Calcutta High CourtBatliboi & Company Ltd vs The Board Of Trustees For The Port Of ... on 23 September, 2008Equivalent citations: AIR 2009 (NOC) 635 (CAL.), 2009 (3) AKAR (NOC) 400 (CAL.)Author:Ashim Kumar BanerjeeBench:Ashim Kumar BanerjeeForm No. J.(2)


                    IN THE HIGH COURT AT CALCUTTA
                      Ordinary Original Civil Jurisdiction
                                Original Side


     Present :
The Hon'ble Mr. Justice Ashim Kumar Banerjee
                  And
The Hon'ble Mr. Justice Tapas Kumar Giri


          A.P.O No. 202 of 2008
          A.P. No. 169 of 1998
          Batliboi & Company Ltd.
                       -Vs-
          The Board of Trustees for the Port of Calcutta



 For the Appellant :         Mr. Ahin Chowdhury
                             Mr. Debjyoti Basu


For the Respondent :         Mr. Suhrid Roy ChowdhuryMr. Pradip Kumar Ghosh
                             Ms. Bithika Mandal



Heard on : September 17, 2008



Judgment on : September 23, 2008.ASHIM KUMAR BANERJEE.J:Disputes arose between the parties on the working of a contract. The parties referred
their disputes to the sole arbitration of the nominee of the respondent as per the
arbitration clause contained in the agreement. Altogether hundred and two sittings
were held. The Arbitrator thereafter published his award partly allowing the claim of
the appellants. Being aggrieved by the said award the respondents filed an
application for setting aside of the award before the learned single Judge. His
Lordship rejected the contentions of the respondents to a substantial extent and
refused to set aside the award save and except claim no. 3. The respondent accepted
the judgment and order of the learned single Judge and paid the amounts covered
under the award so upheld by the learned single Judge. The judgment and order of
His Lordship is reported in 2008,Volume - III, Calcutta High Court Notes, Page -799.The appellant/claimant filed this appeal against the part of the judgment and
order of His Lordship disallowing the claim no. 3. Hence, we need not dilate on all
the issues and we restrict ourselves to claim no. 3.Claim no. 3 is a claim on account of extra cost over run on account of delay and/or
suspension of work due to reasons attributable to the respondent for an amount of Rs.
13.06 lacs. The Arbitrator considered the said claim as would appear from the page
185 of the Paper Book. He ultimately allowed Rs. 6.5 lacs payable by the respondent
to the appellant/claimant.The relevant extract of His Lordships' judgment and order is quoted below :-"It is the challenge on account of serious irregularity as against the award on the
third head of claim, that remains to be assessed. The petitioner has referred to the
judgments reported at (1999) 9 SCC 610 and (2001) 4 SCC 241 for the porposition
that if time is extended by an employer on condition, whether in the contract or in the
letter granting extension, that no extra cost can be claimed for the period of
extension, the arbitrator cannot override such condition to provide for damages or
additional costs during the extended period. Clause 65 of the general conditions in
its last limb, provides that no extra payment shall be made to the contractor on any
account for extension of time for completion of work.The respondent resists the petitioner's challenge to the third head of claim by
referring to the arbitrator's finding, under the first head, that it was the employer
who was to blame for the delay in the execution of the contract. The respondent says
that once the employer was found responsible for the delay, in accordance with the
principles embodied inSection 70of the Contract Act, the contractor was entitled to
compensation and it is such compensation which has been recognised by the
arbitrator and awarded in favour of the contractor under the third head of claim.
Clause 65 of the general conditions according to the respondent, would not cover
situations where delay was attributable solely to the employer. The instances
mentioned in clause 65 are pointed out and it is submitted that the employer could
not take advantage of its own wrong and take refuge under clause 65 to deny a claim
on account of damages being claimed by the contractor for delay attributable to the
employer. Clause 65 of the general conditions provides as follows:'65. Should the amount of extra or additional work of any kind or other special
circumstances including exceptional weather conditions, civil commotion, strikes,
or lock-outs which may occur be such as to delay the completion of work, the
 Contractor shall apply in writing to the Engineer for an extension of time for the
completion of work within the days of such occurrence. The Engineer shall
determine the period of such extension and grant extension of the period of
contract and waive the application of the compensation under Clause 48 hereof if
he thinks the request reasonable. No extra payment shall be made to the
Contractor on any account for such extension of period.'


