no further claim regarding the Award/Vol. II for the next 13 months.
12 On 8 June 2001, an updated statement of account prepared by Mr. Murleedharan of PEC was signed by Mr. Balasaheb Patil of the BTP, showing the amounts payable by PEC to BTP in regard to the claim of Rs.5,19,22,824/- which after adjustments was shown as (i) Rs.28,132.51/- payable to BTP and (ii) Rs.21,121/- payable to SBP. The draft of two âNo claim lettersâ were to be executed by BTP prepared by Mr. Sapre on instructions of Mr. Pravin Patel of PEC and faxed to Mr. Balasaheb Patil of BTP.
13 On 15 June 2001, as the State had withdrawn its challenge to the Award/VolumeI, PEC received an amount of Rs.30,07,33,273/- (after deduction of TDS/Income Tax + Works contract tax of Rs.126,61,131/- from the total amount of Rs.31,33,94,404/-) in respect of the Award /VolumeI, of this Rs.15,50,98,891/- was payable to BTP.
14 On 16 June 2001, a meeting was held between Shri Pravin Patel of PEC and Shri Balasaheb Patil of BTP, wherein, pursuance of the aforesaid full and final settlement arrived at between the parties, the PEC's representative handed over to the BTP's Shri Balasaheb B. Patil:-
(i) Cheque/demand draft No.072609 dated 14 June 2001 for the sum of Rs.28,132.51/- in favour of BTP towards amounts dues under the reconciled Statement of Accounts.
(ii) Cheque/demand draft No.072610 dated 14 June 2001 for the sum of Rs.21,121/- in favour of SBP towards amounts due under the reconciled Statement of Account.
(iii) Letter dated 16 June, 2001 along with cheque No.204901 (post dated to 21 June 2001) for Rs.14,85,26,717/-towards the BTP's and SBP's share of the volume I/Award.
(iv) Letter dated 16 June 2001 along with cheque No.204903 (not dated) for Rs.65,72,174/- towards KHEP volume I award payment of works contract tax earlier recovered from the BTP herein: (the sums of Rs.14,85,26,717/- + Rs.65,72,174/- aggregating to Rs.15,50,98,891/-).
(v) A letter dated 16 June, 2001 from the PEC to the BTP (Exhibit R-24 A and C-80) recording âfull and final settlementâ in its subject line and reading as under:-
âCheques towards full and final settlement including dues towards Volume I have already been paid to you and they have been accepted by you. With this all the issues pertaining to Koyna Stage IV Project along with Arbitration (volume I,II and III) stand completed and settled once for all. âNo further discussion on any of these issues will be entertained in future.â
Receipt of the said letter was admittedly acknowledged/confirmed by BTP's Director Mr.Balasaheb Patil, without any demur or objection.
(vi) Mr Balasaheb Patil had carried with him the two âNo Claimâ letters both dated 8 June 2001 (Exhibit R9 and R10). PEC's Mr.Murlidharan at the request of Mr Balasaheb Patil entered the details of the cheques/demand drafts into the letters, after which Shri Balasaheb Patil signed the said letters and handed over the same to the PEC Shri Pravin Patel along with a covering letter dated 9 June, 2001.
15 On 20 June 2001, BTP claimed a sum of Rs.5,00,000/- from PEC towards the expenditure incurred with respect to legal proceedings pertaining to arbitration award Vol. I.
16 On 27 June 2001, PEC informed BTP that all matters with regard to Volume-I had already been settled in the meeting of 16 June, except for payment of an amount of Rs.2,38,014/- to BTP's Advocate which would be paid to him shortly.
17 On 3 July 2001, after having encashed the cheques given to them under the full and final Mutual settlement on 16 June, BTP and SBP by a joint letter contended that PEC had âby coercion and undue influenceâ on one of the Power of Attorney holder of the sub contractor and piece work contractor, made him to sign on some unilaterally doctored documents. Notwithstanding the aforesaid full and final settlement, sub contractors made five separate claims/demands on PEC and stated that if same were not paid within 30 days, âthe same will be referred to arbitrationâ. The five claims referred were as under:-
i) Rs.5,19,22,824/- in respect of RA Bill no.81.
ii) For alleged wrongful deduction of 11.5% from the price adjustment charges payable in respect of cement and steel.
iii) Balance Rs.10,66,09,740/- towards the 88.5 % of the amount received under the Award/Vol. II payable to BTP under Cl.4 of the subcontract.
iv) Balance Rs.12,94,17,231/- towards the 88.5% of the amount received by PEC under the Award Vol I payable to BTP, under Cl4 of the subcontract.
1. Rs. 5 lakhs for legal expenditure incurred in the Satara Court.
18 On 2 August 2001, PEC resisted the same by referring to the settlement letters. On 9 August 2001, BTP and SBP referred to PEC's letters dated 2 August 2001 and 3 August 2001 and denied that their claims had been settled.
19 On 3 October 2001, BTP and SBP jointly addressed a letter to PEC referring to the five claims made by their letter dated 3 July 2001 and invoked arbitration proceedings under Clause 18 of the sub contract agreement and clause 19 of the piece work agreement respectively. By the said letter BTP and SBP also appointed Mr. T. G. Radhakrishna as its Arbitrator and called upon PEC to appoint its Arbitrator.
20 On 1 November 2001, PEC informed BTP that all disputes and difference had been settled between the parties and that no arbitrable disputes whatsoever remained between the parties. Without prejudice to its above mentioned contention that their were no surviving arbitrable disputes between the parties, PEC appointed one S.N.Huddar as its Arbitrator.
21 In 2001-02, Mr. Huddar, however, refused to act as Arbitrator. BTP and SBP then contended that PEC could not appoint an arbitrator in place of said Huddar and insisted that their Arbitrator (T.G.Radhakrishna) act as a sole Arbitrator.
22 On 30 April 2002, PEC filed Applications under section 11 of the Arbitration Act (being Arbitration Application No.90 of 2002 against BTP and Arbitration Application No. 114 of 2002 against SBP) before the Chief Justice of Bombay High Court for the appointment of an Arbitrator in place of Mr. Huddar.
23 On 18 November 2002, the learned designated Judge, upheld PEC's right to appoint a substitute arbitrator; and also appointed a third arbitrator in the matter.
24 On 3 February 2003, Writ Petition Nos. 20 and 21 filed by BTP and SBP respectively to challenge order dated 18 November 2002, were dismissed. The Special Leave Petitions (SLPs) were filed by both the parties.
25 On 29 February 2008, during the pendency of the SLPs pursuant to the arbitration proceedings initiated by PEC against the State regarding the KHEP project, three further Awards/Volume Nos. IV, V, VII + VIII were made in favour of PEC for Rs.40 crores, Rs.138 crores. and Rs.82 lakhs. PEC's claim VI was however rejected.
26 In April 2008, BTP and SBP filed a Suit in the Court of Civil Judge (Senior Division) Satara, against PEC and the State and prayed that the State be restrained from paying and releasing the amount of Rs.163 crores due to PEC, with regard to the Awards/Volumes IV, V, VI and VIII, till the settlement of their claims.
27 On 13 June 2008, the State challenged the Awards/ Volumes IV, V, VII and VIII. An order was made by the Court at Satara staying the Awards on condition that the State to deposit with PEC, an amount of Rs.100 crores (out of the total awarded amount of Rs.163.31 crores and interest) pending disposal of the Award Petitions.
PEC was required to give an indemnity bond for Rs.50 crores and a bank guarantee for Rs.50 crores for receiving/withdrawing the deposited amount of Rs.100 crores. On 2 August 2008, PEC filed its written statement in Satara Court and objected to BTP's and SBP's entitlement.
28 On 6 September 2008, BTP applied for an amendment to their Plaint by adding:-
(i) a declaration that they were entitled to 88.5 % of the amounts to be disbursed under the Awards/Volumes IV to VIII.
(ii) orders directing the Defendant to pay 88.5 % share of the amounts to be disbursed by the Government to the Petitioners in respect of Awards/Vol. IV to VIII.
The amendment seeking substantive relief of declaration and payment regarding the Awards/Vols IV to VIII, though allowed by the Court, but was not carried out by BTP.
29 On 18 September 2008, after getting the amendment order for reliefs of declaration and payment regarding the Awards/Volumes IV to VIII, the BTP sought to make a fresh reference to arbitration with respect to the aforesaid claims also. The Arbitration invoked was only in connection with the disputes relating to Awards/volumes I and II.
30 On 21 October 2009, the Hon'ble Supreme Court was pleased to set aside order dated 18 November 2002 of the Bombay High Court, appointing the substitute arbitrator/third arbitrator and directed that the arbitration should proceed before T. G. Radhakrishna (i.e. the Arbitrator appointed by BTP and SBP) as sole Arbitrator.
31 On 27 October 2009, BTP and SBP filed an application under Order 23 Rule 1 of the Code of Civil Procedure 1908 (for short, CPC) in Satara Court to withdraw the suit with liberty to prosecute âappropriate legal proceedingsâ. On 10 November 2009, PEC filed its reply to the said Application.
32 On 16 November 2009, a statement of claim was filed by BTP before the learned Arbitrator, covering all the claims, including claims IV to VII.
BTP alleged in paras 33-41 of their Statement of claim: that they had been in dire need of funds; and PEC had allegedly refused to pay the amounts due unless they sign/issue no claim/Full settlement letter. The no claim letter âwas obtained by coercion and undue influence; and the said undertakings are invalid.â
33 On 7 December 2009, PEC filed an application under the provisions of section 16 of the Arbitration Act as and by way of a preliminary objection to the jurisdiction of the Arbitral Tribunal to entertain.
(i) Claim nos. I, II, VI, VII and VIII which had already been finally settled by the Settlement Agreement and the no claim letters.
(ii) The additional/further claim nos. 3,4 and 5 made by BTP directly in its settlement of claim dated 16 November, 2009.
(iii) By filing the Suit in Satara Court and thereafter securing an amendment for claiming the amounts of the Awards/Vols IV to VIII, BTP waived, abandoned, rescinded the Arbitration agreement.
34 On 8 December 2009, BTP filed its reply to PEC's objections. On 9 December 2009, at the second Arbitration meeting, the learned Arbitrator called upon the parties to make their submissions , whether or not PEC's objections should be decided as a preliminary issue. On 12 December 2009, PEC filed its summary of the submissions and accordingly restricted its submissions. On 14 December 2009, BTP filed its written arguments in which they dealt with the merits of PEC's Section 16 application. On 17 December 2009, PEC filed supplemental submissions pointing out that BTP's written arguments contained submissions on merits which were not made by BTP's Advocate at the hearing held on 9 December 2009. The learned Arbitrator on 17 December 2009 rejected PEC's objections under Section 16 on merits.
The Arbitrator held:-
(i) That as the Petitioner had âinsisted upon and took the no claim letters/undertaking as per the draft supplied by it and only then it released the payments.â It established that âthe letters are the result of coercion and undue influenceâ.
(ii) That the filing of the suit in the Satara court for injunction did not amount to waiver/abandonment of the arbitration clause and that the Petitioners herein having relied on the Arbitration could not be heard to so contend.
(iii) That the arbitration clause was wide enough to take in disputes claims arising subsequent to the reference.
