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PETITIONER: ARMY WELFARE HOUSING ORGANISATION

       Vs.

RESPONDENT: M/S.  GAUTAM CONSTRUCTION & FISHERIES LTD.

DATE OF JUDGMENT:       17/09/1998

BENCH: A.S.  ANAND, D.P.  WADHWA

ACT:

HEADNOTE:

JUDGMENT: J U D G M E N T D.P.Wadhwa.  J. IAs 17 to 20 of 1998 are objections filed by M/s Gautam Construction and Fisheries Ltd.,  (GC&FL) under  Section  15,17 and 33 of the Arbitration Act, 1940 (for short,  the  ’Act’)  to  the  award  dated September 9, 1997 of the sole Arbitrator, Justice V. Khalid, a retired Judge of this Court.  IAs 21 to 24 are  the  objections  similarly  filed  by  the Army Welfare Housing Organisation (AWHO) against the same award. GC&FL in their  objections  seek  directions for  modification  of  the award to correct an error with regard to  wrong  deduction  of  Rs.30,000,00/- twice  by  the Arbitrator from their claims 1 and 13 in their statement of claim.  They have also claimed interest @ 18% per annum on the amount of the  award in their   favour  till  payment.    AWHO  in  their objections  also  seek  modification  of  the  award stating  that  their claim for anticipated liability towards  completion  of  the  contract  was  wrongly rejected  by the Arbitrator when some of the amounts claimed were towards "firm liability".  Both parties disputed the objections of each other to  the  award as aforesaid. Little   background  will  be  necessary  to understand the objections  raised  by  the  parties. There  was  a contract entered into between them for construction of certain number of dwelling units  by GC&FL  for  AWHO  on  the  land  belonging to GC&FL. Contract contained an arbitration clause.   Disputes arose  between the parties resulting in cancellation of contract by the WHO and issuance  of  publication of  notice  for re-tendering of the contract for the balance of the work.  Instead of the contract, GC&FL filed an application under Section 20 of the Act and also filed an application under Section  41  of  the Act seeking  interim  directions.  These proceedings were filed in the Madras High Court.  These  learned single  Judge  by  order  dated  September  18, 1995

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appointed a retired Judge of the Madras  High  Court as  sole  arbitrator and at the same time restrained WHO from re-tendering the work pending  disposal  of arbitration proceedings.      Arbitration  agreement under the contract prescribed a different  mode  for appointment  of  arbitrator but that is nor relevant now and unnecessary for us to examine  that  aspect. Aggrieved  by  the  judgement of the High Court, WHO sought leave to  appeal  to  this  court  which  was granted  by  order  dated  December  4, 1995 and the appeal itself was also heard and disposed of on  the same day.    With  the  consent of the parties, this Court, as the Arbitrator and also authorised him  to take any help from any technically qualified person. Liberty  was  given  to  the parties to approach the Arbitrator for any interim relief including vacation of the injection order granted  by  the  High  Court regarding re-tendering  of  the  work.   It was also directed that the Arbitrator would file the award in this court only and other  courts  were  interdicted from interfering in the arbitration proceedings. After  entering  in  to  the  reference, the Arbitrator gave an interim  award  on  May  8,  1996 whereby  he  vacated the order of injunction granted by the High Court in its judgement  dated  September 18, 1995.    This  interim  award when filed in this court was made rule of the Court as no  party  filed any objection   to   the   same.    Thereafter,  the Arbitrator gave his final award on September 9, 1997 and on notice  of  filing  the  same  given  to  the parties,  they  filed  their  objections  now  under consideration. The award is quite elaborate.  It take  into account numerous details.  Arbitrator framed as many as 10 issues and then went on to examine each of the claims  put forward by the parties with reference to the record before him.  In the objections  filed  by AWHO it   seeks   remission   of  the  award.    The objections are though under Section 15, 17 and 33 of the Act.    In  the  course  of  arguments,  it  was submitted by  Mr.    Tiwari, learned counsel for the AWHO  that  the  award  be  remitted  back  to   the Arbitrator  which  would  be under Section 16 of the Act, though in the prayer modification of the  award under Section  15  is  sought.   AWHO submitted that though  if  claimed   certain   amounts   as   ’firm liability’  after  the  contract  was  cancelled and there were certain ’anticipated  expenses’  required to complete the contract.  It was submitted that the Arbitrator treated even the firm liability as in the nature  of  elements  of  anticipated  expenses  and disallowed, the Arbitrator committed a  mathematical error.   It  is  not  the  case of the AWHO that the Arbitrator did not examine  or  did  not  take  into account the  claim  put  forward by the AWHO.  It is not possible for us to  re-appreciate  the  evidence produced  before  the  Arbitrator and then ourselves coming to the conclusion whether  a  certain  amount claimed  was  towards  firm  liability’  or  in  the ’nature of   anticipated   expenses.      Once   the Arbitrator  had  held that the claim would be in the ’nature of anticipated expenses.   It  is  difficult for us  to  hold  the  same otherwise.  It cannot be said that the award is not good on the face of it on that account.  The objections of AWHO have no  force