It is an admitted position that an extension was sought by the contractor following
which the time for completion of the contract stood extended. It was open to the
contractor to not seek extension upon holding the employer responsible for the delay
and seek damages. The instances cited in clause 65 of the general conditions are
illustrative and not exhaustive. Once the contractor sought and obtained an
extension irrespective of the fact that such extension was on account of delay
attributable solely to the employer, the contractor could not seek extra payment for
the extended period in view of the clear bar under clause 65 unless the employer
relaxed the condition on being persuaded by the contractor that the delay was solely
on account of the employer.The respondent urges that there are intelligible reason in support of the award made
by the arbitrator under the third head of claim and the petitioner's challenge is
without basis. On the strength of the decision reported in (1989) 1 SCC 532, the
respondent submits that even if it is obligatory for the arbitrator to state reasons, the
arbitrator is not obliged to give any detailed judgment and if the basis for making an
award is discernable, that should suffice. Even by such test, the award under the
third head cannot be sustained. Merely because the arbitrator has found that the
employer was responsible for the delay in the completion of the work, would not
imply that the last limb of clause 65 of the general conditions went out of play
 altogether. Clause 65 encompasses delays on all counts, including delays
attributable solely to the employer.The clause is clear and unambiguous. It robs the contractor of any right to claim on
account of additional costs incurred during the period of extension. The arbitrator
disregarded such clause in awarding in favour of the claimant in respect of the third
head. The    very basis of the claim under the third head was questionable, the
arbitrator did not attempt to deal with the petitioner's objection and it is irrelevant
that the arbitrator made an unreasoned, wild assessment as to quantum, since such
claim could not have been entertained at all. The award in favour of the respondent
under the third head of claim in the sum of Rs. 6.5 lakh is set aside. "On a close reading of the paragraphs quoted (supra) we find that His Lordship relied
on clause 65 of the General Conditions in case there was any extra costs or additional
work of any kind or other special circumstances involving delay in completion of the
work the contractor would be entitled to apply for extension of time and the
respondent was empowered to grant extension waiving the application for
compensation under Clause 48 in case the respondent found such application
reasonable. It was further provided that "no extra payment" would be made to the
contractor "on any account" for such extension of period. The claimant in their
statement of claim gave detailed justification for the claim no. 3 in paragraph 12 and
13 thereof as would appear from page 52 to 54 of the Paper Book. On a bare
reading of the said paragraphs it appears that the appellant accused the respondent for
non-cooperation resulting delay in execution of the work. As a result they had to pay
idle labour charges in addition to overhead and other miscellaneous cost amounting
to Rs. 13.06 lacs. On perusal of clause 65 it would appear that even in case of delay
the parties agreed that no extra payment would be made on that account. Once the
 parties excluded such item of payment specifically in the agreement the arbitrator
who assumed jurisdiction by virtue of the said agreement was not entitled to go into
such claim. His Lordship held, "Merely because the Arbitrator has found that the
employer was responsible for the delay in completion of the work, would not imply
that the last limb of clause     65 of the General Conditions       went out of play
altoghther." His Lordship further observed, "clause 65 encompasses delays on all
counts, including delays attributable solely to the employer". We do not find any
reason to join issue on that score. We rather accord our strong approval therefor.Mr. Ahin Chowdhury, learned senior counsel appearing for the appellant, however
argued that once the arbitrator considered the claim and gave reasons while allowing
such claim unless and until such finding was held to be perverse the learned Single
Judge was not competent to substitute his own reasoning. On perusal of the counter
statement particularly paragraph 12 thereof appearing at pages 72-74 of the Paper
Book we find that the respondent categorically took the plea that no extra cost could
be paid to the respondent. The Arbitrator although passed a reasoned award
overlooked such plea of the respondent while dealing with claim no. 3. The learned
Judge considered clause 65 which was possibly overlooked by the Arbitrator. His
Lordship found that by virtue of such clause claim no. 3 could not be entertained at
all. Clause 65 clearly excludes any additional claim. Clause 65 was a part of the
agreement by which the parties agreed to resolve their disputes if any through
arbitration. Hence, the Arbitrator was bound by the terms of the contract which
included exclusion of additional cost. Hence, the submission of Mr. Chowdhury on
that count is not tenable.The parties cited the following decisions :-(i) 1989, Volume - I, Supreme Court Cases, Page 532 (Gujarat Water Supply &
Sewerage Board Vs. Unique Erectors (Gujarat)(P) Ltd. & Anr.)(ii) All India Reporter, 1989, Supreme Court, Page 890 (Sudarsan Trading Company
Vs. The Government of Kerala & Anr.)(iii) All India Reporter, 1989, Supreme Court, Page 268 (U.P.Hotels Etc. Vs.
U.P.State Electricity Board)(iv) All India Reporter, 1990, Supreme Court, Page - 1340 (M/s.Hind Builders Vs.
Union of India)(v) All India Reporter, 1991, Supreme Court, Page - 11 (State of Maharashtra Vs.
M/s Nav Bharat Builders)(vi) 1997, Volume - IV, Supreme Court Cases, Page - 693 (B.V.Radha Kirshna Vs.
Sponge Iron India Ltd.)(vii) 1999, Volume - IX, Supreme Court Cases, Page - 610 (Ch. Ramalinga Reddy
Vs. Superintending Engineer & Anr.)(viii) 2001, Volume - IV, Supreme Court Cases, Page 241 (Ramachandra Reddy &
Co. Vs. State of A.P. & Ors.)


We are aware that merely because the Arbitrator did not assign any reason, it would
not per se vitiate the arbitration and/or the award. We are also aware that mere
insufficiency of reason cannot be a ground for setting aside of an award. The
 decision on that score cited by Mr. Chowdhury are well settled principles of law. We,
however, feel that when it goes to the root of the matter and questions the authority
of the Arbitrator to deal with a particular issue such fundamental question has to be
resolved in an application for setting aside of the award. The learned Single Judge
rightly approached the problem and decided it accordingly. We do not have any
scope of interference.The appeal fails and is hereby dismissed. There would be no order as to costs.Urgent xerox certified copy would be given to the parties, if applied for.TAPAS KUMAR GIRI, J:I agree.[ASHIM KUMAR BANERJEE,J.]




                                            [TAPAS KUMAR GIRI, J.]