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CASE NO.: Appeal (civil)  2880-2881 of 2005

PETITIONER: TAMIL NADU WATER SUPPLY & DRAINAGE BOARD

RESPONDENT: M/S. SATYANARAYANA BROTHERS PVT. LTD

DATE OF JUDGMENT: 07/02/2007

BENCH: Dr.AR.LAKSHMANAN & ALTAMAS KABIR

JUDGMENT: J U D G M E N T

Dr.AR.LAKSHMANAN, J.  

1.      Heard Mr.Mohan Parasaran, learned Additional Solicitor General  for the appellant and Mr.Dipanker P.Gupta and  Mr.T.L.V.Iyer, learned  senior counsel for the respondent.   2.      Aggrieved against the order passed by the Division Bench of the  High Court of Madras dt.24.03.2004 in OSA Nos.248 of 1989 and 59 of  1993, the above two appeals were filed.   3.      The case on hand has a chequered history .           The Government of Tamil Nadu formulated a scheme known as  "Veeranam Project" to provide drinking water to the city of Chennai and  thereby overcome the problem of acute water scarcity in the city of  Chennai.  In order to implement the  aforesaid scheme, the Government  invited tenders for manufacturing, supplying and delivering 1676 mm  pre-stressed concrete pipes and fittings including transporting to site,  laying, jointing and testing for raw water and clear water conveying,  from Veeranam Tank to Chennai City.  The Secretary to Government,  Public Works Department requested for clearance of foreign exchange  from the Government of India.  This was done with a view to avoid delay  in the project.  The respondent herein submitted their tender.  The  tender submitted by the respondent was the lowest tender and on  negotiation the same was accepted       by the Government and the  Government issued G.O.Ms.No.1607 Public (Twad) Department  accepting the tender of the respondent.  Subsequently, the Government  suggested that the respondent should approach ICICI Ltd. for foreign  exchange loan.  The Government accepted the request of the  respondent for a hike in the tender amount in view of the reduction on  foreign exchange component.  An agreement was entered into between  the respondent and the Chief Engineer, Public Works Department.  The  Government of India also approved the foreign collaboration  arrangements. The import license for the gasket manufacturing unit  was also cleared and a factory at Thirukalikundram was commenced  and the equipment for manufacturing pipes was also received.  The  factory at Panrutti also commenced the operation and the equipment  for manufacturing rubber gaskets was received in two shipments.  The  respondent sought extension of time till 31.12.1975 in order to complete  the work.  On considering the prevailing circumstances, the time for  completion of work was extended till 30.06.1975.  Again the       respondent wrote to the appellant informing it that the work will not be  completed even by 30.06.1976 and that it is impossible for them to  carry out the work as per the original agreement, unless the rates are  revised and on 30.06.1975, the work was abandoned by the  respondent.  Again a request was made for further extension of time   and the time was also extended for completion of the work till  31.12.1975.  The respondent stated that they were prepared to  continue the work only if the rates are revised.  The appellant further  extended the time for completion of the work till 31.03.1976.  

