Civil Appeal Nos. 7164-7166 of 2014 (Arising out of SLP (C) Nos. 23016-23018 of 2012). Case: Y. Sleebachen Vs Superintending Engineer WRO/PWD. Supreme Court (India)
| Case Number | Civil Appeal Nos. 7164-7166 of 2014 (Arising out of SLP (C) Nos. 23016-23018 of 2012) |
| Counsel | For Appellant: C.U. Singh, Sr. Adv., P.V. Dinesh, Sindhu T.P. and Unnikrishnan S. Nair, Advs. and For Respondents: Subramonium Prasad, AAG, B. Balaji, R. Rakesh Sharma and Rajeev D., Advs. |
| Judges | Jasti Chelameswar and Arjan Kumar Sikri, JJ. |
| Issue | Arbitration and Conciliation Act, 1996 - Sections 34, 37, 37(1); Code of Civil Procedure (CPC) (Amendment) Act, 1976; Code of Civil Procedure (CPC) - Section 107(2), Code of Civil Procedure (CPC) - Order 3 Rule 1, Order 3 Rule 4, Order 23 Rule 1(1), Order 23 Rule 1(4), Order 23 Rule 3, Order 41 Rule 9 |
| Citation | 2014 (9) SCALE 166 |
| Judgement Date | August 04, 2014 |
| Court | Supreme Court (India) |
Judgment:
Arjan Kumar Sikri, JJ.
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Leave granted.
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By the common judgment dated 29.02.2012, the Madras High Court has decided three Civil Miscellaneous Appeals filed Under Section 37(1)(b) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act'). Those three appeals were filed by the Respondents herein challenging the orders dated 28.04.2011 which were passed by the Principal District Judge, Tirunelveli, Tamil Nadu. The reasons for disposing of the appeals by one single order was the commonality of the parties as well as the issue involved in the said three appeals.
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It so happened that the Appellant, who is an Engineering Contractor, was awarded three contracts by the Respondents herein particulars whereof are as under:
(i) For the rehabilitation and modernization of Gundar Reservoir system in Tirunelveli District the bids were called and in which the Petitioner became the successful bidder to execute the work for a contract price of Rs. 80,14,605/- under registered Agreement dated 02.04.1998 within a period of 15 months to complete the contract work.
(ii) For the rehabilitation and modernization of Karuppanadhi Reservoir system in Tirunelveli District the bids were called and in which the Petitioner became the successful bidder to execute the work for a contract price of Rs. 55,82,633/- under the Registered Agreement dated 20.07.1998 within a period of 18 months to complete the contracts work.
(iii) For the rehabilitation and modernization of Kannadian Anicut and Channel Reach-1 in Tirunelveli District the bids were called and in which the Petitioner became the successful bidder to execute the work for a contract price of Rs. 69,24,038/- under registered agreement 28.07.1998 within a period of 26 months to complete the contract work.
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Certain disputes and differences arose between the parties relating to all these contracts. According to the Appellant, delays were caused by the Department in handing over the sites where the works were to be undertaken by the Appellant and in addition, various other breaches were committed by the Department in not fulfilling its obligations under the three contracts. The Appellant raised his claims in respect of all the three contracts. The Department appointed Mr. Velu as the Arbitrator in one case and Mr. S. Krishnamurthy was appointed as Arbitrator in other two cases. After adjudication of the disputes, awards were passed in all the three cases to the following effect:
(i) Award dated 09.06.2006 by Mr. Velu in favour of the Appellant in the sum of Rs. 52,90,776/- together with interest at the rate of 18% p.a. from 09.06.2006 until payment or realisation.
(ii) Award dated 25.04.2006 vide which Appellant was awarded a sum of Rs. 39,74,964/- together with interest at the rate of 18% p.a. from the date of award until payment or realisation.
(iii) Award dated 25.04.2006 in favour of the Appellant whereby Respondent No. 1 was directed to pay an amount of Rs. 42,56,419/- together with interest at the rate of 18% p.a. from the date of the award until payment or realisation.
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The Respondent No. 1 challenged all the awards by filing three petitions Under Section 34 of the Act, seeking to set aside these awards. The Appellant filed his replies contesting those petitions. All these petitions were listed before the Principal District Judge, Tirunelveli. While these proceedings were pending before the Principal District Judge, the Government Public Works Department issued letter dated 02.12.2008 whereby it directed its officers to negotiate with the Appellant for settlement of arbitration awards amount. Accordingly, there were meetings between the parties on 19.12.2008 and 09.01.2009 to negotiate out of court settlement. Officials, including the Superintending Engineer, had discussions with the Appellant, wherein the Appellant was requested to reduce 40% of the principal awarded amount for all the three works covered under the independent arbitration Awards. The contractor instead, came forward to reduce 40% of the interest accrued on the total awarded amount for all the three works, particularly with reference to interest in respect of the three works, which worked out to 12.81% towards the principal award amount covered under the three Awards. However, the Superintending Engineer insisted for further reduction of the principal amount. Ultimately in the meeting held in the Chamber of the Superintending Engineer on 9.1.2009, the contractor was asked to offer 10% reduction in the principal award amount, besides 40% offer made on the interest amount accrued. The Appellant, however, agreed to only 5% reduction in the principal amount, in addition to 40% reduction in the interest amount. Because of the aforesaid position taken by the parties, the negotiation could not be fructified and fell through. The Principal Secretary to the Government wrote a letter dated 9.1.2009 to the officials concerned, directing them to pursue the applications Under Section 34 of the Act in respect of the three awards pending before the Court.
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The matters, however, lingered on in the Courts for some reason or the other. When they were listed in the Court on 09.04.2011, the Appellant came forward with a memorandum to the effect that, apart from the offer made during the negotiations on 09.01.2009 for foregoing the interest at 40%, he was also willing to forgo further accrued interest on the award amount after 09.01.2009. This offer appeared to be fair to the Government Pleader. He made a written endorsement on the said memorandum, on behalf of the Government that it had no objection for this memo. As a result thereof, acting on this compromise, the petitions were partly allowed and the awards of the Arbitrators were modified whereby from the award amount, 5% reduction on the principal amount was ordered. Further apart from 40% reduction on the interest awarded till 09.01.2009; total interest accruing beyond that period, was also waived. However, from the date of award i.e. 25.04.2006 to 09.01.2009, interest was calculated at 18% p.a. from where the reduction of 40% in interest amount was granted.
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To recapitulate the salient facts, the compromise talks took place between the parties at the instance of the Respondents themselves expressing their intention to explore the possibility of settlement as per its letter dated 02.12.2008. Certain meetings were held for this purpose. The Appellant had agreed to forgo substantial part of interest and also 5% of the principal amount. The Superintending Engineer, however, wanted 10% reduction in the principal sums awarded in favour of the Appellant. It is because of this difference the settlement talks failed at...
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