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M/s. Hindustan Steel Works Construction Limited, Rep. by its General Manager, V.S. Prasad v/s Government of Tamil Nadu, Rep. by its Project Director, Tamil Nadu Road Sector Project, Chennai & Others


Company & Directors' Information:- HINDUSTAN CONSTRUCTION COMPANY LIMITED [Active] CIN = L45200MH1926PLC001228

Company & Directors' Information:- S A L STEEL LIMITED [Active] CIN = L29199GJ2003PLC043148

Company & Directors' Information:- INDIA STEEL WORKS LIMITED [Active] CIN = L29100MH1987PLC043186

Company & Directors' Information:- PRASAD & COMPANY (PROJECT WORKS) LIMITED [Active] CIN = U74210TG1983PLC003842

Company & Directors' Information:- M M S STEEL PRIVATE LIMITED [Active] CIN = U27109TZ1996PTC006849

Company & Directors' Information:- G. O. STEEL PRIVATE LIMITED [Active] CIN = U27100PB2007PTC031033

Company & Directors' Information:- C P S STEEL INDIA PRIVATE LIMITED [Active] CIN = U27104TZ2003PTC010552

Company & Directors' Information:- J M G STEEL PRIVATE LIMITED [Strike Off] CIN = U27105BR1992PTC004985

Company & Directors' Information:- S K B PROJECT (INDIA) PRIVATE LIMITED [Active] CIN = U45202MP2008PTC020457

Company & Directors' Information:- H L STEEL PVT LTD [Active] CIN = U27107AS1992PTC003726

Company & Directors' Information:- K V M STEEL PRIVATE LIMITED [Active] CIN = U29141DL1988PTC031248

Company & Directors' Information:- K STEEL PRIVATE LIMITED [Strike Off] CIN = U27104JH1973PTC000998

Company & Directors' Information:- R. J. STEEL PRIVATE LIMITED [Active] CIN = U28112MH2009PTC193047

Company & Directors' Information:- M M STEEL PRIVATE LIMITED [Active] CIN = U27107MH2001PTC131270

Company & Directors' Information:- D R STEEL CONSTRUCTION COMPANY PVT. LTD. [Active] CIN = U27310WB1991PTC051847

Company & Directors' Information:- B L STEEL PVT LTD [Active] CIN = U51909WB1981PTC034021

Company & Directors' Information:- R K G STEEL PRIVATE LIMITED [Active] CIN = U27109DL2004PTC128852

Company & Directors' Information:- V B STEEL PRIVATE LIMITED [Active] CIN = U28112MH2010PTC211691

Company & Directors' Information:- I B STEEL COMPANY PRIVATE LIMITED [Strike Off] CIN = U28910MH2010PTC211344

Company & Directors' Information:- J K ROAD CONSTRUCTION COMPANY PRIVATE LIMITED [Active] CIN = U45203JK2012PTC003594

Company & Directors' Information:- Y D STEEL PRIVATE LIMITED [Strike Off] CIN = U27109WB1997PTC086155

Company & Directors' Information:- J S C STEEL PRIVATE LIMITED [Active] CIN = U27106UP2013PTC061568

Company & Directors' Information:- S. M. STEEL PRIVATE LIMITED [Active] CIN = U51101MH2013PTC239811

Company & Directors' Information:- R K P STEEL LTD [Active] CIN = L27109WB1980PLC033206

Company & Directors' Information:- C P STEEL PRIVATE LIMITED [Active] CIN = U27100WB2008PTC127447

Company & Directors' Information:- A J PROJECT PRIVATE LIMITED [Active] CIN = U70101WB2006PTC110040

Company & Directors' Information:- A. K. J. STEEL PRIVATE LIMITED [Active] CIN = U28112WB2010PTC144880

Company & Directors' Information:- C D STEEL PVT LTD [Under Liquidation] CIN = U27109WB1981PTC034340

Company & Directors' Information:- T M S STEEL PRIVATE LIMITED [Strike Off] CIN = U02710TZ1996PTC007498

Company & Directors' Information:- M B S PROJECT PRIVATE LIMITED [Strike Off] CIN = U45209GJ2000PTC038147

Company & Directors' Information:- T M STEEL WORKS PVT LTD [Strike Off] CIN = U63022MH1964PTC012894

