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Bharat Sanchar Nigam Limited, Rep. By its Chief General Manager Chennai Telephones, Chennai v/s The RITES Ltd (A Govt of India Enterprises -Ministry of Railway), Rep. By its Joint General Manager, Chennai

    Arb O.P (COM.DIV.) No. 171 of 2021 & A. No. 3520 of 2021

    Decided On, 05 October 2021

    At, High Court of Judicature at Madras


    For the Petitioner: S. Gopinathan, Advocate. For the Respondents: S. Amalraj, S. Penikilapatti, Advocates.

Judgment Text

(Prayer: Petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 to set aside the Arbitral award dated 27.04.2021 passed in O.P.No.902 of 2018 and A.F.No.76 of 2019 passed by the Hon'ble Mr.Justice K.Mohanram, Former Judge High Court, Madras, Sole Arbitrator, in its entirety and to direct the respondent to pay the costs.)

1. This Arbitration Original Petition has been filed to set aside the Arbitral award dated 27.04.2021 passed in O.P.No.902 of 2018 and A.F.No.76 of 2019 passed by the Hon'ble Mr.Justice K.Mohanram, Former Judge High Court, Madras, Sole Arbitrator, in its entirety and to direct the respondent to pay the costs.

2. For the sake of convenience, the parties are referred to by the rank in the Arbitral proceedings.

3. The respondent/claimant is a Public Sector Undertaking, incorporated under the Companies Act, 1956. It was engaged in providing comprehensive project management consultancy services. The claimant has participated in the Tender floated by the first respondent (BSNL) vide its Tender Notification No:T/General/2000-01/1 dated 20/26.12.2000 calling for tenders from Public Sector Units for acting as “Consultancy” for the work of “Survey, Supervision, Tendering, Documentation etc. for execution of External Plant Work” throughout the jurisdiction of Chennai Telephones. After negotiations, the respondent selected the claimant as one of the Consultants and issued the Letter of Approval bearing No:DGM(W)/RITES/2001-01/7 dated 28.02.2001 favouring the claimant. Pursuant to the “Letter of Approval” dated 28.02.2001, the respondent and the claimant entered into an Agreement dated 20.03.2001 for executing the work of erection of DP and upgradation of pillars in Koyambedu, Valasaravakkam, Kundrathur and Porur areas of Chennai Telephones. Subsequently, the respondent called for fresh tenders from PSUs for executing the same works in the years 2001-2002 and 2002-2003.

4. After the Letter of Approval was issued by the respondent, the claimant invited Tenders from amongst the Contractors enlisted with BSNL for obtaining the rates for the various works. After the Tenders were opened, the Committee headed by the Divisional Engineer of BSNL, with representatives of the respondents and the claimant as members, negotiated with the Contractors and the respondent conveyed its accepted/approved rates for various items of work to RITES.

5. The Claimant with the help of the Sub Contractors completed the works to the satisfaction of the concerned officials of BSNL and submitted all its Bills strictly as per the 'Check-lists' and the Measurements recorded in the M-Book that were also signed by the concerned officials. However, the respondent has not paid the bills of the claimant that were submitted strictly as per the contract made part payments in respect of number of bills failed to make payment for the number of items in respect of 6 bills as enumerated in the Annexure 'A' to the Statement of Claims. Hence, the claimant referred the dispute claiming a sum of Rs.24,42,599/- as Principal sum due from the respondent and also prayed for interest and costs.

6. Learned counsel for the respondent submitted that the claimant completed the work in July, 2003 and from August 2003, the said bill amounts were withheld and from that time, the claimant has been deprived of the use of the sum of Rs.17,52,812/- . As far as Bill No.18/01 dated 29.06.2004 for Rs.3,80,054/- (Sl.No.3 of Annexure-A) towards cement concrete is concerned, it is contended that the DGM (O&M) Kodambakkam inspected the work spot along with DE, SDE and JTO and other staff concerned and since there was no trace of concreting he had disallowed the same and the rest of the amount had been paid in May 2006. There was no further claim for disallowed amount till a request came from the claimant on 17.08.2007 for arbitration. As per Clause 16.1 of the Post facto Agreement dated 14.10.2004, if the Consultant (RITES) do not make any demand of Arbitration in respect of any claim in writing within 90 days of receiving the intimation from Chennai Telephones that the bill is ready for payment, the claim of the consultant will be deemed to have been waived and absolutely barred and Chennai Telephones shall be discharged and released of all liabilities under the Contract in respect of these claims. The claimant should have claimed it immediately in 2006 itself but has only requested for arbitration in August 2007.

7. As far as claims covered by Sl.Nos.5 & 6 of Annexure-A are concerned, the learned counsel submitted that it is mentioned in the counter statement that the excess work done in Arumbakkam RSU area for which no Work Order had been issued and hence no AT had been done leading to non raising of bill by the claimant. It is contended by the learned counsel that in view of the urgency on the part of BSNL to commission its “Arumbakkam RSU”, the Senior Officials of BSNL were insistent that the claimant must immediately execute certain works even without the issuance of a Formal Work Order and that the same would be regularized at a later date by the issuance of a Formal Work Order after obtaining the administrative sanction and accordingly, the claimant completed the works before July 2003. The learned counsel submitted that as seen from Exhibit C15 dated 02.09.2004, a meeting was fixed by the GM(West) of BSNL for 20.09.2004 regarding settlement of bills and thereafter Ex.C16 dated 14.10.2004, the Post Facto Agreement between BSNL, Chennai Telephones and M/s.RITES Limited for the year 2003-2004 was entered into. The learned counsel brought to the notice of this Tribunal that in the Post Facto Agreement, the payment for the additional work to the claimant, the execution of the same and the need for execution of the Post Facto Agreement to raise the bills for additional quantities is mentioned and in Ex.C15 itself it was acknowledged that the claimant has completed all the works and Arumbakkam RSU was commissioned during July 2003 itself. The learned counsel submitted that even after the execution of the Post Facto Agreement dated 14.10.2004, the respondents did not settle the pending payments which resulted in the correspondence evidenced by exhibits C17- C20. The learned counsel referred to Ex.C21, a letter dated 25.04.2006 from SDE-BSNL wherein it is mentioned that the approval for the payment for the 20% excess works is being obtained to issue the work order and the claimant had been asked to depute some official to sign in the check list to proceed further. Therefore the learned counsel submitted that the issue was kept alive and the respondents had not denied or refused payment but were only delaying the payment and hence the arbitration was invoked well in time and the claim statement was filed on 11.12.2007 and the therefore the claims are well within time. Hence, prayed for dismissal of this petition.

