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M/s. The Waterbase Ltd., Rep. by its Company Secretary & Authorized Person R. Achuthan v/s M/s. KAP (India) Projects & Construction Pvt. Ltd., Rep. by its Managing Director K.V. Mohamed Zakir (Formerly Known as KAP (India) Constructions)

    O.P. No. 499 of 2020

    Decided On, 18 November 2020

    At, High Court of Judicature at Madras

    By, THE HONOURABLE MR. JUSTICE M. SUNDAR

    For the Petitioner: S.A. Rajan, Advocate. For the Respondents: ------------



Judgment Text

(Prayer: Original Petition filed under Section 33 of the Arbitration Act, 1940, to set aside the arbitration award dated 16.05.2018 passed by the Hon'ble Sole Arbitrator in the matter of Arbitration between KAP (India) Projects & Construction Pvt. Ltd., and the Waterbase Ltd., and in the matter of agreement dated 19.02.1991 and 18.06.1991.)1. Captioned 'Original Petition' ('OP' for the sake of brevity) is purportedly an application under Section 33 of 'The Arbitration Act, 1940' ('1940 Act' for the sake of brevity), assailing an 'arbitral award dated 16.05.2018' ('impugned award' for the sake of convenience and brevity) made by an 'Arbitral Tribunal' ('AT' for the sake of brevity) constituted by a sole arbitrator, who is a former Hon'ble Judge of this Court.2. Mr.S.A.Rajan, learned counsel for petitioner was before me in this web hearing on a video conferencing platform.3. Learned counsel, submitted that the impugned award is being sought to be dislodged and is being assailed on the following grounds:(a) Under Section 14(2) of the 1940 Act, the impugned award, ought to have been filed in Court and the Court should have thereupon given notice to the parties about the filing of the impugned award, but this has been breached.(b) Vide Serial No.3 of Schedule 1 of 1940 Act, AT ought to have made the impugned award within four months from the date of entering appearance, but this has not happened and there has been no enlargement of time under Section 28 of 1940 Act.(c) Notice of hearing was issued by AT, this is notice dated 11.02.2015 fixing a preliminary hearing on 19.02.2015, but the impugned award ultimately came to be made only on 16.05.2018.4. Learned counsel in his usual fairness submitted that the above are the limited points on which the impugned award is being assailed.5. Before dealing with the three points raised by learned counsel for petitioner, it may be necessary to set out short facts shorn of elaboration and the trajectory the matter has taken in reaching this Court.6. The genesis of matter on hand is an agreement dated 19.02.1991 between the petitioner and respondent; petitioner in the captioned OP shall be referred to as 'Waterbase' and the respondent in captioned OP shall be referred to as 'KAP' for the sake of convenience and clarity; KAP was claimant before AT and Waterbase was sole respondent before AT; the '19.02.1991 agreement' shall be referred to as 'said contract' for the sake of brevity; it is seen from the case file placed before this Court that the said contract is for civil construction particularly a bridge; complaining that there was a delay, the arbitration clause in the said contract was triggered by KAP and claims were made; Waterbase, as respondent, made counter claims; originally, an ex-parte award came to be passed, that was set aside by this Court, the matter was carried by way of an intra court appeal vide OSA being OSA No.344 of 2009; that by order dated 22.12.2014 in OSA, Hon'ble Division Bench, by consent of the parties appointed a former Hon'ble Judge of this Court, who constituted the AT; that the AT entered upon reference; before AT, there was both oral evidence and documentary evidence. One witness each was examined on the side of KAP and Waterbase as claimant and respondent respectively; on the side of KAP as claimant, as many as 447 documents were marked i.e., Ex.C1 to Ex.C447 and on the side of Waterbase as respondent as many as 218 documents i.e., Ex.R1 to Ex.R218 were marked; after detailed analysis of the oral and documentary evidence, impugned award was made by AT holding inter-alia that KAP is entitled to Rs.69.76 Lakhs with interest; assailing this impugned award, captioned OP has been filed purportedly under Section 33 of 1940 Act and Waterbase as protagonist of captioned OP raised three points for assailing the impugned award, which have been captured in the submissions made by learned counsel supra.7. For the sake of convenience and clarity, this Court deems it appropriate to extract the claim of KAP, counter claim of Waterbase, issues framed by AT and operative portion of the impugned award, which are as follows:Claim made by KAP under 7 heads:'Claim No.1 : Sum of Rs.60,58,253/- by way of payment for work done relating to civil works, extra items of work etc.Claim No.2 : Interest on the said amount at 24% p.a.Claim No.3 : A sum of Rs.5,95,280/- for work done relating to civil works for bridges and other connected items.Claim No.4 : Interest on the said amount at 24% p.aClaim No.5 : a sum of Rs.5,09,862/- towards on account bills.Claim No.6 : Interest on the said amount at 24% p.a.Claim No.7 : Claimant was entitled to receive compensation for the losses caused to the Claimant on account of unlawful withholding of the amounts due to the Claimant with interest at 24% p.a on all the amounts from the date of the Award till realization.'Counter claim made by Waterbase:'1. The Project should have been completed on agreed dates, whereas the projects were abandoned by the Claimant and therefore the Respondent had to engage other contractors to complete the project.2. A sum of Rs.59,03,098/- was the loss incurred by the Respondents as the Respondents could not put the building for use for their required purpose.3. In addition the Respondents had to incur additional expense of Rs.39,31,849/-.4. Interest at the rate of 24% p.a on the amount of dues of Rs.98,34,947/-.'17 Issues framed by AT :'27. The following Issues were framed for consideration:1. Whether the proceedings are governed by Arbitration Act 1940 or under Arbitration and Conciliation Act 1996?2. Whether the claim is barred by limitation?3. Was it the Claimant or the Respondent/or its consultants who committed breach of contract and was responsible for the delayed completion of the work under the contracts?4. Is the Claimant entitled to an amount of totaling Rs.60,28,253/- or any other amount from the Respondent by way of payment due for work done in the Final bill under the contract relating to Civil Works for Buildings and Structures including extra items of work, plumbing any sanitary works, refund of rebate etc. as claimed in claim No.1 of the Detailed Statement of Facts and Claims of the Claimant?5. Is the Claimant entitled to receive from the Respondent interest at 24% p.a or at any other rate on the amount that may be found due against claim No.1 from 5.2.1994, the date of submission of Running Account Bill No.16 & final till the date of award, as claimed in Claim No.2 of the Detailed Statement of Facts and Claims of the Claimant?6. Is the Claimant entitled to an amount totaling Rs.5,95,218/- or any other amount from the Respondent by way of payment due for work done in the Final Bill under the contract relating to Civil works for bridges including refund of Earnest Money Deposit, initial Security Deposit and retention amounts as claimed in Claim No.3 of the Detailed Statement of Facts and Claims of the Claimant?7. Is the Claimant entitled to receive from the Respondent interest at 24% p.a