35 On 19 December 2009, PEC filed an Application for recall and clarification of order dated 17 December 2009, as the hearing before the learned Arbitrator on 9 December 2009 and the written submissions of PEC had proceeded on the basis that the learned Arbitrator was hearing the parties only on the question as to whether Section 16 application should be heard as a preliminary issue or whether it should be heard along with the main dispute/claim. On 23 December 2009, BTP filed its reply to PEC's application for recall. On 29 December 2009, the learned Arbitrator rejected PEC's application for recall/clarification holding that the arguments were not restricted but were on the merits of the application also.
36 On 5 January 2010, PEC's advocates addressed letters categorically denying the entire Annexures C-151, C-152 and C-153. In January 2010 Affidavits of Evidence were filed by BTP's Balasaheb Patil and Mahendrappa and PEC's Sunil Sapre and Murlidharan. Their evidence/cross examination was also recorded. On 25 January 2010, the impugned Award passed by the learned Arbitrator.
37 On 6 February 2010, BTP filed an application under the provisions of Section 33 of the Arbitration Act for certain correction in the Award. On 22 February 2010, the award was corrected. On 29 April 2010, the present Petition filed.
38 The relevant events from the point of view of BTP/SBP are as under:-
PEC entered into an agreement dated 10 March 1992 with the State (hereinafter referred to as 'Main contract') for carrying out construction of civil works from Lake intake to Emergency Valve Tunnel of Koyna Huydro Electric Project StageIV with BTP, as subcontractor. PEC subcontracted major portion of the above work to BTP and its sister concern SBP. In connection with the above, PEC entered into sub contract Agreement and MoU dated 15 October 1992 with BTP and piece work Agreement dated 15 October 1992 with SBP. As required by PEC, BTP gave performance guarantee undertaking to carry out the works themselves in case SBP fails to carry out the work satisfactorily. BTP and SBP completed the work entrusted to them. The KHEP authority gave work completion certificates.
39 Salient Features of the Sub Contract/Piece Work are as under:-
i) BTP/SBP will execute entire work at the accepted rates less 11.5 % (Clause 1).
ii) BTP/SBP will carryout entire work at their cost in conformity with the drawings, layout plans etc (Clause 2).
iii) Any extra item of work shall be carried out by BTP/SBP as per instruction of Chief Engineer, payment for extra item of work will be made by PEC to BTP/SBP after deducting 11.5 % (clause 4).
iv) BTP/SBP shall not directly correspond with the KHEP authorities (Clause 5).
v) BTP/SBP shall submit bill to PEC at the end of each month showing the estimated value of the works executed up to that month and PEC shall pay to BTP/SBP the amount due less deduction on account of the tax and retention money (Clause 6). Reasonable effort shall be made by PEC to make payment to BTP/SBP within 7daysof receipt of bills by PEC from KHEP authorities (Clause 6).
vi) BTP/SBP shall purchase required plant, machinery etc (Clause 7)
vii) BTP/SBP shall be bound by the main contract (Clause 9).
viii) BTP/SBP will make provision for temporary camps, access roads college roads etc. and fully and completely meet expenses under the statutory requirements of Minimum Wages Fair Wages Contract Labour Act, P. F. Act, Gratuity Act, Bonus Act etc etc. (clause 12).
ix) Price variation clause as incorporated in the main contract shall be paid to BTP on prorate basis. Such payments shall be released by PEC to BTP on receipt of the said payments from KHEP Authorities (Clause 14).
x) Financial arrangements between the parties pertaining to the subcontract will be separately recorded (Clause 21).
40 Main contract between PEC and the State provides for payment of escalation [Clause 69 of main contract]. The subcontract and Piece work Agreement and the MoU provides for payment of escalation by PEC to BTP and SBP (Clause 14 of subcontract Agreement], (Clause 15 of Piece Work Agreement) and [(Clause 2 (iii)], last three unnumbered paras of MoU.
41 During the pendency of the work certain disputes arose between the State on the one hand and PEC and BTP and SBP on the other. PEC invoked Arbitration clause and made claims against the State which included claims for works carried out by BTP and SBP. PEC was the claimant in all the arbitration claims pertaining to Volume No. I to VIII. The major portion of the claims therein relate to works carried out by SBP and BTP.
42 The claims in Vol. I, II and VI pertain entirely to works carried out by BTP and SBP. Claims in Vol. IV and V relate to works carried out by both PEC as well as BTP and SBP. Claims in Vol. III,VII and VIII relate to works carried out exclusively by PEC. The award pertaining to Vol. I directed payment of Rs.31,40,60,958/- The amount was received by PEC. Award pertaining to Vol. II directed payment of Rs.23,64,29,371/-which excludes TDS. This amount was received by PEC. The award in Vol. IV is Rs.30,27,18,060/-and award in Vol. V is Rs.1,37,42,84,032/-
43 The claims in Vol. VI was rejected by the Arbitrators on the ground of jurisdiction by holding that the stipulation in Clause 66 (a) (b) of the Main contract was not complied with. The awards in Vol.VII and VIII aggregates to Rs.74,13,992/-
44 Awards in Vol. IV, V, VII and VIII challenged by the State. However, in respect of these awards PEC has received the amount of Rs.100 crores, which represents 60% of the amount payable as per awards in Vol. IV, V, VII and VIII. Out of the amount of Rs.100 crores received by PEC, Rs.99 crores pertains to Awards in Vol. IV and V. No amount paid by PEC to BTP/SBP.
45 Out of the amount of Rs.31,40,60,958/- in respect of Vol. I, PEC paid only a sum of Rs.15,50,98,891/- to BTP/SBP which includes TDS. Out of the amount of Rs.23,64,29,371/-received by PEC regarding Vol. II paid only a sum of Rs.10,54,37,033/- BTP/SBP completed their works. PEC collected the claim amount from the State even in respect of the works carried out by them.
46 In view of the same, in terms of the arbitration clause found in Sub-Contract Agreement (clause 18) and Piece Works Agreement (clause 19) BTP and SBP invoked arbitration and sought reference of their claims to arbitration.
47 The following are 10 claims of the BTP/SBP in question:
1. Claim no.1 for Rs.11,55,23,065/- being balance of the award amount pertaining to Vol/I plus 24% interest per annum rests monthly.
2. Claim no.2 for Rs.4,14,88,793/- being balance of the award amount pertaining to Vol.II plus 24% interest per annum rests monthly.
3. Claim no.3 for Rs.26,12,08,613/- being the share of the award amount payable to claimant under the award amount pertaining to Vol.IV and V. plus 24 % interest per annum rests monthly.
4. Claim no.4 for Rs.25 crores being the share of the claimant in the additional benefits/claims received by the Respondent for carrying out works which fall within the portion of the work allotted to claimant plus 24% interest per annum rests monthly.
5. Claim no. 5 for Rs.70,00,00,000/- being the claim for works carried out by the claimant and set out in vol.VI plus 24 % interest per annum rests monthly.
6. Claim no.6 for Rs.2,92,07,110/- being illegal excess deduction towards escalation made by the Respondent plus 24 % interest per annum rests monthly.
7. Claim no.7 for Rs.5,19,22,824/- being the amount payable towards running and final bill (Illegal excess deductions made by Respondent)plus 24 % interest per annum rests monthly.
8. Claim no.8 for Rs.1,18,27,244/- being the claims for costs of litigation.
9. Claim no.9 for interest on the amounts due at the rate of 24% p.a. Compounded monthly.
10. Claim no. 10 for costs of the present Arbitration.
48 The background of the litigation which went up to the Supreme Court is also recorded in the matter between the parties. Ultimately, the Hon'ble Supreme Court by order dated 21 October 2009 confirmed T. G. Radhakrishna, Retired Chief Engineer, Government of Karnataka to be the sole Arbitrator and directed that the Arbitrator should pass award within 3 months.
49 The first arbitration meeting held on 8 November 2009 and by consent of both the parties, the learned arbitrator gave directions regarding procedure to be followed including filing of claim statement, reply, rejoinder, admission and about the documents. PEC did not deny the documents filed by BTP/SBP, therefore are âdeemed to have been admittedâ.
50 The learned Arbitrator rejected the objections of PEC and also a recall application, but held that the same does not preclude the parties from leading evidence on the merits of the matter including on the merits of the contentions which are covered by the application under Section 16 of the Act.
51 BTP/SBP examined two witnesses namely Shri Balasaheb B. Patil and Shri C. Mahendrappa. PEC examined two witnesses namely Shri Sunil D. Sapre and Shri Muraleedharan. Even though they filed Affidavit of Shri Pravin Patel, Chairman and Managing Director of PEC, a pursis was filed and he was not made available for cross-examination.
52 On 29 December 2009, PEC sent a list to admit and/or deny the documents filed by the BTP/SBP. Mr. Sunil Sapre and Mr. Muraleedharan witnesses of PEC, admitted all the documents which had been denied in the above statements. After detailed examination of oral and documentary evidence and the law, the learned Arbitrator has passed the reasoned award. This is challenged by PEC. No counter challenge by the BTP/SBP.
53 The basic contentions of PEC are as under:-
i) The unconditional award of Rs.26.12 crores in respect of Claim No.III on the basis of payment of work done is ex facie in excess of / contrary to BTP Claim in its SOC and is perverse and in excess of jurisdiction.
ii) The Arbitrator has exceeded his Jurisdiction by entertaining and awarding claims other than the five claims specifically listed/enumerated set out in BTP/BTP's letters dated 3 July 2001, 9 August 2001 and 3 October 2001, being the reference for the present arbitration. The Arbitrator could not have entertained and awarded Claim Nos. III or V which were not referred by the letters and which in fact arose only post 2008 when awards were made in respect of Vols. IV to VIII in the arbitration between PEC and the State/KHEP.
iii) The reference of the claims disputes enumerated/ listed in BTP's letters dated 3 July 2001, 9 August 2001 and 3 October 2001 to Arbitration, was the consensual reference. There was no objection/ resistance by PEC to the reference of the listed claims and accordingly no occasion to approach the Court under section 11. Pursuant to the three Notices / letters, the Arbitral Tribunal was constituted by consent of the parties to decide the five specific claims enumerated in the said Notice/letters.
The subsequent proceedings which ensued before this Court and the Supreme Court of India, only related to the power to replace an arbitrator who had declined to act etc and did not detract from the consensual nature of the reference, or of the fact that parties had agreed to refer only the listed/enumerated disputes.
