The Executive Engineer v. M/S. S. Bose And ORS

IN THE HIGH COURT AT CALCUTTA

CIVIL APPELLATE JURISDICTION [CIRCUIT BENCH AT PORT BLAIR] PRESENT: THE HON'BLE JUSTICE MADHURESH PRASAD AND THE HON'BLE JUSTICE SUPRATIM BHATTACHARYA FMAT(ARBAWARD)/2/2024 EXECUTIVE ENGINEER ...

APPELLANT VS.

M/s S. BOSE AND OTHERS ...

RESPONDENTS For the appellant : Mr. Rakesh Kumar For the respondents : Mr. Tapan Kumar Das Heard on : January 10, 15 & 20, 2025 Judgment on : January 20, 2025 MADHURESH PRASAD, J.

1.

The present appeal has been filed under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred as to the 1996 Act). It is the case of the appellant that a tender was awarded on 16.11.2010 to the respondents. The scope of the work under the tender was construction of Sea Dykes with Hume Pipe Sluice (08 Nos single vented and 01 No three vented) at New Manglutan in South Andaman under Watershed Development Project.

2.

After award of the work, the respondent did not commence the work on the stipulated date of commencement (01.12.2010). In fact the work was not started even till the stipulated date of completion

(31.08.2011), under the agreement. The work could not commence due to some issues. Under the circumstances, the appellant invoked Clause-3A of the General Conditions of Contract (hereinafter referred as the GCC) to close the contract.

3.

Clause 3A was invoked by the appellant foreclosing the contract on 23.03.2015.

4.

After foreclosure of the contract under Clause 3 A of the agreement the respondents invoked Clause 25 of the GCC containing the arbitration clause and requested the Chief Engineer, APWD for adjudication of his disputes and claim raise by the respondents. 5.

The authorities took no steps for appointment of Arbitrator. The respondents thus, invoked Section 11 of the 1996 Act by moving the High Court for appointment of an Arbitrator. The Sole Arbitrator was thus appointed by the High Court for adjudication of the respondent's disputes.

6.

Before the Arbitrator, the respondents claimed that it had deposited the Earnest Money Deposit (EMD) of Rs. 8,92,624/- (Rupees eight lakhs ninety two thousand six hundred twenty four only) and the Performance Guarantee (PG) being an amount of Rs. 30,73,891/- (Rupees thirty lakhs seventy three thousand eight hundred ninety one only). The EMD was deposited on 13.09.2010 whereas the PG was deposited on 23.11.2010.

7.

Despite deposits being made the respondents could not commence the work in view of objections raised by the Forest department and the cultivators/land owners raising various environmental issues as well as alleged irregularity in fixing of the central line of the bandh. The claimant was also being prevented from proceeding with excavation at the site by the authorities. The claimant, in the circumstances requested the authorities to sort-out the dispute so as to enable immediate commencement and completion of work. It is the claimant's case that he had deployed various resources at the work site and also paid money for availing permission of the authorities. The claimant kept informing the authorities regarding the manner in which the commencement and execution of work was being frustrated by reasons beyond his control. The claimant specifically asserted that the work is incapable of being executed till the issues were sorted out by the authorities with the forest and revenue authorities as well as the local cultivators.

8.

As a result of the delay occasioned by such reason the claimant was suffering damages, loss of profit and further loss including the losses arising out of blockage of EMD and PG. 9.

The appellant on the other hand took a stand before the Arbitrator that the claimant had participated in the tender and taken up the work with open eyes. The site was available for him to visit

prior to taking up the work. After due inspection of the site and being well aware of the ground realties he has participated in the tender process and was awarded the work. The claimant was obliged to conduct survey of field assessment or other preliminaries as required for execution of work. The claimant in fact never attempted to commence the work, let alone deploy any resources for such commencement or execution of the work. He had taken over the site but not commenced the work.

10.

Since the claimant failed to commence the work within 1/8th period of the stipulated time for completion of the work (9 months). The authority had no option but the invoke Clause-3A of the GCC and to foreclose the contract and return the EMD and PG without any interest in accordance with clause 3 A. Clause-3A provided equal opportunity to the claimant, also to foreclose the contract in the event work was not started due to reasons not within the control of the contractor within 1/8th period of the stipulated time of the completion of work. Though the claimant did not commence the work, it also did not resort to such foreclosure. In view of such prevailing circumstance the appellant had no option than to invoke Clause-3A of the GCC foreclosing the contract. 11.