8. On consideration of above pleadings and after hearing the counsel for the parties, the learned Arbitrator has framed the following issues for consideration:

1. Whether the Claimant executed the work of removal of excess earth and the work of sea-sand filling as per the contract and as stipulated in the relevant and applicable 'Specification for Cable Laying'?

2. Whether the respondents are entitled to and justified in not accepting the entries in the relevant M-Books, Check-lists, Acceptance Test-Reports and the Certified Bills submitted by the Claimant for payment?

3. Whether the agreement of the guidelines or procedures issued by the respondents relating to submission of bills for payment provide for enclosing any other proofs/documents other than M-books, Check-lists, Acceptance Test-Reports and Certified Bills in respect of sea-sand filling and removal of excess excavated earth, and if so, whether the respondents called upon the claimant to produce such other proofs/documents?

4. Whether the respondents are justified in disallowing a sum of Rs.3,80,054/- covered by Bill No.18/01 dated 29/6/2004 relating to cement concrete and concreting-insitu?

5. Whether in the light of Clause 16.1 of Post-facto of Agreement No.DGM(KOD-O&M)/2004-05/2 dated 14/10/2004 the claimant is deemed to have waived the claim covered by Bill No.18/01 dated 29/06/2004 for a sum of Rs.3,80,054/-?

6. Whether the claimant is entitled to the claim of a sum of Rs.1,96,000/- as per Bill No.153 enumerated at Sl.No.4 in Annexure-A of the claim statement.

7. Whether the claimant is entitled for the claims enumerated in Sl.Nos.5 & 6 of Annexure-A of the Claim statement in the absence of the work order issued by the respondents, in the absence of Acceptance Test-Report and without raising a bill by the claimant?

8. Whether the claimant is entitled to the claim as made in the claim statement?

9. Whether the claimant is entitled for interest and if so on what amount, for what period and at what rate?

10. Whether the parties are entitled for costs?

11. To what other reliefs the parties are entitled to?

9. After hearing both sides, the learned Arbitrator has passed an award for a sum of Rs.17,52,812/- towards principal with interest at the rate of 12% on the sum of Rs.17,52,812/- from 01.08.2003 till the date of the award which comes to Rs.37,13,616/-; cost awarded is Rs.1,64,709/- and the respondents shall pay the above said award amounts to the claimant within a period of 3 months from the date of the award failing which the award amounts will carry interest at the rate of 12% per annum till the date of payment.

10. It is the contention of the learned counsel for the petitioners that the learned Arbitrator has not taken note of the fact that no document is filed to prove the transport of the sea-sand by the claimant and removal of earth from the site and passed an award. It is also submitted that the interest has been awarded from the year 2004, which was excessive.

11. Learned counsel for the petitioners further submitted that the Arbitration award suffers from patent illegality, whereas, the learned counsel for the respondent submitted that in similar contracts, 13 awards have already been satisfied by BSNL and the contention that there was no evidence to claim the bill is without any basis. Learned Arbitrator infact, considered the entire aspects. Hence, he prayed for dismissal of this original petition.

12. I have perused the entire award. The only dispute referred for arbitration in this matter is for removal of excess earth and sea-sand. The bill for removal of earth and sea-sand has not been disputed by BSNL, but the only contention is that no documents have been produced to substantiate their case.

13. The learned Arbitrator in para No.21 has categorically recorded the factual finding that no Work Orders have been obtained by the Claimant for sea-sand filling and removal of excess earth, it is relevant to point out that the Acceptance Test Report has been duly signed by the officials of BSNL. Apart from that, M-Book had also been signed by the Officials and the signature of the officials of BSNL in various documents is also not in dispute and it is also specifically recorded by the learned Arbitrator that nowhere in the documents, the officials have disputed the work carried out by the claimant. The claimant relied on the report of the Committee constituted by the Chief General Manager of the BSNL which is marke

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d as Ex.C6 dated 29.03.2004 is also relied on by the learned Arbitrator. When the learned Arbitrator has fully recorded the factual findings on the basis of the documents and the work carried out by the claimant, this Court cannot re-appreciate the entire evidence in a petition filed under Section 34 of the Arbitration and Conciliation Act, 1994 at this stage. Therefore, the contention of the learned counsel for the petitioners, cannot be countenanced. 14. As far as, the interest is concerned, there is no bar under contract to award Pendentelite interest. When similar contracts is also a subject matter in O.P.No.652 of 2012, this Court vide order dated 21.09.2016 has confirmed the interest at the rate of 12% per annum. It is stated by the learned counsel for the respondent that 13 similar awards had already been satisfied by BSNL, wherein, similar rate of interest has also been awarded. Such being the position, this Court is of the view that when there is no provision in the contract which restricts the interest, interest awarded by the learned Arbitrator cannot be found fault with. 15. Accordingly, this Court did not find any merit in this original petition and this original petition is dismissed. No costs. Consequently connected application is closed.