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4            Since disputes arose between the parties, the respondent  invoked the arbitration clause in the agreement and appointed  Sri.P.S.Subramaniam as their Arbitrator. The appellant appointed  Sri.C.K. Sreenivasan as their Arbitrator. Both the Arbitrators  appointed Hon’ble Mr.Justice K.S.Palaniswamy, a retired Judge of  the High Court as their umpire.  The arbitrators entered upon the  reference on 18.03.1978. The statement of claim of  Rs.13,92,00,478.17 was also filed by the respondent before the  Arbitrators. The appellant Board also made a claim of  Rs.50,29,63,320/- filed before the Arbitrators. 5               The learned Arbitrator Sri.P.S.Subramaniam gave an award in  favour of the contractor for a sum of Rs.6,98,54,780/-.  However, the  other Arbitrator, namely, Sri.C.K.Sreenivasan gave notice of his  disagreement to the award. Therefore, on 02.04.1979, the Umpire  entered upon the reference.  The Umpire passed his award, inter  alia, holding that the respondent-contractor is entitled to  Rs.40,02,591/- from the appellant and that after allowing deduction  for the same the respondent is liable to pay to the appellant a sum  of Rs.2,69,93,674/- with interest at 9% p.a. from the date of the  Award.  Out of the said Award only a sum of Rs.5,000/- was awarded  as damages for breach of contract.  6                       The Umpire filed the Award in the High Court of Madras   and the same was numbered as O.P.No.428 of 1979. The appellant  filed Application No.560 of 1980 in O.P.No.428 of 1979 praying for a  decree to be passed in terms of the Award. Aggrieved by the Award,  the respondent filed O.P.No.122 of 1980 before the High Court for  setting aside the aforesaid Award dated 10.09.1979.  The learned  Single Judge allowed O.P.No.122 of 1980 filed by the respondent  and set aside the award passed by the Umpire and consequently  application No.560 of 1980 in O.P.No.428 of 1979 and O.P.No.428 of  1979 were dismissed.  On the same day, C.S.No.176 of 1978 was  also dismissed. Aggrieved by the order allowing O.P.No.122 of  1980, the appellant preferred an appeal in O.S.A.No.248 of 1989 and  aggrieved by the order dismissing Application No.560 of 1980 in  O.P.No.428 of 1979, the appellant herein preferred an appeal in  O.S.A.No.59 of 1993.  Aggrieved by the order dismissing C.S.No.176  of 1978, the appellant herein preferred an appeal in O.S.A.No.211 of  1990.   7.        The Division Bench allowed O.S.A.Nos.248 of 1989 and 59 of  1993, preferred by the appellant, inter alia, holding that the  respondent had stopped work without any cause, that the respondent  had abandoned the work, that the award amount arrived at by the  Umpire is correct and, therefore, passed a decree in terms of the  Award dated 10.09.1979 passed by the Umpire.  It was further held  that the appellant is entitled to costs throughout and to interest at 9%  p.a. from the date of Award. 8.        Aggrieved by the aforesaid order, the respondent herein  preferred Special Leave Petition (Civil) Nos.2096-2097 of 2002.  The  Division Bench dismissed O.S.A.No.211 of 1990.  The Special Leave  Petition (Civil) Nos.2096-2097 of 2002 were filed which were re- numbered as Civil Appeal Nos.9136-9137 of 2003 and this Court  remitted the matter to the Division Bench of the High Court to be  considered in the light of the observation made in the paragraph 16 of the Judgment. [Sathyanarayana Brothers (P) Ltd. vs. T.N.Water  Supply & Drainage Baord, reported in (2004) 5 SCC 314].  On  remission, the Division Bench dismissed the appeals holding that  foreign exchange was to be obtained by the joint efforts of the  appellant and the respondent, that the Government was not extending  the time reasonably but in piecemeal, that the respondent had not  committed breach of contract.   9.       Aggrieved by the order dt.24.03.2004, the appellant preferred  the above appeals.   10.      It is also pertinent to notice that the SLP filed by the  respondent-contractor against the very same judgment was also