In such a situation the reference was necessarily restricted to the specific enumerated/listed disputes which had been referred/agreed to be referred to Arbitration and the Arbitral Tribunal had no jurisdiction to entertain any other claims.
iv) The award of Rs.30.53 crores and interest thereon at 18% per annum from 22 February 2000 for Claim No.5, is without jurisdiction are (i) contrary to the Claim made and (ii) contrary to the specific terms of the contract.
v) The Award holding that the said no claim / full and final settlement letters dated 8 June 2001 and 16 June 2001 are the result of coercion and undue influence; and the Respondent (PEC) has failed to prove that the no claim letters were given voluntarily after receiving the amounts specified thereinâ is in excess of/contrary to the Respondent's Case / Claim and discloses apparent errors.
vi) By filing Suit No.117/2008 on the file of the District Judge, Satara Respondent has waived/abandoned the arbitration clause and therefore the arbitration proceedings are not maintainable.
vii) As per the letter dated 15.10.1992 given by BTP/SBP,BTP/SBP is entitled to only 50% of the amounts released by KHEP Authorities. The Arbitrator has misconducted himself by ignoring this letter.
viii) No opportunity was given to the petitioner to address arguments on the merits of the application filed under section 16 of the Act. The award discloses a predisposed state of mind on the part of the Arbitrator and that the order passed under section 16 of the Act has coloured and influenced the Arbitrator at subsequent stages of the proceedings also in passing of the award impugned.
ix) The arbitrator erred not framing issues. Points for determination have been framed by the arbitrator unilaterally and without disclosing the same to the appellant and without giving an opportunity to the appellant to address these points.
x) No claim certificate given by BTP to SBP bars further claims being made.
xi) Even though prayer made by BTP in the Claim statement regarding claim no.3 is for payment on ad hoc basis of Rs.15.67 crores against indemnity and Bank guarantee, Arbitrator has awarded the entire amount of Rs.26 crores. The award is contrary to prayer.
xii) The award is contrary to record and the findings therein are not based on evidence and the documents and disclosed bias on the part of the Arbitrator
xiii) Award of interest by the Arbitrator is illegal.
xiv) The correspondence and documents established that the parties proceeded on the foundation that payment was required to be received by the PEC from the Government, then only they would make payment to BTP/SBP.
xv) BTP should have submitted before the Supreme Court that it wanted the award pertaining to Vol. IV to VIII to be arbitrated upon by the very Arbitrator. Having not done so, it is not permissible for arbitrator to adjudicate these claims.
xvi) Prior to the claim statement no letters have been written demanding monies from the petitioner regarding Volumes IV to VIII. Claim regarding Vol.VI is a claim in tort.
xvii) Coercion does not pertain to the amount covered by Vol. II, because payment was made prior to no claim letter. The particulars of coercion and undue influence have not been set out in the claim statement, and therefore the award is bad.
54 The learned Senior Counsel Mr. Uday Hola appearing for the Respondents, supported the award by defending the Petitioner's contention, on all counts.
55 The matter was closed for order. The dictation commenced in open Court on 21 March 2013. As it was not completed, continued again on 22 March 2013 and lastly on 4 April 2013.
56 Both the learned counsel have relied upon the various authorities/citations in support of their respective contentions/ submissions. The following are the darted points of law emerge out of those citations, which need no further discussion, but require its application to the facts and circumstances of the present case. Those facts are distinct and distinguishable.
The power/jurisdiction of Arbitrator to restrict the specific listed disputes or no jurisdiction to go beyond the point of reference.
Indian Aluminum Cables Ltd. Vs. Haryana State Electricity and Ors (1996(5) SCALE 708).
There should be no inconsistency or difference between the claim made in the notice and the claim filed before the Arbitrator.
âIf the claim made by HSEB is outside the scope of the reference made to the Arbitrators, the Arbitrators must confine themselves to the reference and cannot travel outside it merely because under the terms of the contract the dispute in regard to this matter would have been covered and could have been referred to Arbitration. In the instant case, since the reference is in relation to the item set out in the Notice, the jurisdiction of the Arbitrators stands confined to those matters only and cannot travel outside it.â
ââ¦....Therefore, there is no question of examining the claim which is totally different from the one made in the notice which is the basis of the reference as to whether or not damages could be awarded on that claim. Once the claim is outside the reference it is outside the scope and ambit of the inquiry by the Arbitrators and therefore, the Arbitrators cannot go into it. Therefore, in our view, the claim made in the reference, which is inconsistent with paragraph 6 of the notice, cannot be entertained by the Arbitrators.â
(Indian Oil Corporation Ltd. Vs. Industrial Gases Ltd. and Anr.) (1989 Supp (2) SCC 290).
â......It is quite apparent that the jurisdiction of the arbitrator or the umpire was wide enough the include claims with regard to the subsequent periods. We accordingly allow the application for clarification in terms of the prayer contained therein.â
Santokh Singh Arora Vs. Union of India ((1992) 1 SCC 492).
The Arbitrator appointed in a contractual reference is to confine to the disputes so raised.
Russell on Arbitration TwentyThird Edition â para 5025 and 5026 (Three Judges)
(Shyama Charan Agarwala and Sons Vs. Union of India) (2002) 6 SCC 201).
A claim for future compensation arising out of the same contract is permissible for Arbitrator to adjudicate.
(Indian Oil Corporation Ltd. Vs. Industrial Gases Ltd.and Anr.) (Supra) The Court can interpret the scope of reference to include the claim arising for the subsequent period and the order so passed binds the parties.
(State of Orissa Vs. Asis Ranjan Mohanty) (1999) 9 SCC 249).
The Arbitrator can entertain beyond the reference, if there was no specific/defined issue referred.
(Shyama Charan Agarwala and Sons Vs. Union of India) (supra)
â9 â¦....The High Court further held that under the circumstances, the arbitrator could not have granted relief relating to future claim of the Contractor with reference to stone aggregate.â
â20. As already noted, the award insofar as the future period is concerned i.e. subsequent to 2411994 which is the date of filing of claim statement, the High Court set aside the award on two grounds:
(i) such a claim did not form part of the terms of reference, though the Contractor had filed claim in respect of stone aggregate to be brough in future, and
(ii) the future claim in respect of stone aggregate would be subject to various factors including market conditions and whether the shortage continued.
21 â¦....The aim of arbitration is to settle all the disputes between the parties and to avoid further litigation. There is no legal justification in restricting the scope of arbitration in the manner in which the High Court did.â
 â18 Considering the scope of Section 30 of the Act, this Court in the case of Indu Engg. and Textiles Ltd. v. Delhi Development Authority, (2001) 5 SCC 691, enumerating some of the wellrecognized grounds on which interference in an award is permissible, observed:
"Interpreting the statutory provision courts have laid stress on the limitations on exercise of jurisdiction by the court for setting aside or interfering with an award in umpteen cases. Some of the well-recognised grounds on which interference is permissible are:
(1) violation of the principles of natural justice in passing the award;
(2) error apparent on the face of the award;
(3) the arbitrator has ignored or deliberately violated a clause in the agreement prohibiting dispute of the nature entertained;
(4) the award on the face of it is based on a proposition of law which is erroneous etc."
Section 23 permits additions and amendments to the claim.
State of Goa Vs. Praveen Enterprises (2011(3) Arb. L.R. 209 (SC).
It is permissible for the Arbitrator to entertain the claim other than what was referred.
Rajinder Krishan Khanna and Ors. Vs. Union of India and Ors (1998) 7 SCC 129).
â11) Section 34(1) of the Act states that recourse to a court against an arbitral award may be made only by an application for setting aside such award in accordance with subsections (2) and (3). Under subsection (2), Clause (iv) an award may be set aside if it "deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration". The proviso to clause (iv) says that if the decision on matters submitted to arbitration can be separated from those not so submitted, only that part of the award which contains decisions on matters not submitted to arbitration may be set aside.
17 We hold that the award of Rs.77,19,800 for "loss of potential of land" and interest thereon falls outside the scope of the reference to arbitration and is not in relation to a dispute contemplated thereby.â
The Arbitrator has no jurisdiction to entertain and award additional and subsequent claims than the issue referred.
The doctrine of unequal bargaining power does not apply to the commercial contracts:
(S.K. Jain Vs. State of Haryana and Anr (2009) 4 SCC 357).
â8. It is to be noted that the plea relating to unequal bargaining power was made with great emphasis based on certain observations made by this Court in Central Inland Water Transport Corpn. Ltd. Vs. Brojo Nath Ganguly (1986) 3 SCC 156: 1986 SCC (L and S) 429: (1986) 1 ATC 103. The said decision does not in any way assist the appellant, because at para 89 it has been clearly stated that the concept of unequal bargaining power has no application in case of commercial contractsâ.
Coercion and undue influence, pleading and proof
(Bishundeo Narain and Anr. Vs. Seogeni Rai and Ors (AIR (38) 1951 SC 280).
â24) We turn next to the questions of undue influence and coercion. Now it is to be observed that these have not been separately pleaded. It is true they may overlap in part in some cases but they are separate and separable categories in law and must be separately pleaded.
25) It is also to be observed that no proper particulars have been furnished. Now if there is one rule which is better established than any other, it is that in cases of fraud, undue influence and coercion, the parties pleading it must set forth full particulars and the case can only be decided on the particulars as laid. There can be no departure from them in evidence. General allegations are insufficient even to amount to an averment of fraud of which any Ct. ought to take notice, however strong the language in which they are couched may be, and the same applies to undue influence and coercion. See. O.6, R.4, Civil P.C.
(Lala Kapurchand Godha and Ors. Vs. Mir Nawab Himayatali Khan Azamjah (AIR 1963 SC 250).
â9) â¦....The position in the present case is that the appellants must have known that they could receive the second instalment and retain the first instalment by accepting the condition on which the sum of Rs.20 lacs was offered to them namely, that they must record a full satisfaction of their claim. They accepted the money on the condition on which it was offered and it is not now open to them to say, either in fact or in law, that they accepted the money but not the condition.â
Conduct of the parties to an unequivocal acceptance of the offer.
(Bhagwati Prasad Pawan Kumar Vs. Union of India (2006) 5 SCC 311)
The material/documents not considered by the Arbitrator./ Its effect and reason to set aside the award/misconduct.
(K.P. Poulose Vs. State of Kerala and Anr. (1975) 2 SCC 236).
Conduct of the parties
Food Corporation of India and Ors. Vs. Vikas majdoor Kamdar Sahkari Mandali Limited (2007)13 SCC 544).
The implied contract in the work done covers to pay reasonable amount.
The scope of challenge under Section 34 of the Arbitration Act
Oil and Natural Gas Corporation Vs. Wig Brothers Builders and Engineers Pvt. Ltd. (2010) 13 SCC 377).
While considering challenge to award, court will not examine the award as if in appeal or reappreciate material on record.
No re-appreciation of evidence/ material.
(i) P.R. Shah, shares and Stock Brokers Pvt. Ltd. Vs. B.H.H. Securities Private Limited and Ors. (2012) 1 SCC 594)(Para 21)
The Court does not examine the award as an appellate Court. No question of reassessing and/or re-appreciation of evidence. A wrong conclusion or failed to appreciate some facts is no ground to interfere with the award.
ii) Ravindra Kumar Gupta and Co. Vs. Union of India (2010(1) SCC 409)(Para 8 to 10, 12 to 15, 15 to 17)
The Courts ought not to re-appreciate the evidence led before the arbitrators which evidence has been duly scrutinised and evaluated by the arbitrator. Elaborate reasons given by arbitrator regarding claims. In such an event, findings cannot be said to be perverse or based on no evidence.
Arbitrator is the final arbiter for the dispute between the parties and it is not open to challenge the award on ground that arbitrator has drawn his own conclusion or has failed to appreciate facts. Conclusions of Arbitrator substituted by High Court set aside.
