JUDGEMENT
S.K. Mishra, J. -
(1.)This is an appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the "Act" for brevity) preferred by the Union of India (hereinafter referred to as to the "UOI" for brevity) assailing the judgment passed by learned District Judge, Khurda at Bhubaneswar, in ARBP No.36/2009, dismissing the petition filed by the UOI under Section 34 of the Act as per the judgment dated 22.12.2011.
(2.)The facts leading to filing of this appeal may be succinctly stated as follows:-
Pursuant to the invitation of tender by the UOI and submission of the offer by claimant-respondent, the work of construction of Regional Training Centre, C.I.S.F., Mundali, Cuttack (Odisha) S.H.: site Development and Bulk Services (Civil and Electrical) SW: Construction of one lakh litre capacity 20 Mt staging height R.C.C. overhead tank and one lakh litre capacity R.C.C. underground sump was awarded on 5.1.2001 for Rs.22,65,646 with a stipulated date of start of the works on 15.1.2001 and the stipulated date of completion as 14.10.2001, the time of completion being nine months. Within the scope of work the construction of one overhead tank and one underground sump, both of one lakh litre capacity each, were included.
It is further borne out from the record that the work could be completed within the stipulated period and after expiry of the stipulated date of completion on 14.10.2001, the contract was allowed to be continued without fixing any further date of completion. The contract thereafter was rescinded on 8.4.2004 under Clause-3 of the contract with the aim of completing the balance work by other agencies at the risk and cost of the claimant(respondent in this case). At time of rescission the underground sump was almost complete and the overhead tank was constructed upto first and second bracings. The entire work was got completed through other agencies on or about 2.11.2005, i.e. nearly nineteen months after the rescission.
Though the work of the claimant-respondent was rescinded on 8.4.2004 and the balance work was also got completed on 3.11.2005, yet neither the accounts of the claimant-respondent were finalized nor the final bill of the work done by the claimant-respondent was passed. The claimant respondent invoked the Arbitration clause on 8.6.2004 and the disputes were referred to the Arbitrator on 16.7.2004 for arbitration by the sole Arbitrator.
Additionally, it is noted that as per the terms and conditions of the contract, the appellant (UOI) was to issue 30.98 MT of the steel at the recovery rate of Rs.18,110 per MT from the their Bhubaneswar Stores. The appellant, accordingly, issued about 18,110 per MT from their Bhubaneswar Stores, but they did have the balance quantity of the various required diameters as per specifications. The UOI, i.e the appellant, at the same time were having a huge quantity of about 50 MT of surplus steel lying at Koraput for a very long time, which were to be brought to Bhubaneswar. Accordingly, they directed the claimant-respondent to transfer the same (entire quantity) to the site of work, for which a separate work order for the transportation was issued to the claimant-respondent(contractor). Accordingly, the surplus steel lying at Koraput was transported to the site of the work and the payment of the transportation was made to the claimant-respondent separately and the same was issued to the claimant-respondent separately.
It is further noted that though the total requirement of steel for the entire work was 30.98 MT, out of which 18 MT was already issued from Bhubaneswar Stores and the only balance quantity of about 13 MT was required to be issued, yet the appellant-UOI in order to avoid the maintaining of their own stores, issued and order to transport the entire surplus quantity lying at Koraput to the site. As such, against the total requirement of 30.98 MT of steel, the respondent issued about 68.8 MT of the steel to the claimant-respondent. As a result thereof, at the time of rescission, huge quantity of steel rods remained unused lying at the site of the work along with the other materials and T and P of the claimant-respondent(contractor).
It is further borne out from the record that though such huge quantity was lying at the site of the work, yet the appellant did enter the same in to their account and on the contrary proposed penal recovery for 50.96 MT amounting to Rs.18,45,771/- in the final bill prepared and submitted to the Arbitrator on 26.8.2006. The appellant's argument against the steel lying at the site were that the same was issued to the claimant-respondent (contractor) and that they failed to return the balance steel and hence penal recovery under Clause 42 was justified, even though the same was lying at the site and after the rescission was obviously in the custody of the appellant. The claimant-respondent's objections were that such huge quantity was required and the same was thrust on them by the appellant and after the rescission of the contract, all the materials lying at site whether belonging to the Contractor or the department were in the custody of the department. As such the question of penal recovery for the very materials lying at the site under the custody of the appellant does arise.
Subsequently, under the directions of the Arbitrator, the mater was reconciled and it was decided that the appellant would remove the steel lying at the site of the work, account and adjust the same in the bill. It was also agreed that the claimant-respondent would remove their materials and the T & P like mixer and vibrators etc. lying at the site. Accordingly, this process was completed during June, 2007. This fact has been recorded in the minutes of the 7th hearing held on 24.7.2007, the steel lying at site and removed by the appellant was found to be 9.86 MT and Mild Steel and 24.52 MT of Tor Steel, totalling 34.38 MT on the basis of the scale weight i.e. weighted in Trucks. However, as per report date 8.10.2007 enclosed with the final bill submitted on 10.10.2007, the quantity is 33.574 MT. Accordingly, the appellant in the final bill has reduced the penal recovery of steel from 50.96 MT to 16.58 MT.
It is clarified by the appellant that though surplus steel was available at the site after the rescission, yet to the new agency, they had issued the steel from the new consignment arranged independently, because of pendency of the litigation. Though the stipulated date for completion of the contract was 14.10.2001, the appellant has rescinded the contract on 8.4.2004, i.e. after the stipulated date. It is further borne out from the record that both parties were blaming each other for the delay.
(3.)Admittedly, in course of arbitral proceeding, no oral evidences were led by examining witnesses. Only documents were placed and submissions were made. The sole Arbitrator having considered each claim item decided the mater and awarded that the appellant shall pay a sum of Rs.22,33,380/- plus interest amount of Rs.10,94,356/- totalling Rs.33,27,736/- along with a cost of Rs.1,50,000/- within a period of three months. The appellant will also pay a further interest on the total amount of Rs.34,77,736/- from 8.2.2009 @ 12% per annum till the date of actual payment.