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and IAs 21 to 24 are rejected. Under  the terms of the contract GC&FL would be entitled to a total amount of Rs.54,95,271.72  as retention money from the total contract amount.  The Arbitrator  found  that  under  the  Contract, GC&FL executed work of the value of  Rs.4,52,10,002/-  and as  such  GC&FL would be entitled to retention money to the extent of 63.47%.  Thus  from  the  retention money   of   Rs.54,95,271/-  which  GC&FL  would  be entitled to on compaction of the contract, a sum  of Rs.34,87,848.90  is  now due to them being 63.47% of Rs.  54,95,271.72.  On  completion  of  50%  if  the work, GC&FL had already received Rs.  30,00,000/- as retention money in three installments.  Thus, GCC&FL would   be   entitled   to  the  balance  amount  of Rs.4,87,848.90 towards the  retention  money.    The Arbitrator found that under claims 1 and 13 of GC&FL an  amount  of  Rs.7,08,893.60 would be due to GC&FL from AWHO.  This is how the  Arbitrator  arrived  on this figure :         "The ultimate position is as follows:         RAR BILL 23 DEMAND:Rs.         1.Value of work exeuted         450,44,002.35         2.Value of extra work             1,66,000.00         3.Total                        4,52,10,002.35         4.Val.of materials lying site    29,57,657.00         5.Grand total                  4,81,67,659.70         6.Percentage of work done              63.47%         DEDUCTION         a) Retention Money        2,00,000         b) Cost of Schedule "B"            materials supplied by            AWHO            1,69,37,615         c) Income Tax        11,52,990         d) Interest on Rs.18 lakhs            advance’           6,26,117         e) Payment for RAR bills            upto Bill No.22    2,47,55,521         f) Advance of retertion            money after 50%            work done            30,00,000         g) Advance made at site 12,74,372     4,79,46,615.00         Balance Receivable                    2,21,044.70         h) Proportionate retention money            payable at 63.47%ofRs.54,95,271.72            less Rs.30,00,000/-already paid       4,87,848.90                        Total Balance Receivable  7,08,893.60         Thus, a sum of  Rs.7,08,893.50  is  allowed         under Claim No.1 and 13." The  objection  of   GC&FL   is   that   amount   of Rs.30,00,000/-  has  been  deducted  twice by the Arbitrator which was a mistake apparent on the face of it and  as  such this  Court  should  modify  the  award  and grant a further amount of Rs.30,00,000/- to  that  already  awarded  by  the Arbitrator under  claims 1 and 13.  We do not think that Mr. Thakur is right in his  approach.    GC&FL  is  entitled  to Rs.4,87,848.90  towards  balance  of  retention amount as an amount of Rs.30,00,000/-  GC&FL,  it  should  have  deducted Rs.30,00,000/- which  it  had already received.  As a matter of fact, the Arbitrator observed as under :-         "Claim No.   1 suffers from a serious flaw         and the same can be rejected outright.  On         a perusal of the  claim  and  the  various         items shown  therein.  it is seen that the         petitioners have either  inadvertently  or

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       deliberately omitted  to  deduct  Rs.   30         lakhs towards retention money obtained  by         them  on  three  occasions  for 50% of the         work done.    If  this  Rs.30   lakhs   is         deducted  from  the  claim  minus  figure.         This error, however, is seen corrected  in         the petitioners’ reply to the Respondents’         claim No.1" In  fact,  in the calculations aforesaid, under Item (h), the Arbitrator could have  said  :    "Balance  of  the retention  money  payable  - Rs.4,87,848.90" Retention money due to GC&FL is from the whole of the value of the contract. Total of retention money as arrived at by the Arbitrators is Rs.54,95,271.72  which  is  payable  on  completion  of  the contract by  the AWHO.  Since GC&FL, executed only 63.47% of the  value  of  the  contract  they   became   entitled   to Rs.34,87,848.90 being  63.47%  of  Rs.54,95,271.72.   Having already received Rs.30,00,000/-  GC&FL  became  entitled  to balance   amount  of  Rs.4,87,848.90  which  the  Arbitrator allowed them under the award. As far as the claim of interest  is  concerned,  the award  has already allowed the same and no objection thereto has been filed by AWHO or even by GC&FL on the claim due  to AWHO under  the  award.    IAs  17  to  20  of the GC&FL are rejected. IAs 13 to 16 filed by GC&FL seeking  directions  for modification  of  the  Award  and for grant of interest also stand dismissed. Accordingly the award dated  September  9,  1997  is made  rule  of the court and decree in terms thereof will be passed.  Since  both  the  parties  have  failed  in   their objections to the award, they shall bear their own costs.