Satna Stone and Lime Co. Ltd., Madhya Pradesh and ors. Vs. Union of India and Anr. (2008)14 SCC 785)(para 18) M/s Sudarsan Trading Co. Vs. Government of Kerala and Anr. (1989) 2 SCC 38)(Head note and para 29) Oil and Natural Gas Corporation Ltd. Vs. Comex Services SA (2003 (3) ARB LR 197 (BOM) (DB)((Head note (ii) and Para 10) The Arbitrator is the sole Judge of quality as well as quantity of the judge. Ircon International Limited Vs. Arvind Construction Co. Ltd. and Anr. (2000 (1) RAJ 111 (Del)(Para 9 and 11) The reasonableness of reasons and/or sufficiency of reasons cannot be gone into by the Court. The Court must approach award with a view to support it. Smt. Santa Sila Devi and Anr. Vs. Dhirendra Nath Sen and Ors. (AIR 1963 SC 1677)(Para 10)
The award is final on facts and law from the point of view of the Arbitral Tribunal;
Limitation
Major (Retd.) Inder Singh Rekhi Vs. Delhi Development Authority (1988) 2 SCC 338)(Head Note and Para 4)
The period of limitation has to be computed from the date claim is asserted and payment is denied. The cause of action arose from the date of assertion of claim.
Court interference unwarranted
G. Ramchandra Reddy and Co. Vs. Union of India and Anr. (2009) 6 SCC 414)(Head Note B and para 19)
Interpretation of contract by arbitrators â interference not warranted merely because Court could take a different view.
No claim certificates and jurisdiction of the Arbitrator.
Damodar Valley Corporation Vs. K.K. Kar (1974) 1 SCC 141)(Para 6)
In a case where there is a plea of full and final settlement under the contract, that itself is a dispute arising upon or in relation to the contract and hence, could be referred to arbitration.
Jiwani Engineering Works (P) Ltd. Vs. Union of India (AIR 1981 CAL 101)(para 6)
The dispute whether there is a no-claim certificate or not, itself, is a dispute referred to arbitration.
Chairman and MD, NTPC Ltd. Vs. Reshmi Constructions, Builders and Contractors (2004(2) SCC 663). (head note E and para 27 to 29)
A person may sometimes have to succumb to the pressure of the other party to the bargain who is in a stronger position.
Receiving payment and giving receipt in full settlement circumstances indicate undue influence viz. Refusal to pay without receipt endorsement not binding such a certificate does not affect arbitration clause.
Union of India and Anr. Vs. M/S. L.K. Ahuja and Co. (1988) 3 SCC 76)(Head note and para 7 and 8)
Contractor accepting four final bills and giving no claim declaration in respect of the said four contracts. Later filing application under Section 20 of Arbitration Act to appoint arbitrator. Trial Court rejecting it on ground that in view of acceptance of final bill in full and final settlement, court had no jurisdiction to appoint arbitrator. Decision set aside by High Court on ground that despite certificate claim subsists and is arbitrable and High Court view upheld by the Supreme Court.
National Insurance Co. Ltd. Vs. Boghara Polyfab Pvt. Ltd. (2009) 1 SCC 267)(para 26 and 50 and 51(iii)
If a party who executed discharge agreement or voucher alleges that the execution of such agreement was on account of fraud/coercion/undue influence practiced by the other party and is able to establish the same, dispute raised by such party is arbitrable. (para 26)
If it is established that the discharge voucher was obtained by fraud/undue influence/ coercion, arbitrator (like civil Court) will ignore the same and examine the claim on merits. (para 50, 51 (iii). Mahanagar Telephone Nigam Ltd. Vs. Ultramatx Computer Support Systems Pvt. Ltd. (2012(2) Arb. L.R. 838)(para 9 and 10)
Merely because no due certificate is given is not a bar to arbitrator from looking into the facts and circumstances of the case including the reason behind issuance of such certificate. There is no bar to contractor to raise claims which are genuine even after submission of such no claim certificate.
Subsequent claims arbitrable
Shyama Charan Agarwala and Sons Vs. Union of India. (Supra) K.T. Kuriakose Vs. High Court of Kerala and Ors. (1989 Supp (2) SCC 291).
State of Orissa Vs. Asis Ranjan Mohanty (1999(9) SCC 249)(para 6 to 8 and 11)
State of A.P. Vs. Chandrasekhara Reddy and Ors. (1998 (7) SCC 141)(head note D and E, Para)
Jurisdiction of Arbitrators includeclaims arising subsequent to reference.
Scope of reference
Gas Authority of India Ltd. Vs. Kalyani Mukand Limited. (2010 (2) Arb. L.R. 244 (Del.)(Para 39)
Arbitral Tribunal derives its authority and power from the Arbitration Agreement executed between the parties. Unless the scope and width of the power of jurisdiction of the Arbitral Tribunal is limited or reconstructed explicitly, the Arbitral Tribunal is required to adjudicate all claims/ counter claims of both parties. One can not forget that the intent of all arbitrations is to achieve finality. V.H. Patel and Co. and Ors. Vs. Hirubhai Himabhai Patel and Ors. (2000(4) SCC 368)(para 8 and 9)
The scope of reference cannot be understood on the actual wording used in the course of the order made by the Court or the memorandum concerned filed before the Court, but should be looked from the angle as to what was the spirit behind the reference to arbitration. The idea is to settle all disputes between the parties and not to confine the same to any one or other issue arising thereunder. P.M. Paul Vs. Union of India (1989 SUPP (1) SCC 368)(para 13).
Once Arbitrator had jurisdiction to find that there was delay in execution of the contract due of conduct of respondent and respondent was liable for consequences of delay, namely increase in prices, claim for compensation was not outside the purview of contract. It arose as an incident of contract and Arbitrator had jurisdiction.
T.P. George Vs. State of Kerala and Anr. (2001(2) SCC 758)(head note and para 8 and 9)
Arbitrators view in respect of questions referred to him cannot be substituted by High Court with its own views or conclusions so long as the Arbitrators view can be said to be the one that can be reached by a reasonable person.
Food Corporation of India Vs. Shanti Cereals (P) Ltd. (2010(3) Arb. L.R. 296 (Del) (D.B.)(para 7)
The Arbitral Tribunal is the master of the factual arena and has the right to even go wrong while deciding the factual issues, unless there is something manifest from the face of the award that is so grave has to move the conscience of the court that the error would result in a monumental miscarriage of justice.
Additional work without agreement
Supreme Co-operative Group Housing Society Vs. M/s. H.S. Nag and Associates (P) Ltd. (1996 (2) Arb. Law Reporter 273 (SC).
Work of 7 towers, Additional work of 7 towers given. The letter agreement does not have arbitration clause. Held Arbitrator had jurisdiction to decide.
J.G. Engineers Pvt. Ltd. Vs. Union of India and Anr. (2011(5) SCC 758)(para 25).
Rashtriya Chemicals and Fertilizers Limited Vs. Chowgule Brothers and ors. (2010(8) SCC 563).
When award decides several claims, if award regarding some items bad, court will uphold award regarding other items.
Bias
Municipal Corporation of Greater Bombay Vs. Bharat Constructions and Anr. (1999(SUPPL) ARB LR 153)(Head note (ii) and Para 7)
The Petitioner participating in arbitration proceedings without demur except placing some objections on records cannot complain of bias of arbitrator when it was always open for him to move court for removal of arbitrator.
Filing of Suit
Telemecanique and Controls (India) Ltd. Vs. LA Telemecanique Electrique SA and Ors. (2002(3) Arb. LR. 189 (Del).
Filing of suit which have some bearing on injunction cannot be interpreted as abandonment of petitioner to go for arbitration. Claim for damages
MSK Projects India (JV) Limited Vs. State of Rajasthan and Anr. (2011(10) SCC 573).Mohanlal Harbanslal Bhayana and Co. Vs. Union of India (UOI) (2012(2) Arb. L.R. 91 (Del.) (D.B.)(para 7)
If a claim does not fall within the stipulated contractual provision but is a claim for loss suffered which can be granted under Section 73 and 74 of the Contract Act, it would be permissible for arbitrator to award such a claim.
K.N. Sathyapalan (Dead) By Lrs. Vs. State of Kerala and Anr. (2007(13) SCC 43)(para 32)
Parties are bound by terms agreed upon in the contract but in the event one of the parties to the contract is unable to fulfill the obligations under the contract, which has a direct bearing on the work to be executed, the arbitrator is vested with authority to compensate the second party for extra costs incurred by him as a result of failure of first party to live up to its obligations.
Interest:-
State of Haryana and Ors. Vs. S.L. Arora and Co. (2010) 3 SCC 690).
Bhagawati Oxygen Ltd. Vs. Hindustan Copper Ltd. (2005) 6 SCC 462).(Head Note âCâ and Para 36, 37 and 39, para 33 to 35)
Arbitrator awarding interest at 18% for all the stages viz. Prereference, pendente lite and post award. HeldWhile fixing the rate of interest, arbitrator took into account the rate at which earlier loan advanced by the party against who interest was awarded to the other partywhich is a germane and relevant factor. The award of interest at 18% upheld. (para 36, 37 and 39). Court while exercising power under Section 30 of Arbitration Act, 1940 cannot reappreciate evidence or examine correctness and conclusions arrived at by the arbitrator. Single Judge of the High Court on virtual appreciation of evidence holding that the arbitrator had not considered certain documents and had committed misconductHeld inference to be drawn from the said letter was in the realm of appreciation of evidence. The High Court was in error in interfering with the award. (para 33 to 35).
Union of India Vs. Arctic (India) (2005(1) Arb. L.R. 314 (Bombay)(Head note and para 2 and 2A)
Arbitrator awarding interest at 18% p.a. argument that 18% is not current rate of interest negatived by the Court. Held that Sec. 31(7)(b) provides for granting of interest at 18% p.a.
Interpretation of contract is in the exclusive domain of the arbitrator and court has no jurisdiction to reconsider the interpretation of clauses or contract made by the arbitrator under Section 34 of the Act even if two views are possible.
Godrej Properties and Investments Ltd. Vs. Tripura Construction, Mumbai and Ors. (2003 (2) Arb.L.R. 195 (Bombay)(Head note (ii) and Para 8)
Award in favour of the respondent pendente lite interest and future interest at 18%. Held interest awarded is not unreasonable. Section 31(7) of the Arbitration Act provides for interest at 18% p.a.