Company & Directors' Information:- P M R STEEL PRIVATE LIMITED [Active] CIN = U51102DL2003PTC122675

Company & Directors' Information:- C T STEEL PVT LTD [Active] CIN = U27109WB2005PTC106634

Company & Directors' Information:- P G STEEL PVT LTD [Strike Off] CIN = U24111AS1998PTC005409

Company & Directors' Information:- A AND S STEEL PRIVATE LIMITED [Active] CIN = U63090DL1987PTC027835

Company & Directors' Information:- K C PROJECT INDIA PRIVATE LIMITED [Active] CIN = U55101DL1997PTC088558

Company & Directors' Information:- A. H. PROJECT PRIVATE LIMITED [Active] CIN = U45400WB2010PTC141970

Company & Directors' Information:- R S STEEL WORKS PRIVATE LIMITED [Strike Off] CIN = U27310UP1977PTC004395

Company & Directors' Information:- J S STEEL PRIVATE LIMITED [Active] CIN = U52190CT1978PTC001432

Company & Directors' Information:- U M STEEL PRIVATE LIMITED [Strike Off] CIN = U27209TN1986PTC013670

Company & Directors' Information:- E & G STEEL INDIA PRIVATE LIMITED [Strike Off] CIN = U28113PN2009PTC134643

Company & Directors' Information:- V K CONSTRUCTION WORKS PVT LTD [Strike Off] CIN = U45209CH1977PTC003718

Company & Directors' Information:- L N STEEL PRIVATE LIMITED [Active] CIN = U27310WB2007PTC118206

Company & Directors' Information:- K. D. W. STEEL PRIVATE LIMITED [Active] CIN = U28910UP2011PTC043976

Company & Directors' Information:- R. N. STEEL PRIVATE LIMITED [Active] CIN = U27100WB2007PTC116588

Company & Directors' Information:- H E F PROJECT PRIVATE LIMITED [Converted to LLP] CIN = U74899DL1995PTC069794

Company & Directors' Information:- P M STEEL PRIVATE LIMITED [Active] CIN = U27105MP1982PTC001915

Company & Directors' Information:- M R STEEL (INDIA) PRIVATE LIMITED [Active] CIN = U27100TG2013PTC088808

Company & Directors' Information:- C K STEEL PVT LTD [Active] CIN = U29150WB1975PTC030259

Company & Directors' Information:- B J S PROJECT PRIVATE LIMITED [Active] CIN = U74900WB2015PTC206605

Company & Directors' Information:- STEEL INDIA COMPANY (CHENNAI) PRIVATE LIMITED [Active] CIN = U27101TN2004PTC053840

Company & Directors' Information:- A M Q STEEL PRIVATE LIMITED [Strike Off] CIN = U27310UP2012PTC053823

Company & Directors' Information:- PROJECT Q AND S PRIVATE LIMITED [Active] CIN = U74999HR2020PTC086437

Company & Directors' Information:- K STEEL & COMPANY PVT LTD [Strike Off] CIN = U51909WB1991PTC053960

Company & Directors' Information:- STEEL CONSTRUCTION COMPANY PRIVATE LIMITED [Strike Off] CIN = U27104KA1939PTC000250

Company & Directors' Information:- N S STEEL PVT LTD [Strike Off] CIN = U27106PB1980PTC004266

Company & Directors' Information:- S D STEEL CONSTRUCTION PVT LTD [Active] CIN = U45202WB1986PTC040330

Company & Directors' Information:- M M PRASAD CONSTRUCTION PRIVATE LIMITED [Active] CIN = U45201JH2015PTC002815

Company & Directors' Information:- VS INDIA PRIVATE LIMITED [Strike Off] CIN = U31200MH2005PTC157071

Company & Directors' Information:- AMP PROJECT PRIVATE LIMITED [Active] CIN = U45400WB2011PTC164997

Company & Directors' Information:- R C STEEL PVT LTD [Strike Off] CIN = U28112AS1980PTC001811

Company & Directors' Information:- M K G STEEL PRIVATE LIMITED [Strike Off] CIN = U74899DL1995PTC066480

Company & Directors' Information:- P D STEEL PRIVATE LIMITED [Strike Off] CIN = U74899DL1989PTC038426