After submission of the statement of claim and counter statement of facts, the submission of the parties and after given them opportunity of leading their evidences in support of their respective

claims, the arbitrator proceeded to decide the following 10 claims made by the claimant:- a) Claim- I Interest on EMD (Rs. 8,92,624/-, (Rupees eight lakhs ninety two thousand six hundred twenty four only) for 54 months.

b) Claim-II Interest on the amount of bank charges for issuance of PG and interest on the same for 52 months. The bank charges has been quantified as Rs. 67,810/- (Rupees sixty seven thousand eight hundred ten only).

c) Claim-III Loss incurred @ 18% per annum on the margin money (Rs.7,69,000/- (Rupees seven lakhs sixty nine thousand only)) deposited in the bank for obtaining PG, which remained blocked for 52 months.

d) Claim-IV Loss of profit on account of the claimant's head office remaining tied up with the work during the prolongation of the contract, quantified at Rs. 1,06,56,157/- (Rupees one crore six lakhs fifty six thousand one hundred fifty seven only) e) Claim-VI Loss of profit quantified at Rs. 1,51,69,652/- (Rupees one crore fifty one lakhs sixty nine thousand six hundred fifty two only) on account of investment being made by the claimant.

f) Claim-VII Damage/loss arising out of idling of machinery, Site Over head expenses, expenditure over engagement of Highly skilled, semi skilled, under skilled labourer from the Mainland, quantified at Rs. 35,24,657/- (Rupees thirty five

lakhs twenty four thousand six hundred fifty seven only).

g) Claim-VIII Recovery of an amount of Rs. 9810/- (Rupees nine thousand eight hundred ten only) allegedly paid as royalty for extraction of the earth and interest on this amount for the period of 01.11.2011 to 23.03.2015, amounting to Rs.1,64,055/- (Rupees one lakh sixty four thousand fifty five only) .

h) Claim-IX Interest @ 18% on all the claims from the date of foreclosure on 23.03.2015 till the actual date of payment under the various heads.

i) Claim-X Payment of cost of Arbitration of Rs. 3 lakhs. 12.

The Arbitrator considered the various claims raised by the claimant, as follows:

a) Claim No.-I, being interest on the amount of Rs. 8,92,624/- (Rupees Eight lakhs ninety two thousand six hundred twenty four only) (EMD) has been allowed @ 9% per annum instead of 18% as claimed and quantified @ Rs. 7,23,025/- (Rupees seven lakhs twenty three thousand twenty five only).

b) Claim No.-II has also been allowed to the extent of bank charges for getting the performance/bank grantee and an amount of Rs. 67,810/- (Rupees sixty seven thousand eight hundred ten only) has been found payable to the claimant on account of the bank charges deposited as processing fees for PG. Claim to interest on this amount has not been allowed.

c) Claim No.- III has been rejected.

d) Insofar as claim No.-IV is concerned that the Arbitrator has allowed the claim on account of overhead expenditure of 0.20% of contract value and thus quantified the same at Rs. 1,63,941/- (Rupees one lakh sixty three thousand nine hundred forty one only).

e) Insofar as the claim No. V is concerned, the same has not been allowed by the Arbitrator.

f) In Claim No. VI loss of profit has been claimed at 15 % of the contract value, but the Arbitrator has considered and allowed the claim under the heading loss of profit only to the extent of 5% of the contract value, quantified at Rs. 26,12,808/- (Rupees twenty six lakhs twelve thousand eight hundred eight only). g) Claim No. VII has been rejected.

h) Claim No. VIII has been allowed in respect of amount allegedly paid as royalty for extraction of earth (Rs.93,810/- (Rupees ninety three thousand eight hundred ten only). The Arbitrator has also found the claimant to be entitled to interest @ 9 % per annum on this amount for four years as per calculations. i) In respect of Claim No. X being the cost of arbitration, the Arbitrator has awarded an amount of Rs. 50,000/- (Rupees fifty thousand only).