Point for consideration
57 Though specific issues were not framed and the Arbitration proceedings proceeded without any insistence of framing of issues yet while deciding the matter finally the learned Arbitrator has framed following points for consideration.
i) Whether Claim No.1 (Second part-para 27), Claim No.2 (Second part-para 31), Claim No.4, claim No.8 (Second part-para 64) and Claim No. 9 (first part-para 65) are beyond the scope of reference?
ii) Whether claims which in any manner whatsoever relate to and/or arise under the piecework agreement dated 15th October, 1992 entered into between the Respondent and the Claimants sister concern S.B.P. and Co. are not arbitrable?
iii) Whether Claim No.1 (second part-para 21), Claim no.2 (second part â para 31) and Claim No.4 are barred by limitation?
iv) Whether by filing the Suit 117/2008 before the Civil Judge (Senior Division), Satara, in respect of Claim No.3, the Claimant has waived and abandoned the arbitration agreement and the said claims are barred from being adjudicated in arbitration?
v) Whether Respondent proves that there was an agreement between Respondent and BTP/SBP, where under the latter agreed to receive only 50% of the award amount pertaining to Vol. I and 44.25% of the award amount pertaining to Vol. II?
vi) Whether BTP/SBP are entitled to receive 88.5% of the award amounts in Volume I and II?
vii) whether BTP/SBP prove that no claim letters dated 08.06.2001 given by them are the result of co-ersion and undue influence and therefore are invalid?
viii) Whether the Respondent proves that the BTP/SBP voluntarily gave no claim letters dated 08.06.2001 after receiving the amounts specified therein in full and final settlement of all their claims against the Respondents?
ix) Whether Respondent proves that there has been an accord and satisfaction?
x) Whether the claims which have arisen subsequent to the letter dated 03.10.2001 are beyond the scope of reference and therefore the arbitrator cannot adjudicate upon the said claims?
xi) Whether the Claimant proves that they are entitled to receive an amount of Rs. 70 crores being the claim made in Vol. VI?
xii) Whether the Claimant proves that the Respondent has been entrusted additional work falling within the scope of earlier work of the Claimant and that they are entitled to receive a sum of Rs.25 Crores towards their share of profit?
xiii) Whether the Claimant is entitled to Rs.2,92,07,110/- towards illegal deductions made by the Respondent?
xiv) Whether the Claimant is entitled to a sum of Rs.5,19,22,824/- towards running and final bill?
xv) Whether the Claimant is entitled to litigation cost of Rs.1,18,27,244/-?
xvi) Whether the Claimant is entitled to interest on the above sum @ 24% p.a. compounded monthly?
xvii) Whether the Claimant is entitled to costs of this arbitration?
xviii) To what order or relief are parties entitled to?
58 The learned Arbitrator has decided point No. (i) and (x) together, point Nos. (ii), (iii), (iv), (v), (xi), (xii), (xiii), (xiv), (xv), (xvi), (xvii) and (xviii) separately, point Nos. (vii), (viii) and (ix) together. (point (vi) together-verify).
59 Though the submissions were made with regard to the non-framing of issue by the Arbitrator but as the framing of issue is not compulsory in the Arbitration matter for want of specific provisions and/or otherwise, I am not inclined to accept the challenge of the Petitioners on this ground. The Point is settled. The framing of issue is not mandatory. It is useful so that the parties can lead evidence and made submissions accordingly. But, the arbitral award cannot be set aside on that count itself.
60 However, considering the fact that the learned Arbitrator has dealt and passed reasoned order surrounding the respective points. All these points are interlinked and interconnected. The respective claims however, need not be tackled separately and so also the challenges so made, for deciding this Section 34 Petition.
Common Reasons
61 Admittedly, the Petitioner-PEC was the main contractor (the contractor) of the Civil work contract in question. The work was of KHEP (The employer). The state awarded contract to the Petitioner for execution of work in question, some time in March 1992. The Respondents BTP and SBP were the subcontractor. The BTP was the sister concern and the partner of SBP. The parties executed, on 15 October 1992, the Subcontract agreement and the piecework agreement, separately. BTP and SBP were the claimants of these matters, who invoked Arbitration Clause in view of the dispute arose between and with the Petitioner (the Contractor) at the relevant time. They filed separate claim petitions based upon their respective agreements and the work done by them.
62 The relevant clauses of the agreements dated 15 October 1992, are as under:-
Piece-work agreement â
â4) Any extra item of work within the scope of the works of âSBPâ as described hereinabove that will be required to be carried out based on instruction of the Chief Engineer, Irrigation Department, Koyna Hydro Electric Project or his authorised representative which is not included in the BOQ shall also be executed by âSBPâ as per the relevant clauses in the Agreement. Payment for the extra item of works shall be made to âSBPâ after deducting 11.50% from the payment for the said extra item of work that will be received by âPECâ from âKHEP Authorities.â These extra items will form part of this Agreement/Contract.
Any claim or claims that may arise within the scope of âSBPâ's wok which may be approved and paid by âKHEP Authoritiesâ the payment for the same as and when received by âPECâ shall be made after deducting 11.50% from the payment for the said claims that will be received by âPECâ from âKHEP Authorities.â
15) Price variation clauses except for steel and cement (as incorporated in clause 1 hereinabove) as incorporated in the Contract Agreement and which shall be paid by the âKHEP Authoritiesâ shall be paid to âSBPâ on the prorate basis of the work done by âSBPâ when such payment are received by âPECâ, after deducting 11.50%.
19) The continuance of this Piece Work Agreement/Contract or at any time after the termination thereof, any difference or dispute shall arise between the parties hereto in regard to the interpretation of any of the provision herein contained or act or thing relating to this Agreement/ Contract, such difference or dispute shall be forthwith referred to two Arbitrators for Arbitration in Bombay, one to be appointed by each party with liberty to the Arbitrators in case of differences or their failure to reach an Agreement within one month of the appointment, to appoint in umpire resident in Bombay and the award which shall be made by two Arbitrators or Umpire as the case may be shall be final, conclusive and binding on the parties hereto.
If either party to the difference or dispute shall fail to appoint an Arbitrator within 30 calendar days after notice in writing having been given by the parties or shall appoint an Arbitrator who shall refuse to act then the Arbitrator appointed by the other party shall be entitled to proceed with the reference as a Sole Arbitrator and to make final decision on such difference or dispute and the award made as a result of such arbitration shall be a condition precedent to any right or action against any of two parties hereto in respect of any such difference or dispute.
However, before and during the arbitration proceedings the works shall be continued as usual.
Under the circumstances, either party agrees not to revert to Court proceedings.â
Sub-Contract agreement â
1) âB.T.P.â has agreed to execute the entire works as mentioned above at the accepted rates as entered into the B.O.Q. Less 11.50% as mutually agreed to between âPECâ and âB.T.P.â. Rates are for finished work in situ and includes all direct and indirect expenses for labour, materials, equipment, conveyance leads and lifts etc. complete in all respects that go in for completion of the said works.
4) Any extra item of work within the scope of the works of âB.T.P.â as described hereinabove that will be required to be carried out based on instruction of the Chief Engineer, Irrigation Department, Koyna Hydro Electric Project or his authorised representative which is not included in the B.O.Q. shall also be executed by âB.T.P.â as per the relevant clauses in the Agreement. Payment for the extra item of works shall be made to âB.T.P.â after deducting 11.50% from the payment for the said extra item of work that will be received by âPECâ from âKHEP Authorities.â These extra items will form part of this DEED.
Any claim or claims that may arise within the scope of âB.T.Pâ's wok as and which may be approved and paid by âKHEP Authoritiesâ the payment for the same when received by âPECâ shall be released to âB.T.P.â. Payment towards such claim by âPECâ to âB.T.P.â shall be made after deducting 11.50% from the payment for the said claim that will be received by âPECâ from âKHEP Authorities.â
6) âB.T.P. Shall submit to âPECâ after end of each month on agreed date, a statement showing the estimated value of the specific items of the works executed upto the end of the month and âPECâ shall pay âB.T.P.â the amount due less deduction on account of advances, retention money, power supply and other recoveries if any, based on the quantities accepted by âKHEP AUTHORITIESâ.
Every reasonable effort shall be made by âPECâ to make all payments due in this Subcontract Agreement to âB.T.P.â within seven days of receipt of such payment by âPECâ from âKHEP Authoritiesâ. The percentage of the security deposit deducted from the monthly bills of âB.T.P.â to âPECâ will be of the same percentage as deducted by âKHEP Authoritiesâ from the value of the monthly bill of âPECâ. Security Deposit deducted shall be paid to âB.T.P.â by âPECâ on receipt thereof by âPECâ from âKHEP Authoritiesâ as per the terms of the Agreement between âPECâ and âKHEP Authoritiesâ. The Bank commission charges towards the Bank Guarantees for refund of Security deposits from âKHEP Authoritiesâ shall be recovered by âPECâ from the monthly running bills of âB.T.P.â.
14) Price variation clauses as incorporated in the Contract Agreement and which shall be paid by the âKHEP Authoritiesâ shall be paid to âB.T.P.â on the prorate basis of the work done by âB.T.P.â when such payment are received by âPECâ, after deducting 11.50%. The said payment shall be released by âPECâ to âB.T.P.â on receipt of the said payments.
18) The continuance of this DEED or at any time after the termination thereof, any difference or dispute shall arise between the parties hereto in regard to the interpretation of any of the provision herein contained or act or thing relating to this DEED, such difference or dispute shall be forthwith referred to two Arbitrators for Arbitration in Bombay, one to be appointed by each party with liberty to the Arbitrators in case of differences or their failure to reach an Agreement within one month of the appointment, to appoint in umpire resident in Bombay and the award which shall be made by two Arbitrators or umpire as the case may be shall be final, conclusive and binding on the parties hereto.
If either party to the difference or dispute shall fail to appoint an Arbitrator within 30 calendar days after notice in writing having been given by the parties or shall appoint an Arbitrator who shall refuse to act then the Arbitrator appointed by the other party shall be entitled to proceed with the reference as a Sole Arbitrator and to make final decision on such difference or dispute and the award made as a result of such arbitration shall be a condition precedent to any right or action against any of two parties hereto in respect of any such difference or dispute.
Under any circumstances, either party agrees not to revert to Court proceedings.
21) Financial arrangements between the parties pertaining to this Subcontract Agreement as mutually settled between âPECâ and âB.T.P.â are separately recorded. However, âPECâ are fully responsible to âKHEP Authoritiesâ for all the contractual obligations under the Contract Agreement between âPECâ and âKHEP Authorities.â
63 The relevant clauses of MOU is as under:-
â(...............)
From the monthly running bills which shall be released to âB.T.P.â by âPECâ all recoveries towards advance payments, security deposit, electricity charges for the energy consumed for âB.T.P.'s portion of works, Bank commission charges and any other and all that may become due, shall be made by âPECâ.
When price adjustment bills for cement and steel are received from KHEP Authorities, the same shall be shared in proportion of value of work done by âPECâ and âB.T.P.â. However, from the funds so realised initially âPECâ and âB.T.P.â shall keep at site to a maximum of Rs.15.00 alcs each as a revolving fund (i.e. total Rs.30.00 lacs). The said funds shall be tuilised for purchase of cement and steel as required. This provision is in addition to the funds as mentioned under clause 8(a) hereinbelow.
Out of the amount received by âB.T.P.â on account of price adjustment of cement and steel as above, Rs.7.00 lacs shall be paid to âPECâ by âB.T.P.â in due course of time to be mutually agreed to.â
Modification of the contracts.
64 Admittedly, two subcontracts were entered into between the parties on 15 October 1992. The issue is also whether the terms and conditions of those contracts were modified immediately and/or thereafter. The case of PEC referring to the agreement dated 15 October 1992 (Exhibit C50) which stipulated that the payments received for works other than those stated/accepted should be shared by PEC and BTP on 50:50 basis after deducting expenses incurred for executing the works related to such claims. The relevancy of this modification, in my view, needs to be addressed at the earliest. BTP and SBP have not denied the subcontract agreements, but denied 50:50 sharing after deducting the expenses incurred for executing the works related to such claims. The learned Arbitrator though referred the letter in the award, while dealing with claim No.4 in para 19 and 19.3, observed that "letter Exhibit C50 has not been accepted by the Respondent". The importance of this letter and the relevant pleadings in reply to the statement of the claim and the related correspondences and conduct between the parties are also relevant factor, basically when the case of PECoriginal Respondent was that the parties have modified the part of the agreement (subcontract dated 15 October 1992). The averments therefore, so made by the PEC is nothing but clear confrontation with the Respondent's claim for 88.5% of Volume I and II and so also the Volume Nos. IV and V. Therefore, any modification to the terms and conditions of this nature, in my view, is relevant factor which just cannot be overlooked while considering the agreements and/or financial claims or implications arising out of the same. The learned Arbitrator, therefore, has failed to deal with the submissions of PEC in this regard as PEC throughout resisted the Respondents claim of 88.50% and/or receipt of the amount deducting 11.50% only.