Company & Directors' Information:- A K STEEL PVT LTD [Strike Off] CIN = U99999DL1961PTC003566

Company & Directors' Information:- H S P STEEL PRIVATE LIMITED [Strike Off] CIN = U27100MH2013PTC242983

Company & Directors' Information:- R B R STEEL PRIVATE LIMITED [Active] CIN = U51103PB2013PTC037791

Company & Directors' Information:- D H STEEL PRIVATE LIMITED [Strike Off] CIN = U27109RJ2012PTC039742

Company & Directors' Information:- K D PROJECT PRIVATE LIMITED [Strike Off] CIN = U45400MH2010PTC209307

Company & Directors' Information:- R A STEEL PRIVATE LIMITED [Active] CIN = U51909MH2014PTC253625

Company & Directors' Information:- J D WORKS PRIVATE LIMITED [Active] CIN = U74999MH2011PTC211791

Company & Directors' Information:- N. V. STEEL PRIVATE LIMITED [Strike Off] CIN = U27310DL2009PTC186541

Company & Directors' Information:- K. D. STEEL PRIVATE LIMITED [Strike Off] CIN = U28939DL2012PTC244467

Company & Directors' Information:- S M WORKS PRIVATE LIMITED [Active] CIN = U45400DL2014PTC270403

Company & Directors' Information:- E PROJECT PRIVATE LIMITED [Active] CIN = U72300HR2015PTC057142

Company & Directors' Information:- J A J PROJECT CONSTRUCTION PRIVATE LIMITED [Strike Off] CIN = U45400GJ2014PTC078635

Company & Directors' Information:- INDIA GENERAL CONSTRUCTION CORPORATION LTD [Strike Off] CIN = U45400WB1945PLC018797

Company & Directors' Information:- STEEL INDIA PRIVATE LIMITED [Strike Off] CIN = U00349KA1958PTC001309

Company & Directors' Information:- PRASAD CONSTRUCTION PVT LTD [Strike Off] CIN = U99999MH1988PTC049401

Company & Directors' Information:- M P WORKS PVT LTD [Strike Off] CIN = U22219WB1950PTC018702

Company & Directors' Information:- STEEL CO PVT LTD [Strike Off] CIN = U51109WB1947PTC015981

Company & Directors' Information:- HINDUSTAN CORPORATION PRIVATE LIMITED [Dissolved] CIN = U74900KL1901PTC000424

Company & Directors' Information:- HINDUSTAN LTD. [Active] CIN = U99999MH1917PTC000472

Company & Directors' Information:- HINDUSTAN STEEL CORPORATION LIMITED [Dissolved] CIN = U99999MH1943PTC003926

Company & Directors' Information:- HINDUSTAN CORPORATION LIMITED [Dissolved] CIN = U99999MH1949PLC007790

    O.P. No. 309 of 2014

    Decided On, 04 December 2019

    At, High Court of Judicature at Madras

    By, THE HONOURABLE MR. JUSTICE SENTHILKUMAR RAMAMOORTHY

    For the Petitioner: N.C. Ramesh, Senior Counsel for M/s. C. Ramesh, Advocate. For the Respondents: R1, M. Sricharan Rangarajan, Spl.GP(CS).



Judgment Text


(Prayer: Original Petition is filed under Section 34 of the Arbitration and Conciliation Act, 1996 to set aside the Award dated 28.08.2009 passed by the Arbitrator.)

1. The claimant in the Arbitration is the Petitioner herein. The dispute arises out of a contract for the Enhanced Periodical Maintenance of Government Roads in Tuticorin District. Pursuant to the tender floated by the first Respondent, the work was awarded to the Petitioner. The Agreement No.10/2004-05 was executed on 21.07.2004 (the Agreement) and the scheduled date of completion of work was 23.09.2005. However, the admitted position is that the work was actually completed on 30.10.2006. In these facts and circumstances, claims were made with regard to escalation, idling etc. and the said dispute was referred to Arbitration. In the Arbitration, the Petitioner made 6 claims. The said claims were in respect of the following: a sum of Rs.2,17,23,456/- towards escalation in costs of materials and labour; a sum of Rs.1,86,38,923/- towards loss of profits and overheads; a sum of Rs.70,28,640 towards compensation for costs incurred on idle men and machinery; interest on overdue payments; costs of the Arbitration Proceedings; and compensation due to delay in issuance of the Project Authority Certificate. Based on the pleadings and documentary evidence, the Arbitral Tribunal pronounced the Arbitral Award dated 28.08.2009(the Award) and rejected all the claims except claim No.4. With regard to claim No.4, a sum of Rs.13,25,994/- was awarded with interest thereon at 8% per annum from the date of the Award till the date of payment. The said Award is challenged by the Petitioner.