13.

Thus, against the total claim of Rs. 3,14,60,468/- (Rupees three crores fourteen lakhs sixty thousand four hundred sixty eight) + interest, the Arbitrator has awarded a total sum of Rs. 29,88,369/- (Rupees twenty nine lakhs eighty eight thousand three hundred sixty nine) + interest, whereas the contract value/tender amount is Rs. 6,14,77,827/- ( Rupees six crores fourteen lakhs seventy seven thousand eight hundred twenty seven only).

14.

Aggrieved by the said award, the present appellant assailed the same under section 34 of the 1996 Act in Other Suit No. 01 of 2017. 15.

The same was considered by the learned District Judge, Port Blair, who found no reason to interfere with the award dated 28.11.2016 and thus by an order dated 12.10.2023, dismissed Other Suit under section 34 of the 1996 Act, on contest but without cost. 16.

The appellant is thus before us in the present proceeding instituted under Section 37 of the 1996 Act.

17.

It is the limited submission of the learned counsel for the appellant that since the claim with respect to claim number VII (damages) has been rejected, the award of the Arbitrator allowing claim No.VI under the heading loss of profit @ 5 per cent of the contract value is unsustainable. It is further submitted that the claimant had not adduced any evidence whatsoever in support of claim No.-VI. Merely by relying upon section 73 of the Indian

Contract Act, 1872 (hereinafter referred to as the Contract Act), the claim to loss of profit has been allowed without there being any evidence as regards any deployment of resources by the claimant. 18.

It is submitted that in absence of any tangible basis to assert quantification of loss of profit, no such claim should have been allowed merely on the basis of a finding regarding breach of contract. Section 73 of the Contract Act, itself contemplates that such compensation is not to be given for any remote and indirect loss or damage sustained by reason of breach of contract. 19.

Insofar as claim of the various deposits made by the claimant, learned counsel for the appellant has not raised any dispute, he has fairly submitted that the deposits had been made by the claimant. Since the appellant invoked Clause-3A of the GCC, the claimants were entitled to refund of the amounts. Disputing the award of the Arbitrator only insofar as it allowed the claim No. VI. It is submitted that the decision of the Arbitrator in this regard is perverse and unsustainable since such conclusion of the Arbitrator cannot be reconciled with the conclusion of the Arbitrator with respect to claim No. VII being under the head of damage/losses due to idling of machinery and expenditure incurred over deployment of resources. In support of his submission learned counsel for the appellant has relied upon an unreported decision of the Apex Court in the case of Batliboi Environmental Engineers Limited vs.

Hindustan

Petroleum Corporation limited and another reported in (2024) 2 SCC 375. The judgment of the Apex Court is dated 21.09.2023. The learned counsel relied upon paragraph Nos. 23, 29 to 39 of the said judgment to submit that when a claim is made to loss of profit as has been made by the claimant herein, the claimant has to prove that there was other work available that he could have secured if not for the delay. The same has to be proved with reference to invitations to tender in which the claimant could not participate due to insufficient capacity to undertake other work; or by books of accounts to demonstrate a drop in turnover. If loss of turnover resulting from delay is not established, the contractor would not be entitled to loss of profit. In the instant case, the Arbitrator has already awarded the interest on the amounts deposited. In absence of any materials to prove that a loss of profit has occasioned, the award of the Arbitrator in respect of claim No. VI under the head of loss of profit is unsustainable.

20.

Recognizing the limitation of an Appellate Court in respect of an arbitral award as per Sections 34 and 37 of the 1996 Act, it is submitted by learned counsel for the appellant that in the case of Batliboi Environmental Engineers Limited (supra), the Apex Court has clearly held that in paragraph Nos. 45 to 48, which are as follows:- "45. Referring to the third principle in Western Geco, it was explained that the decision would be irrational and perverse if (a) it is based on no evidence; (b) if the arbitral tribunal takes into account something

irrelevant to the decision which it arrives at; or (c) ignores vital evidence in arriving at its decision. The standards prescribed in Excise and Taxation Officer-cum-Assessing Authority v. Gopi Nath & Sons37 and Kuldeep Singh v. Commissioner of Police38 should be applied and relied upon, as good working tests of perversity. In Gopi Nath & Sons it has been held that apart from the cases where a finding of fact is arrived at by ignoring or excluding relevant materials or taking into consideration irrelevant material, the finding is perverse and infirm in law when it outrageously defies logic as to suffer from vice of irrationality. Kuldeep Singh clarifies that a finding is perverse when it is based on no evidence or evidence which is thoroughly unreliable and no reasonable person would act upon it.