65 The commercial agreement between the parties and/or modification if any, is always the foundation for any proceeding of the project and/or the work. The subsequent conduct, as well as, the action adopted by the parties are important for considering the claim and/or counterclaims in case of dispute between the parties and/or even otherwise. The terms and conditions in such type of construction works have always direct bearing on the financial implication arising out of the contracts.
66 The learned Arbitrator, while dealing with Claim No.4 referring to the additional work held that the Respondent is entitled to receive a sum of Rs.25 crores towards the share of profits. Admittedly, the parties had exchanged the letters revolving around this letter dated 15 October 1992 (Exhibit C-50). Mr. Sunil D. Sapre, was also examined with this regard. The letter Exhibit C-50, however, was not accepted by the Respondent. It is relevant to note the extract/contents of this letter, which reads as under:-
âIn the works being executed by us on subcontract basis, if any claims are paid by KHEP Authorities based on the quoted and accepted rates of PEC by KHEP Authorities, the payment shall be released to us after deducting 11.5% from the payment received from KHEP Authorities.
However, if any benefits/claims other than as mentioned above, in the portion of works allotted to us on subcontract basis, are settled and payments for same are decided and released by KHEP Authorities to PEC, the same shall be shared between PEC and BTP on 5050 basis after deducting expenses incurred for executing the works related to the said benefits/claims.â
The relevancy here is that this letter was addressed to PEC by BTP. There is no denial so far as this part is concerned by BTP. The issue still remains whether the parties relied and acted upon this at any point of time.
67 BTP/SBP never denied the fact that the portion of the works was entrusted to them on the basis of subcontracts. The two letters dated 15 October 1992 in question whereby, relevant terms were modified/changed. Both the parties proceeded further and completed the work by October 1999. These modified terms therefore, become the part and parcel of the agreement between the parties having arbitration clause. There is no denial to the fact that no payment whatsoever received by the BTP/SBP by overlooking these clauses. At the relevant time, there was no objection whatsoever even raised to the effect that these two letters noway modified and/or changed the basic terms and conditions of the contract. PEC in fact raised specific pleadings in their defence revolving around these modified terms based upon letter dated 15 October 1992 , specially with regard to the Volume Nos. I, II, IV, V and VI.
68 The series of events, following these letters/modifications of contract, took place whereby the parties arrived at and recorded the settlement. (That is recorded in R23) It is specifically averred that the claimantBTP entitled to receive only 50% of the total amount in respect of the Volume No. I and 44.25% of the total amount in respect of the Volume No. II. However, it is specifically averred that all amount due to the BTP/SBP in this regard have already been paid. The basic agreement provides share proportion at 88.50% and 11.50%. If that was intention to proceed with the work throughout and there was no occasion even to settle the matter in such fashion i.e. on the basis of 55.75 and 44.25%. This itself shows that there was modified agreement. Both the parties acted upon and proceeded accordingly.
69 It is relevant to note that the meeting took place on 2 April 2000. The parties agreed that for award volume No. II, PEC's share would be 55.75% and BTP's share would be 44.25%. It was further agreed for award volume No.I and for all future cases the amount would be shared by PEC and BTP on 52:48. PEC accordingly paid BTP an amount of Rs.9,76,93,283/being 44.25% share in the amount received from the State so far as the award Volume No. II. There is no denial to the fact of the receipt of the amount. The balance amount was also paid on 5 June 2000. No further claim made with regard to award No. II for more than 12 months thereafter.
70 The Respondents denied that there was modification of the subcontract by any such letters. As per them, those letters relates to different situation. It was with regard to the additional permission and PEC received from KHEP on 50:50 basis after deducting the expenditure of executing the award. The reference was made to MOU dated 15 October 1992 and specifically clause 11. This MOU was agreed to be read along with the subcontract pertaining to BTP. The mode of payment was elaborated by this MOU. Clause 11 provides that "amendments, if any, during the currency of this MOU shall be mutually discussed, agreed and incorporated as and when requiredâ. This MOU, therefore, reflects that the parties have specifically agreed to modify the subcontract agreements, after mutual discussion. This itself shows that both the parties were fully aware of the clauses of agreement and thereby based upon this, proceeded to modify and/or changed the terms and conditions, after mutual discussion. Therefore, to say that there was no intention and/or discussion to modify the basic contract, is also unacceptable.
71 The same types of letters modifying the piece work agreement with SBP is not in serious dispute. The learned Arbitrator, in spite of the serious dispute about the modification of the contract in view of these subsequent letters/settlements, not even framed specific issue with regard to such modification of the subcontracts, though dealt with this aspect to some extent while deciding Point No. IV. The learned Arbitrator recorded that there was mutual agreement in respect of VolumeII between Shri Pravin Patel, Chairman of SBP and Shri Balasaheb Patil, Chairman of BTP on 2 April 2000, but as both were not examined, the burden was upon PEC to support the "oral agreement" which is contrary to the âsubcontract agreement". The nonexamination of these witnesses was treated as a foundation to draw adverse inference against the PEC. It is relevant to note that principle of adverse inference just cannot be invoked to treat that as the parties failed to prove the case and it means the case of other side stands proved.
72 The observations that "the agreement set up by the Respondent are false and that had these witnesses been examined it would have been unfavourable to the Respondents." Reference was also made to the various judgments of the Supreme Court (i) Gopal Krishnaji Ketkar Vs. Mohamed Haji Latif (AIR 1968 SC 1413); Vidhyadhar Vs. Mankikrao and Anr. (AIR 1999 SC 1441); Gajendra Singh Vs. State of U.P. (AIR 1975 SC 1703)and Zahira Habibullah Sheikh and Anr. Vs. State of Gujarat and Ors. (2006 (3) SCC 374). The proposition of law as laid down by the Supreme Court needs no discussion, but we have to see the facts and circumstances of this surrounding situation also. The case is specifically based upon the specific talk going on between the parties and the settlements recorded in writing. There is no denial of the fact that the Respondent, based upon the same, actually acted upon and received the substantial amount immediately and later on also. What is the effect of those letters correspondences and minutes of the meeting on that day, just cannot be stated to be as oral agreement which as alleged to be contrary to the subcontract. The alleged coercion and/or undue influence as put forth by the Respondents if are unacceptable, then to say that there was contrary oral agreement between the parties is clearly unacceptable position on record itself. The acceptance of the fact of these letters and connected surrounding letters by authorized persons, if not in dispute then to say that the Respondents failed to examine these two witnesses, should be sufficient to discard the positive case made by the BTP and SBP and is also unacceptable way of dealing with the matter.
73 The learned Arbitrator failed to take note of the observation made by the Supreme Court in Standard Chartered Bank Vs. Andhra Bank Financial Services Limited and Ors. (2006) 6 SCC 94)while dealing with Sections 61, 93 to 95 and 3 (Inference from a documents) of the Evidence Act 1872 read with Section 114 III (g) and 5 (Doctrine of Adverse Inference) read with Sections 101 to 110 (question as to burden of proof). The Three Judge Bench judgment of the Supreme Court has dealt with the above aspects based upon the evidence on record. The relevant point for the purpose is as under:-
âAs to what inference from a document is always a matter of evidence unless the document is self explanatoryâ.
74 In the present case, the documents were placed on record by both the parties. The learned Arbitrator has recorded that the documents filed by the Respondents deemed to have been admitted by the PEC. So far as the documents filed by PEC not admitted by BTP and SBP. Both the parties led evidence in support of their documents and pleadings. It is settled that the concept of deemed admission of documents that itself is not sufficient to say and hold that the contents of the documents are also accepted by the parties. The existence of documents read with the evidence so placed on record, the Court and/or Arbitrator, need to consider while passing and/or assessing the rival contentions of both the parties.
75 It is also observed by the Supreme Court in Standard Chartered Bank (Supra) as under:-
â52. (â¦...)
Even if the burden of proof does not lie on a party the court may draw an adverse inference if he withholds important documents in his possession which can throw light on the facts at issue. It is not, in our opinion, a sound practice for those desiring to reply upon a certain state of facts to withhold from the court the best evidence which is in their possession which could throw light upon the issues in controversy and to rely upon the abstract doctrine of onus of proof.â
76 Another settlement was on 8 June 2001 in respect of the amount of Rs.5,19,22,824/- payable by the PEC to the BTP as per the clause RA Bill No. 139. Mr. Balasaheb Patil denied the same in his evidence. The adverse inference was again drawn as against Shri Pravin Patel but there is no denial to the signature, as well as, the acceptance of the uptodate statement of account prepared by Mr. Murlidharan of PEC on 8 June 2001. It shows the regular practice and understanding between the parties. Two other letters forwarded by Mr. Sapre was received by the RespondentSBP and BTP.
77 There is no denial to letter dated 8 June 2001 as it was forwarded by BTP to PEC, thereby acknowledged the receipt of the statement and the full and final settlement amount. It is specifically confirmed that âin future no claim will be raised in connection with the works executed by the parties.â.The similar letter was forwarded by SBP also.
78 The demand of legal expenditure on 20 June 2001 was contested by PEC. Lastly, by letter dated 27 June 2001, PEC informed to adjust the claim of Rs.5 lacs towards the balance amount of Rs.2,38,014/-. The Respondent by letter dated 3 July 2001 never raised any objection referring to letter dated 14 June 2001 stating it to be under coercion and undue influence, so also while acknowledging the receipt of Rs.65,72,174/-.
79 The subsequent denial in evidence in such fashion is no way override the written documents and/or earlier correspondences on record. Denial of everything by overlooking the written documents itself shows the uncertainty and unclarity, it destroys their own positive case. SBP/BTP again objected and/or denied any kind of the settlement and/or jointly prepared statement, by Mr. Murlidharan, who was also cross-examined.
80 The same modified terms and conditions based upon the letter dated 15 October 1992, were also relied and referred in defence by PEC with regard to Volume Nos. IV and V, by which the Respondent claimed Rs.26,12,08,613/-.