2. I heard the learned counsel for the Petitioner and the learned counsel for the Respondents. The learned counsel for the Petitioner submitted that the delay in completion of work was on account of delay in approving revised proposals and that this delayed the performance of work from 09.04.2005 to 09.01.2006. The other reasons for delay were the monsoon rains in October and November 2004 and October and November 2005, the delay in approval of the deletion proposal in August and September 2006 and the delay in issuing the Project Authority Certificate. Consequently, he submitted that the reasons for delay are not attributable to the Petitioner and that, therefore, the Petitioner was entitled to its escalation claim. He further submitted that the Petitioner had reported the deterioration in the road surface within a reasonable time as per Clause 31.5 of the Agreement.

3. As regards idling of men and machinery, the learned counsel submitted that the men and machinery of the Petitioner were kept idle from 09.04.2005 to 09.01.2006, which is the time taken for approval of the revised estimate by the first Respondent, and, therefore, the Petitioner is entitled to claim No.2 towards idling. In this connection, it was further submitted that the Arbitral Tribunal misconstrued Clause 28.5 of the Agreement so as to hold that the Petitioner had admitted that it would not make any claim for increase in costs. It was further submitted that the first Respondent delayed the issuance of the Project Authority Certificate for the purpose of enabling a waiver of excise duty and that the Petitioner incurred losses on that account. The learned counsel also submitted that the rejection of the claim of loss of profits and overheads is arbitrary and perverse and that the Arbitral Tribunal should have been adopted Hudson-s formula or any other accepted formula so as to determine the overheads and loss of profits claim. For all these reasons, the learned counsel submitted that the Arbitral Award is liable to be set aside.

4. In response and to the contrary, the learned counsel for the first Respondent submitted that the Agreement admittedly does not contain a price escalation clause. Instead, clause 47.2 stipulates that the prices included in the contract shall be deemed to include any increase or reduction in prices. Moreover, as per clause 13.4, the rates and prices are firm during the duration of the contract and shall not be subject to adjustment. He further submitted that the Petitioner had failed to give an early warning with regard to the deterioration of roads between 21.07.2004 and 25.09.2004 and that such notification was given only on 09.04.2005. The learned counsel pointed out that the Arbitral Tribunal had taken note of the fact that enhancement of cost is permissible only if the actual quantity exceeds the contractual or BOQ quantity by more than 25%, whereas this criterion was not satisfied in this case. He also pointed out that the Arbitral Tribunal had taken into consideration the fact that the Petitioner had requested for extension of time under clause 28.1 of the GCC without financial loss.

5. As regards the claim for compensation for alleged idle men and machinery, he pointed out that the Arbitral Tribunal had recorded factual findings that about 9175 m3 bituminous macadam (BM) was executed during the alleged idle period between 09.04.2005 and 09.01.2006 and that, therefore, the Petitioner is not entitled to idle charges especially because the Petitioner had agreed to the extension without any increase and costs. As regards the failure of the Petitioner to avail interest free mobilisation advance, he pointed out that the Arbitral Tribunal had recorded the finding that if such interest free mobilization advance had been availed of by the Petitioner, it would have effectively neutralised the impact of rise in prices.