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dismissed by this Court at the admission stage. 11.       Before dealing with the matter on merits, it is beneficial to  refer to the order passed by this Court in  Sathyanarayana Brothers  (P) Ltd. vs. T.N.Water Supply & Drainage Baord, reported in (2004) 5  SCC 314.  This Court          after an elaborate consideration of the  entire materials placed before it held that the learned Single Judge  has given it as one of the reasons to hold that it vitiated the  award.   The  Division Bench  was of the view that the learned Single Judge was right in inferring that such an  infirmity  would vitiate the award.  However, this Court held that the order of the  Division Bench, reversing the decision of the Single Judge was not  sustainable  and the matter be required to be remitted to be  considered in the light of the "handing over note" of the Chief  Engineer in respect whereof an application was moved by the  appellant before the Arbitrator as well as before the Umpire which  remained unattended to by the forum and which later did not accede  to the request.  Considering the fact that it is an old matter and it  being a speaking award, the matter having also been considered by  the learned Single Judge, this Court felt that it would better serve the  ends of justice to ensure expeditious disposal of the matter and,  therefore, the Division Bench of the High Court was requested to  consider the matter afresh taking into account the "handing over  note" of the Chief Engineer of the project and other relevant  documents. In the result, this Court allowed the appeals filed by the  contractor-Sathyanarayana Brothers (P) Ltd.- and set aside the order  of the Division Bench of the High Court and remitted the matter to the  High Court for being decided afresh by the Division Bench in the light  of the observations made in the Judgment.   12             We have carefully perused the order passed by the Division  Bench in O.S.A.Nos.248 of 1989 and 59 of 1993 after remittance.  After hearing extensive arguments advanced by Mr.Mohan  Parasaran, learned ASG and countered by two learned senior  counsel appearing on behalf of the respondent, we are of the view  that on remand, the learned Judges of the Division Bench have  considered the entire matter afresh and came to the conclusion that  the reasons recorded in the said Judgment and that the  sustainability of the claims of the contractor need not be  considered in these appeals and equally the Board is also not  entitled to any decree on the basis of the Award for the reasons  given in the said Judgment.  It was also further observed that the  Bench was not dealing with the respective claims of the contractor  and the Board against each other on different headings and they  were inclined to set aside the award passed by the Umpire. 13           In the instant case, the appellant is still proceeding under a false  premises that the contractor is solely responsible for the delay in  the execution of the work and the breach of contract which have  been conclusively found against the appellant by the learned Single  Judge as well as the Division Bench of the High Court while setting  aside the award passed by the Umpire in the present case.  The  appellant has not raised any substantial question of law that needs  to be considered by this Court.  The questions raised are only  question of fact and in view of the concurrent findings by both the  learned Single Judge and the Division Bench, no interference by  this Court is called for particularly when a matter was fully heard in  the earlier round by the Supreme Court.  The matter was remitted to  the Division Bench of the High Court by this Court only after  considering all aspects and the questions involved in the case.   Now, it has been conclusively found that the respondent-contractor  was not responsible for any breach of contract.  According to the  contractor, all the advances were granted only for the mobilization  of the work with specific condition that pro-rata deductions will be  made in the bills for the work carried out by the contractor and now  the completion of the contract the advances will be adjusted from  the bills for the dues to be paid to the contractor. 14              As already noticed, the appellant has not raised any ground

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that warrants interference with the impugned judgment.  The High  Court, in our opinion, has decided the matter strictly in accordance  with the remand order made by this Court in the judgment in Civil  Appeal Nos.9136-9137 of 2003 reported in [(2004) 5 SCC 314].  The  High Court also has not entered into any finding regarding the  respective claims of the parties but set aside the award of the  Umpire only on the ground of legal mala fides. 15           In our opinion, the well-considered judgment rendered by the  High Court on remission from this Court does not call for any  interference.  We, therefore, affirm the order passed by the Division  Bench and dismiss the Civil Appeal Nos.2880-2881 of 2005 filed by  the appellant.  16              We also make it clear that if any claim survives with reference  to this particular contract, the parties will be free to agitate the same  before the sole Arbitrator in terms of the Arbitration Clause.  For the  said purpose, we, by consent of both parties, appoint Hon’ble  Mr.Justice S.Mohan, a retired Judge of this Court as the sole  arbitrator.  The parties are at liberty to file any claim if it survives  and also documents, records etc.  The sole arbitrator is requested  to dispose of the arbitration proceedings within six months from the  date of entering upon the reference.   17                      The Arbitrator is at liberty to fix his remuneration and  other expenses to be equally shared by both the appellant and the  respondent.   18                      The Arbitrator should file his Award in this Court. 19               The Civil Appeals stand dismissed.  No costs.