81 The modification and change of terms and conditions can be noted by following facts also. The settlement between the parties arising out of the basic contract took place some time in June 2000. As recorded above, on 2 May 2000, the State has challenged the award before the Civil Judge, Senior Division, Satara. Pending the proceedings, balance payment was made with regard to the award Volume No. II to BTP on 5 June 2000. The discussion was going on to settle the matter. There is no denial that on 8 June 2001 based upon the statement of account prepared by Mr. Muraleedharan of PEC, document/Settlement was signed by Mr. Balasaheb Patil of BTP, referring to the amount payable by PEC to BTP. Payment of Rs.5,19,22,824/- which was after adjustment shown as Rs.28,132.51/- payable to BTP and Rs.21,121/- payable to SBP. It was agreed to execute "no claim letters" prepared by one Mr. Sapre on instructions of Mr. Pravin Patel of PEC which was faxed accordingly to BTP. In the meanwhile, the State had withdrawn the challenge to the award on 15 June 2011. (Award volume I). PEC received an amount of Rs.30,07,33,273/. Even as per PEC an amount of Rs.15,50,98,891/- was payable to BTP. On 16 June 2001, in continuation of the discussion, to settle the matter full and final a meeting was held between Pravin Patel of PEC and Balasaheb Patil of BTP. PEC's representative handed over, as per full and final settlement, two cheques dated 14 June 2001 of Rs.28,132.51/- and Rs.21,121/- in favour of BTP and SBP respectively. A post dated cheque, dated 21 June 2001 with covering letter dated 16 June 2001 for Rs.14,85,26,717/- towards BTP and SBP's share of Volume I (Award) and also Rs.65,72,174/towards KHEP (volume I award) were issued aggregating to Rs.15,50,98,891/. The letter recording "full and final settlement" from PEC to BTP dated 16 June 2001, whereby it was endorsed/recorded that âcheques towards full and final settlement including dues towards Volume-I have already been paid to you and they have been accepted by youâ. Also endorsement that "With this all the issues pertaining to KHEP project along with Arbitration (Volume I, II and III) stand completed and settled once for all. No further discussion on any of these issues will be entertained in future". The receipt of the letter was not disputed by BTP's Directors according to Mr. Balasaheb Patil, who accepted it without any objection at the relevant time. No claim letters dated 8 June 2001, signed by Mr. Balasaheb Patil and handed over to Mr. Pravin Patel with covering letter dated 9 June 2001.
82 BTP on 20 June 2001 demanded a sum of Rs.5 lacs towards legal expenditure, pertaining to the Arbitration award No. I. PEC replied and pointed out about the settlement in the meeting of 16 June 2001, except for the balance payment of Rs.2,38,014/by letter dated 27 June 2001.
Coercion and undue influence
83 However, by a joint letter dated 3 July 2001, after encashing the cheques so issued pursuant to the settlement agreement letter dated 16 June, 2001, the Respondents alleged that PEC had "by coercion and undue influence", upon the power of attorney holder of the subcontractor, compelled to sign on unilateral documents and thereby denied the settlement, and at the same stroke raised five claims. PEC resisted the same by the correspondences and reiterated that the claims had already been settled. At this stage, therefore, it is very clear that there was no denial to the existence of the documents including the receipt of the amount based upon the same and so also the signatures and the contents of the letters. However, the issue was raised for the first time that the letters were obtained by âcoercion and undue influenceâ. The party one who raises the objection with regard to this, first of all, needs to accept the existence of the documents. In the present case, admittedly, there is no denial to these facts.
84 As already noted, so far as the related law is concerned, the basic burden lies upon the party one who alleges âcoercion and undue influenceâ. The requirement of details/particulars in support of the same is a must. Mere allegations of coercion and/or undue influence in a commercial contract like this, is unacceptable. It is relevant to note here that the commercial understanding between the parties in this particular matter was quite typical. At one stage, even BTP and SBP persuaded PEC to raise the disputes against the State to recover their amount, the proceedings initiated directly or indirectly, even for and on behalf of BTP and SBP. The award was passed in favour of PEC. BTP and SBP thereafter, pursuance to the subcontract agreements which was modified from time to time, and as recorded above, settled and acted upon. The terms and conditions between the PEC and BTP cannot be read in isolation. All these commercial transactions are interlinked and interconnected. Both the parties were fully aware of the nature of transactions/ business and the works to be carried out by them and its financial implication.
85 In this background to say that these settlements and modifications so made from time to time, including the understanding, based upon which the parties have, apart from exchanging the correspondences, factually received amount without any objection and/or dealt with at the relevant time, were under coercion and undue influence, is unacceptable.
86 The learned Arbitrator has dealt with this aspect of coercion against PEC, by relying on para 52(iii) of the Judgment of the Supreme Court in National Insurance Company Limited Vs. Boghara Polyfab Private Limited (Supra) which reads is as under:-
âA contractor executes the work and claims payment of say rupees ten lakhs as due in terms of the contract the employer admits the claim only for rupees six lakhs and informs the contractor either in writing or orally that unless the contractor gives a discharge voucher in the prescribed format acknowledging receipt of rupees six lakhs in full and final satisfaction of the contract, payment of the admitted amount will not be released. The contractor who is hard pressed for funds and keep to get the admitted amount released, signs on the dotted line either in a printed form or otherwise, stating that the amount is received in full and final settlement. In such a case, the discharge is under economic duress on account of coercion employed by the employer. Obviously the discharge voucher cannot be considered to be voluntary or as having resulted in discharge of the contract by accord and satisfaction. It will not be a bar to arbitration.â
The learned Arbitrator further observed that "the case on hand is similar to what has been stated by the Hon'ble Supreme Court in the above decision. Therefore, the arbitrator has no choice but to conclude that no claim letters are the result of undue influence and coercion"
87 The reference was also made to Reshmi Construction and Builders (Supra) in para 17.16, which reads as under:-
âAs already stated herein above, the Supreme Court in the case reported in Reshmi Construction and Builders case, 2004(2) SCC 667, has taken notice of the fact that it cannot shut its eye to the ground reality of no demand certificate being pressurized to be given by the contractors as a result of pressure by the other party, who is in a stronger bargaining position.â
88 The facts of National Insurance Company Limited (Supra) are relevant to reconsider, as the learned Arbitrator has taken those observations treating it similar to the case in hand. So far as the principle of law is concerned and as settled by the Supreme Court no discussion is necessary. Those principles just cannot be accepted as a foundation to overlook the factual background of the case and the circumstances under which the Supreme Court made those observations, as relied and referred by the learned Arbitrator. In that case (the Respondent) the insured obtained the standard fire and special perils (with floater) policy from (the Appellant) the insurer. There arose dispute with regard to the additional endorsement of further period of 60 days. The Respondent reported loss to their stocks on account of heavy rains and floods. After due inquiry a preliminary report was submitted. An amount was arrived at. The objection was raised. The final report was submitted. The net assessment loss was calculated. The Respondent protested the assessment. The dispute took considerable time for the settlement. In this background the individual Respondent, signed undated "discharge voucher-in-advance" acknowledging the receipt of particular amount in full and final settlement. The amount was accordingly received. Thereafter issue was raised and also demanded balance amount. Merely because in that case individual person who had suffer loss on account of heavy rains and floods and as accepted the amount by signing the discharge voucherinadvance, that itself is not a situation which can be compared with the situation in hand. As recorded above and considering the relation between he parties and the nature of transaction/ business, they entered into and as both were admittedly experts in their respective fields, doing the business in so many years jointly, therefore, to say, after receipt of the substantial amount and/or that those letters/settlements were compel to sign, under undue influence and coercion, is unacceptable. The facts and circumstances in my view, therefore, in no way sufficient to accept the case as recorded by the learned Arbitrator, that the case in hand is similar to what has been stated by the Supreme Court. In this process, the learned Arbitrator completely overlooked and not even recorded that there was no denial to the existence of the documents and/or settlement, at the relevant time and so also the receipt of the amount, based upon the same by BTP and SBP.
89 The learned Arbitrator failed to take note of the earlier background and the events which took place in the matter. The correspondences and the earlier negotiations talks as recorded in the letters also just cannot be overlooked. The learned Arbitrator neither recorded and/or made reference to those earlier correspondences and the evidence on record to show that the parties prior to signing of this settlement were discussing various things revolving around the settlement of the claims and the counter claims.
90 From the terms and conditions as recorded above, it is very clear that BTP and SBP are entitled to receive the amount only after the payment "received" by PEC. It was never the case of the Respondent that they are entitled to all the claims and respective amounts from PEC (except Volume No. IV). In my view it is always necessary to consider the aspect of coercion and/or undue influence in the facts and circumstances of the case and not on the basis of one particular incident and/or letter so referred and relied by the Respondents, as well as, by the learned Arbitrator.
91 The learned Arbitrator failed to appreciate that there is no denial to the execution, as well as, the signature of the power of attorney of these documents. There is no even dispute with regard to the authorization and/or challenge that Mr. Patil was never authorized to make up and/or instructed and/or permitted to settle the matter. The objection is that those signatures and/or acceptance of letters and/or settlements were under the coercion and undue influence. The learned Arbitrator failed to note that there was no occasion and/or reason for the Respondent to encash and/or to accept those amounts; later on to say that they were in dire need of money and therefore, no choice/option but to sign those settlement, in my view, are after thought submissions. The settlement talks were going on for long. "The Full and final settlement", in the background, cannot be stated to be the result of coercion and/or undue influence as alleged by the Respondents and as accepted by the learned Arbitrator.
92 The reliance on Reshmi Construction and Builders (Supra), in no way, in view, of above reasoning, sufficient to accept the case of the Respondent. The Apex Court by referring to the principle of undue influence and coercion reiterated that the conduct of the parties is always relevant. That was the case of public undertaking verses a private party. We are not dealing with the situation like this. Both the parties are commercial entity having long relation and doing the business of similar type, and together since 1992. Strikingly, there is no material placed on record and/or even correspondences, nor the oral evidence to support that PEC insisted at any point of time prior to getting the signature and/or settlement, that they would not pay the amount unless BTP/SBP signed the settlement documents. It is not even the case of the SBP and PEC though they lead evidence. As recorded, the allegations of coercion and undue influence cropped up only after receipt of the amount/ encashment of the amount.
93 Assume for a moment that the litigation was pending between the parties and so also was between PEC and the State for the recovery of amount; the Respondents were in dire need of balance amount. That itself, in the present facts and circumstances of the case, cannot be the reason to say that they succumbed to the pressure of other party to the bargaining, as they were on the stronger position.
94 Such allegations, just cannot be accepted merely because SBP and BTP after receipt of the amount revoked all the settlement and even denied the subsequent/modified agreements and reiterated to claim the share of the amount based upon the original agreement i.e. 88.50% and 11.50%. There was no reason, unless instructed and/or permitted to proceed to accept this substantial amount on the basis of modified terms and conditions. There was no reason otherwise to accept any amount by BTP/SBP. The whole purpose according to me was to reagitate and reopen the issue and claim, after receipt of the amount, based upon the modified terms, as well as, the settlement. The Respondent's case that they were compel to sign settlement documents, in my view, is unacceptable.
95 In the present case, it is not the case that the relevant documents were suppressed or not placed on record by the PEC. The learned Arbitrator drew adverse inference against the PEC as those two witnesses were not examined, though they were party to the said negotiations. To lead the evidence to prove the particular documents and/or plea is always a matter of choice and option of the party, who rely and support those documents and its contents. In the present case, though BTP and SBP, denied specifically about such settlement and/or background discussion, yet admitted the existence of those documents and factually acted upon the same. It is settled that one who raises the plea and/or alleges coercion and/or undue influence, must prove the same by placing on record the details/particulars in support of it. Mere allegations are not sufficient. There is no specific material shown on record in support that they were in dire need of money. On 12 January 2010, produced the balance sheets of BTP for the year ended 31 March 2001 and 31 March 2002, BTP's witness produced Balance sheets which showed that BTP was making large profits during this period contrary to their allegation/case of having suffered a financial crunch during that period. They agreed to sign and/or settle the matter. It was specifically contended that because of this settlement they got substantial amount to the tune of Rs.15 Crores and otherwise they would never had received this much amount. This submission itself, according to me, is sufficient to discard their denial to the oral agreement and/or settlement, contrary to the written terms and conditions. In the present facts and circumstances, I am inclined to observe that nonexamination of these two witnesses, could not have affected the undisputed position on record with regard to the settlement as referred and read, revolving around agreement dated 2 April 2000. It is difficult even otherwise after going through all other evidence placed on record by the BTP and SBP in support of their case to accept the case that there exists no such settlement. In my view, the learned Arbitrator is wrong in holding that the documents Exhibit R-6 âheld to be brought up documentâ.