6. With regard to the delay in issuance of the Project Authority Certificate, he submitted that the Petitioner had furnished a nil entry in the bid document, thereby indicating its intention not to avail excise duty exemption. As regards the claim for over heads and loss of profits, he pointed out that the Arbitral Tribunal had taken into account the fact that the pricing schedule includes overheads and profits. After pointing out the aforesaid factual findings of the Arbitral Tribunal, the learned counsel contended that the scope for interference with an Arbitral Award is extremely limited as per the law laid down by the Hon-ble Supreme Court in several judgments, including ASSOCIATE BUILDERS vs. DDA (2015) 3 SCC 49, which was followed by the subsequent judgment in THE STATE OF JHARKAND AND OTHERS vs. M/S.HSS INTEGRATED SDN AND ANOTHER, Order dated 18.10.2019, at Paragraphs 6.1 and 6.4, wherein it was held that when the findings are based on appreciation of evidence and by considering the relevant provisions and material on record, and such findings are neither perverse nor contrary to the evidence on record, no interference is warranted. In this regard, he also relied upon the recent judgment of the Delhi High Court in WISHWA MITTAR BAJAJI AND SONS vs. SHIPRA ESTATE LTD AND ANOTHER 2018 SCC Online Del 12918.

7. The records were examined and the oral submissions of both sides were considered carefully. The main issue to be decided is whether the Arbitral Award is liable to be interfered with and set aside either partly or wholly. In this case, as discussed above, except claim No.4, all the other claims of the Petitioner were rejected. The rejection of the escalation claim is based on an interpretation of clause 47.2 and 13.4 of the GCC, which stipulate that the prices included in the Agreement shall be deemed to include any rise or fall in prices, that the rates and prices quoted by the contractor shall be fixed for the duration of the Agreement and that it shall not be subject to adjustment on any account. It is also evident that the Arbitral Tribunal recorded a factual finding that the Petitioner issued the warning with regard to the deterioration in the road on 09.04.2005, which is more than six months after taking over the site. On that basis, the Arbitral Tribunal held that the Petitioner is not entitled to compensation for costs, which could have been avoided by giving an early warning. For this purpose, the Arbitral Tribunal relied upon clause 32.1 and 40.5 of the GCC. The Arbitral Tribunal also referred to the fact that the items in respect of which the Petitioner claimed escalation are BOQ items and that, as per clause 38.1 of the GCC, unless there is an increase of not less than 25%, the Petitioner is not entitled to make a claim. The Arbitral Tribunal also took note of the fact that each extension of time was granted on the basis that there would not be an increase in cost. Thus, the decision of the Arbitral Tribunal was based on a reasonable interpretation of the relevant contractual clauses and by appraising the evidence; therefore, no case is made out for interference.

8. As regards the idle claim, the Arbitral Tribunal examined the contractual requirements with regard to the execution of work during the alleged idle claim period. On that basis, the Arbitral Tribunal concluded that the claim could be sustained only if the Petitioner established on the basis of dependable data that no work was executed during the alleged idle period between 09.04.2005 and 09.01.2006. By examining the relevant evidence, the Arbitral Tribunal entered the finding that the Petitioner had carried out work during the relevant period and that the Petitioner did not contest the data, in that regard, as set out in page No.12 of the Award. On that basis, the Arbitral Tribunal rejected the claim. Such rejection is based on a reasonable appreciation of evidence and, therefore, does not warrant interference.

9. With regard to claim No.3, namely, the claim for loss of profits and overheads, the Arbitral Tribunal took into account the lapses on the part of the Petitioner with regard to commencement of work, issuance of early warning, want of materials and the fact that the Petitioner agreed to each extension on “a without financial loss” basis. After adverting to the lapses of th

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e Petitioner, the Arbitral Tribunal also considered the delay that is attributable to the employer/first Respondent herein. By apportioning responsibility as between the employer and the contractor for delay, the Arbitral Tribunal concluded that the Petitioner is entitled to compensation for a quantity of 6424 m3 of BM, which translates into a time over run of 17 weeks. For the 17 week period, the Arbitral Tribunal concluded that the Petitioner would be entitled to a sum of Rs.13,25,944/-, which was awarded with interest thereon at 8% per annum. Once again, these findings are based on an appreciation of evidence and no perversity is discernible on the face of the Award. 10. For the foregoing reasons, the Petitioner has failed to make out any case for interference with the Arbitral Award as per applicable principles, in this regard, as laid down in cases such as McDermott International Inc. v. Burn standard Co. Ltd and others, (2006) 11 SCC 181 and Associate Builders vs. DDA, (2015) 3 SCC 49. 11. In the result, the Petition to set aside the Award is dismissed. No costs.
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