If there is some evidence which can be acted and can be relied upon, however compendious it may be, the conclusion should not be treated as perverse. This Court in Associate Builders emphasised that the public policy test to an arbitral award does not give jurisdiction to the court to act as a court of appeal and consequently errors of fact cannot be corrected. Arbitral tribunal is the ultimate master of quality and quantity of evidence. An award based on little evidence or no evidence, which does not measure up in quality to a trained legal mind would not be held to be invalid on this score. Every arbitrator need not necessarily be a person trained in law as a Judge.

At times, decisions are taken acting on equity and such decisions can be just and fair should not be overturned under Section 34 of the A&C Act on the ground that the arbitrator's approach was arbitrary or capricious. Referring to the third ground of public policy, justice or morality, it is observed that these are two different concepts. An award is against justice when it shocks the conscience of the court, as in an example where the claimant has restricted his claim but the arbitral tribunal has awarded a higher amount without any reasonable ground of justification. Morality would necessarily cover agreements that are illegal and also those which cannot be enforced given the prevailing mores of the day. Here again interference would be only if something shocks the court's conscience.

Further, 'patent illegality' refers to three sub-heads: (a) contravention of substantive law of India, which must be restricted and limited such that the illegality must go to the root of the matter and should not be of a trivial nature. Reference in this regard was made to clause (a) to Section 28(1) of the A&C Act, which states that the dispute submitted to arbitration under Part I shall be in accordance with the substantive law for the time being in force. The second sub-head would be when the arbitrator gives no reasons in the award in contravention with Section 31(3) of the A&C Act.

The third sub-head deals with contravention of Section 28(3) of the A&C Act which states that the arbitral tribunal shall decide all cases in accordance with the terms of the contract and shall take into account the usage of the trade applicable to the transaction. This last sub-head should be understood with a caveat that the arbitrator has the right to construe and interpret the terms of the contract in a reasonable manner. Such interpretation should not be a ground to set aside the award, as the construction of the terms of the contract is finally for the arbitrator to decide.

construes the award in a way that no fair-minded or reasonable person would do.

46. As observed previously, we need not examine the amendment made to the A&C Act vide Act No. 3 of 2016 with retrospective effect from 23.10.2015 and the judgments that deal with the amended Section 34 of the A&C Act. Pertinently, the amendment to Section 34 of the A&C Act was effected, pursuant to the observations of the Supplementary Report to Report No. 246 on Amendments to Arbitration and Conciliation Act, 1996 by the Law Commission of India, titled 'Public Policy - Developments post-Report No. 246' published in February 2015.

This Supplementary Report observed that the power to review an arbitral award on merits under Section 34 of the A&C Act, as elucidated in the case of Western Geco, subsequently followed in Associate Builders, is contrary to the object of the A&C Act and international practice on minimization of judicial intervention. A reference can also be conveniently made to MMTC Ltd. v. Vedanta Ltd.,39 and Ssangyong Engg. & Construction Co. Ltd. v. National Highways Authority of India which examine the scope of intervention of courts under Section 34 of the A&C Act as amended by Act No. 3 of 2016. MMTC Ltd. and Ssangyong Engg., and other judgments which deal with the amended Section 34 of the A&C Act that are not applicable in the present case.

47. We have extensively analysed the award, its patent flaws and illegalities which emanate from it, like the manifest lack of reasoning in arriving at the conclusions and the calculation of amounts awarded, which, in fact, amount to double or part-double payments, besides being contradictory etc. In view of our aforesaid reasoning, the award has been rightly held to be unsustainable and set aside by the division bench of the High Court exercising power and jurisdiction under Section 37 read with Section 34 of the A & C Act.