or at any other rate on the amount that may be found due against Claim No.3 from 30.3.1993, the date of submission of the Final bill for Bridge Works, till the date of award as claimed in Claim No.4 of the Detailed Statement of Facts and Claims of the Claimant?8. Is the Claimant entitled to an amount totaling to Rs.5,09,862/- or any other amount from the Respondent by way of refund of tax deducted at source deducted from the Claimant's running account bills which could not be availed of due to the defecting TDS certificate No.391535 dt. 14.5.1993 issued by the Respondent to the Claimant as claimed in Claim No.5 of the Detailed Statement of Facts and Claims of the Claimant?9. Is the Claimant entitled to receive from the Respondent interest at 24% p.a. or at any other rate on the amount that may be found due and payable against claim No.5 from 14.5.1993 the date of the defective TDS certificate, till the date of Award as claimed in Claim No.6 of the Detailed Statement of Facts and Claims of the Claimant?10. Is the Claimant entitled to receive from the Respondent interest at 24% p.a. or at any rate on the amounts that may be found due and payable against Claim Nos. 1 to 7 from the date of award till actual payment or realization as claimed in Claim No.7 of the Detailed Statement of Facts and Claims of the Claimant?11. Have the counter claims of the Respondent crystallized into disputes for the same to form the subject matter of these arbitral proceedings?12. Are not the counter claims of the Respondent barred by limitation?13. Did the Claimant abandon the project site by withdrawing their workers and removing the machineries?14. Did the Claimant fail to submit the Final Bill for approval by the consultant of the Respondent?15. Are the parties entitled to interest in respect of their claims /counter claims?16. Whether the parties are entitled to cost of the proceedings?17. To what relief the parties are entitled?'Operative Portion of the impugned award:'1. The Claimant is entitled to a sum of Rs.69,76,000/- (Rupees sixty nine lakhs seventy six thousand only)2. The Claimant is entitled to interest at the rate of 12% p.a on Rs.68,76,000/- (Rupees Sixty Eight lakhs Seventy Six Thousands only) from 8.1.1996 till this date.3. The Claimant is entitled to interest at the rate of 12% p.a on Rs.69,76,000/- (Rupees Sixty nine lakhs seventy six thousands only) from this date to the date of decree to be passed by the court in terms of the provisions of the Arbitration Act 1940 or till the date of the realization whichever is earlier.4. The Respondent shall pay to the Claimant a sum of Rs.9,90,000/- (Rupees nine lakhs ninety thousand only) towards costs.'8. This Court now proceeds to discuss the submissions made by learned counsel in his campaign against the impugned award.9. The first point turns on violation of Section 14(2) of 1940 Act. From the typed set placed before this Court, it comes to light that AT has sent a communication dated 17.05.2018 to the Registrar General of this Court and a scanned reproduction of the same is as follows:10. To be noted, above scanned reproduction is the letter that has been placed in the typed set by the learned counsel for petitioner. Therefore, this Court is unable to countenance the submission that there is breach of Section 14(2) of 1940 Act. Be that as it may, what is of relevance is breach of Section 14(2), if at all it be so i.e., on a demurrer cannot be a ground for dislodging impugned award. This takes us to the next point that was urged by learned counsel. To be noted, the second and third points urged by learned counsel which constitute sheet anchor submissions in the captioned OP can be dealt with together as both turn on delay on the part of AT in making the impugned award.11. Serial No.3 in Schedule 1 of the 1940 Act reads as follows:'3. The arbitrators shall make their award within four months after entering on the reference or after having been called upon to act by notice in writing from any party to the arbitration agreement or within such extended time as the Court may allow.'12. The first schedule is relatable to Section 3 of 1940 Act and Section 3 of 1940 Act reads as follows:'3. Provisions implied in arbitration agreement:- An arbitration agreement, unless a different intention is expressed therein, shall be deemed to include the provisions set out in the First Schedule in so far as they are applicable to the reference.'13. This takes us to Section 28 of 1940 Act, as it is the pointed submission of learned counsel for petitioner that enlargement of time under Section 28 has not been sought for by AT. A careful perusal of Section 28 reveals that there is no provision which would go to make the impugned award liable to be set aside or there is nothing in Section 28 to suggest that the impugned award gets vitiated when enlargement of time beyond four months from the date of entering upon reference has not been sought for. It is also to be noted that unlike Section 29A of the present obtaining 'The Arbitration and Conciliation Act, 1996' (Act No.26 of 1996), which shall hereinafter be referred to as '1996 A and C Act' for the sake of convenience, clarity and contradistinction, there is nothing in the 1940 Act to suggest that the mandate of the AT would snap if the award is not made within four months.14. This Court also carefully considered the chronicle. This being sole and pivotal submission, this Court deems it appropriate to examine the case file and also the chronicle. In the captioned OP, there is a reference to an agreement dated 18.06.1991 besides the said contract which is dated 19.02.1991, but that is neither placed before this Court nor any issue turning the same has been urged. From the impugned award, it is clear that arbitration was asked for on 08.01.1996 and the 1996 A and C Act came into force on and from 26.01.1996. It is in this context, AT relying on Shetty's Constructions Co. Pvt. Ltd., Vs. Konkan Railway Construction and Another reported in [1998] 5 SCC 599, resolved the issue between the parties as to whether 1940 Act or 1996 A and C Act would govern the proceedings. In any event, before this Court learned counsel submitted and argued on the basis that the OP itself is purportedly under Section 33 of 1940 Act. Continuing with the chronicle, after the 1996 A and C Act kicked in, aforementioned order was made by Hon'ble Division Bench on 22.12.2014, wherein sole Arbitrator, who is a former Hon'ble Judge of this Court was appointed by consent of both sides. Thereafter, amendments to 1996 A and C Act kicked in on 23.10.2015, AT reserved orders on 07.04.2017, Kochi Cricket Association case was rendered by Hon'ble Supreme Court on 15.03.2018. Thereafter, the impugned award came to be made on 16.05.2018. To be noted in Kochi Cricket Association case, being Board of Control for Cricket in India Vs. Kochi Cricket Private Limited reported in (2018) 6 SCC 287, interpreting Section 26 of the amending act, which amended 1996 A and C Act namely, Act No.3 of 2016, Hon'ble Supreme Court held that with regard to arbitral proceedings, which are under way, the earlier Act i.e., pre-amendment regime would continue to apply with the exception of Section 36 of A and C Act. This Court has noticed that Kochi Cricket Association case was holding the field when the impugned award came to be made by AT on 16.05.2018. Besides Kochi Cricket Association case, what was holding the field is Shetty's Constructions Co. Pvt. Ltd., Vs. Konkan Railway Construction and Another reported in 1998 5 SCC 599, which