96 It is also relevant to note that the transactions of this nature, it is important to read and refer a series of documents prior to the basic date and even after correspondences between the parties. It is difficult to take decision based upon one or two documents by overlooking the surrounding circumstances and admitted position on record in case of such dispute. The learned Arbitrator overlooked the fact to discard the documents filed by the PEC, R9, 10 and 24A, by stating âthese documents appear to be he result of coercion and undue influence as has been discussed elsewhereâ. The learned Arbitrator further wrongly discarded the case of PEC that the cheques were issued towards the full and final settlement including dues pertaining to Volume Nos. I, II and III, on a foundation that these letters no where mentioned about any settlement.
97 The learned Arbitrator is wrong in recording that Mr. Balasaheb Patil has admitted his signature at R-24 A and R-25A, but it would be the only receipt of these documents. By further observing that âHe has not stated that he has accepted them to be correct. Both these documents do not speak of any agreementâ. In a commercial contract of such type it is always the party who signed such documents knows the purpose and object of such acknowledgments. It is not the case that they accepted the amount by putting any endorsement of any sort of objection at the relevant time.
98 Merely because, in this background, PEC failed to examine some witnesses, in my view, in no way sufficient to draw the adverse inference as drawn by the learned Arbitrator and in that process acceptance of the case of the Respondent BTP and SBP though they failed to lead any contra evidence to support this case. One cannot overlook the factual position that BTP/ SBP were the claimants who filed the claim Petition for the amount so raised, in reference to the various Volumes. The basic burden, in my view, always lies upon the person/party who asserts and/or raises such pleas. I am inclined to observe that in the present facts and circumstances, the learned Arbitrator has wrongly applied the law also.
99 The learned Arbitrator failed to appreciate before declaring that the documents Exhibit R6 is got up documents, no supportive evidence was led by BTP and SBP. It is settled that a party one who raises such plea and challenge the authority of any such transaction and wants that those transactions to be declared sham, bogus and/or documents are got up and/or fabricated, must prove the same. There is no question of other side to prove the contrary and/or negative. In the present case, the learned Arbitrator wrongly upheld the case of the Respondents SBP and BTP and proceeded accordingly to pass the award in question.
100 The Supreme Court has observed in Standard Chartered Bank (Supra) as under:-
â71. (â¦..)
âBut in considering the application of this doctrine to the facts of the present case, it is necessary to bear in mind the other principle that considerations of form cannot override the legitimate considerations of substance. If a plea is not specifically made and yet it is covered by an issue by implication, and the parties knew that the said plea was involved in the trial, then the mere fact that the plea was not expressly taken in the pleadings would not necessarily disentitle a party from relying upon it if it is satisfactorily proved by evidence. The general rule no doubt is that the relief should be founded on pleadings made by the parties. But where the substantial matters relating to the title of both parties to the suit are touched, though indirectly or even obscurely, in the issues, and evidence has been led about them, then the argument that a particular matter was not expressly taken in the pleadings would be purely formal and technical and cannot succeed in every case.â
101 It is settled, in view of the provisions of the Evidence Act, that (a) any rule of burden of proof is irrelevant when the parties have actually led the evidence and that evidence has to be considered (Standard Chartered Bank [Supra]); (b) when the entire proceedings before the Court, the burden of proof becomes immaterial. (Sita Ram Bhau Patil Vs. Ramchandra Nago Patil) (1977) 2 SCC 49).
102 It is necessary to observe here that considering the scheme and purpose of the Arbitration Act and the requirement for adjudicating the claim or to deal with the rival contentions of the parties in dissolving the dispute, the above observations are relevant for any such Arbitration proceedings. This itself means the Arbitral Tribunal/ Arbitrator needs to proceed with the Arbitration matters within the frame work of law and the record.
103 Therefore, I am inclined to observe that the learned Arbitrator is wrong in holding that PEC failed to prove that there was agreement between the BTP and SBP to receive only 50% of the award payment to Volume No. I and 44.25% amount pertaining to volume No. II and further that BTP/SBP are entitled to receive 88.50% of the award of Volume No. I and II.
104 The learned Arbitrator, in my view, failed to appreciate this legal principle and has passed the award by drawing adverse inference and by overlooking the admitted documents on record. It is not the case of the possible view and/or plausible view, based upon the available material and/or terms and conditions of the contract. The award based upon on wrong principle of law and by overlooking the material on record, cannot be stated to be possible view and/or correct view, which need no interference. The view expressed by overlooking these principles is wholly untenable.
105 Merely because the Respondent sought certain clarification from time to time but which was not answered and dealt with by PEC at the relevant time that itself is no reason to accept the case of BTP and SBP. The denial of Mr. Balasaheb Patil to the same letter dated 2 April 2000 (R23) that itself is not sufficient in view of written documents and admitted conduct of the same. The oral evidence so led and/or denial so made in the evidence that itself no way sufficient to prove the case/claim of the Respondent SBP/BTP, in view of the specific plea and the grounds so raised.
106 BTP also denied agreement which took place in the meeting held in second week of July 2000 between Mr. Pravin Patel and Mr. Balasaheb Patil with regard to Arbitration volume Nos. I , IV and V as per letter dated 14 July 2000. It is the settlement /understanding which were immediately denied including the contents of the letter on 20 July 2000 itself by Mr. Balasaheb Patil. Mr. Balasaheb Patil, however, denied the signature at Exhibit R6 as original was not placed on record. The case was again made that it was a fabricated document. The issue was raised that the document though was of dated 24 February 2000, it was alleged to have signed later on by Mr. Patil. He denied his signature also.
107 The payment in so far as Volume No. I had been received by PEC from KHEP on 15 June 2001. The share of BTP out of it of Rs.14,85,26,717/had been paid on 16 June 2001 and certainly not on 21 June 2001. The case, therefore, of coercion and/or undue influence referring to Volume NoI is also unacceptable as settlement letters written and forwarded on 8 June 2001. Therefore, the observation âreassured in the payment in case of volumeIâ itself falsify their submission so raised revolving around the coercion and undue influence by the Respondent/BTP and SBP.
108 So far as the allegations of coercion with regard to the award volume Nos. II, IV, V and VI are on a foundation that the amount was further withhold and also not recorded at any earlier point of time except by oral evidence of one witness. There was even no specific pleadings raised so far as the withholding amount of these volumes. The findings therefore, given by the learned Arbitrator in following words for the reasons so stated above are untenable.
âRespondent who had in his possession Rs.10crores pertaining to Award Vol. II and ⦠.. was in a dominant position to pressurize the Claimant to give no claim letters.â
âNon payment of Vol II award amounts constituted âproof enough of the fact that Respondent pressurized BTP and SBP to issue the no claim letters.â
âB.T. Patil was under pressure to receive the Vol I and Vol II amounts and therefore had no choice but to succumb to the pressure of the Respondents.â
âThat amounts for Vols. IV and V aggregating to over Rs.100 crs was due to BT Patil and was being withheld and accordingly B T Patil was âin an extremely weak positionâ PEC was âin a dominant position to dictate terms to the Claimant (B.T. Patil)â
109 So far as the Volume II is concerned, there is no specific case raised and/or pleadings. The relevant amount was paid by PEC to SBP and BTP in May/June 2000, one year earlier to the grievance raised. There was no objection raised by the Respondent. For the above same reason, the observation with regard to the volumes V and IV referring to withholding an amount and/or undue influence and/or coercion is also without any foundation except their statement so made and by observing that BTP âbeing still in demanding positionâ to dictates the terms to the claims. Admittedly, no claim for IV and V was even made by Respondent till 2 August 2001, because there was no occasion to raise such plea even for this amount.
110 It is relevant to note that the observations made by the Supreme Court in S.K. Jain Vs. State of Haryana and Anr. (Supra) while dealing with the plea of unequal bargaining power. It is not applicable in such case of commercial contracts. The relevant observations are in the Arbitration matter while dealing with the Arbitration Act and Section 23 and 28 of the Contract Act, as noted above.
111 For the reasons recorded above, I am inclined to observe that the Respondent BTP/SBP failed to prove that the letter dated 8 June 2001 given by them was the result of coercion and undue influence and therefore, invalid. I am also inclined to hold that the Respondent proves that BTP and SBP voluntarily in full and final settlement of their claims against the Respondents. In view of above, I am also inclined to observe that PEC's case has been proved satisfactorily.
112 In view of above reasoning referring to Point Nos. VII, VIII and VIII, I am inclined to observe that BTP/ SBP are not entitled to 88.50% of the award amount in Volume Nos. I and II as referred and discussed in Point Nos. VI. It is not the question of the work being carried out by BTP/SBP, but it is a question of commercial settlement and agreement between the parties. Under what circumstances and why they entered into such type of commercial agreement and settlement is not the job of third party or the Court or the Arbitral Tribunal. The further discussion on the issue including the work being carried out, exclusively, in my view, looses its importance. Once the settlement and its further action based upon the same of the parties is accepted then there is no question of going back to the original claim of 88.50% of the award amount in volume Nos. I and II also.
113 The same is the case in view of above reasoning and specifically point Nos. vii, viii, ix and vi, I am inclined to observe that PEC proves that there was an agreement between the PEC and SBP wherein the later agreed to receive only 55.75% of the award amount pertaining to VolumeI and 44.25% award amount pertaining to Volume No. II. All these points, in my view, in a way are interlinked and interconnected. The above facts and reasonings so recorded if read together, the cumulative effect is taken into consideration, the reasoning and the award so passed by the learned Arbitrator deserves to be interfered with.
Certain claims beyond the scope of reference
114 It is relevant to note that there arose dispute between the parties with regard to the appointment of the Arbitral Tribunal. From order dated 3 February 2003 passed by the Division Bench of the Bombay High Court against the order passed by the designated Judge. The Respondents preferred Special Leave Petition (SLP). The Civil Appeals decided by the Supreme Court on 21 October 2009 (S.B.P. And Company Vs. Patel Engineering Ltd. and Anr.) (2009) 10 SCC 293).
115 The background facts of the litigation between the State and the Petitioner with regard to the contract between them, are necessary for adjudication of these petitions also. There arose disputes between the State and the Petitioner some time in October 1996. The unanimous award was passed by three Arbitrators, on 11 February 2000, directing the state to pay Rs. 24,09,25,965/- to the Petitioner. The State accordingly made the payment to the Petitioner.
116 The Respondents (sub-brokers) had demanded their share of amount on 3 July 2001. They invoked Arbitration clause as the Petitioner inspite of three months notice, failed to make the payment. By letter dated 3 October 2001, appointed Shri T.G. Radhakrishna (retired Chief Engineer) who was also party to the SLP as the Arbitrator on their behalf. The petitioner appoint