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has been alluded to supra. In Shetty's Constructions case, the point was, if a request was made prior to the date of 1996 A and C Act coming into force then the proceedings would be governed by 1940 Act. As already delineated supra, Hon'ble Arbitrator has noticed that the appointment of the Arbitrator by request has been made on 08.01.1996 prior to the coming into force of 1996 A and C Act on 26.01.1996. This puts an end to the chronicle. That the notice being issued on 11.02.2015 and the impugned award being ultimately made on 16.05.2018 is of no avail to petitioner in the light of the dispositive reasoning given by this Court and therefore, that argument also does not come to the aid of the petitioner in captioned OP.15. Before concluding, this Court also noticed that captioned OP was presented in this Court on 18.06.2018. Therefore, going by Ssangyong principle captioned OP is under 1996 A and C Act. However, arbitral proceedings are governed by 1940 Act and ground to dislodge impugned award has not been made out under Section 34 of 1996 A and C Act either as is evident from discussion and dispositive reasoning supra. Thereafter, there has been some maintainability issue touching upon the Court fee payable, which has been resolved by Hon'ble predecessor Judge on 19.11.2019 and captioned OP has been listed for admission today.16. In the light of the narrative thus far, i.e., discussion and dispositive reasoning, this Court finds that no ground has been made out for issuing notice and the points raised in the captioned OP fail and the captioned OP is dismissed. There shall be no order as to costs.
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