48. In view of the aforesaid discussion, the appeal is dismissed without any order as to costs."

21.

It is submitted that considering the earlier judgments delivered by the Apex Court holding the field till date, the Apex Court in the judgment of Batliboi Environmental Engineers Limited (supra), has held that patent flaws and illegalities which emanate from an award, like the manifest lack of reasoning in support of the conclusions and the amounts awarded as in the instant case, would suffice to set aside an arbitral award by exercising of jurisdiction under Section 34 and 37 of the 1996 Act.

22.

On the other hand, learned counsel for the claimant has sustained the award referring to several correspondence in the paper books. It is submitted that the claimant is a class-I contractor, as evident from an office order dated 28.01.2011 Exhibit-C of the paper book. He has placed before the Court the certificate of registration of trucks, excavator and a lease in respect of a Tata Hitachi. He has also referred to a cash memo for an amount of Rs. 1,16,000/- (Rupees one lakh sixteen thousand only) spent over acquisition of hume pipes and M.S. Sheet materials. On the strength of the documents, it is submitted that the claimant has maintained these resources to remain capable of execution of the contract.

These documents were before the Arbitrator, and therefore the submission of the appellant that the petitioner's claim for loss of profit is without any basis, is unacceptable. He has also taken us to the correspondence showing the claim made by him before foreclosure by the appellants, for the interest on the amount of capital blocked due to prolongation of the contract for 4 years. He has also placed before the Court income tax returns for the year 2010-2011 till 2015-2016 to show that there is a consistent fall in gross total income of the company. He has attributed his fall in gross total income on account of maintenance of the resources during prolongation of the current contract. 23.

It is submitted by the learned counsel for the claimant that the option of invoking Clause-3A of the GCC was available to either of the parties within 1/8th of the stipulated time of completion of work.

Since the time for completion of the contract was 9 months, 1/8th of the stipulated time of completion comes to about one month. The said clause has not been invoked by the appellant within the time stipulated in Clause-3A. In such circumstance, the appellant was required to invoke Clause-13 of the GCC to foreclose the contract due to abandonment and reduction of the scope of work. Clause-13 of the GCC contains the clause regarding "foreclosure of contract due to abandonment or deduction in scope of work" and contemplates much more to be paid to the contractor in the event foreclosure of contract was at the instance of the employer.

In order to avoid the liabilities arising out of such foreclosure under Clause-13, the authority has resorted to invocation of Clause-3A, which option was not available as per bare perusal of Clause-3A:- "CLAUSE 3A In case, the work cannot be started due to reasons not within the control of the contractor within 1/8th of the stipulated time for completion of work, either party may close the contract in such eventuality, the Earnest Money Deposit and the Performance Guarantee contract shall be refunded, but no payment on account of interest, loss of profit or damage etc shall be payable at all."

24.

Learned counsel has relied upon three decisions, which are as follows:- (i) Mohd. Salamatullah and other vs. Government of Andhra Pradesh reported in AIR 1977 SC 1481.

(ii) A.T. Brij Paul Singh and other vs. State of Gujarat reported in AIR 1984 SC 1703.

(iii) Unreported decision of the Division Bench of the Bombay High Court in the case of M/s Jeevat Construction vs. Union of India and others in Appeal No. 755 of 2005 decided on 07.02.2017.

25.

By relying upon the decision in the case Mohd. Salamatullah and other (supra), it is submitted that this Court should not investigate into claims awarded by the Arbitrator de novo. 26.

Referring to the decision of A.T. Brij Paul Singh and other (supra), it is submitted that once it is held that the appellant was in breach of contract, the expenditure incurred by the petitioner being corroborated by the various receipts, which we have referred to above, the petitioner would be entitled to a loss of expected profit in the work. He has also relied upon paragraph No. 11 of this judgment to submit that the award to the extent of 5% of the contract amount towards loss of profit is not only reasonable but a lesser quantification. By referring to Clause 2(x) of schedule "F" of the contract it is submitted that an amount of Rs. 6,14,77,827/ (Rupees crores fourteen lakhs seventy seven thousand eight hundred twenty seven only), being the tender amount includes 15% being the percentage on cost of materials and labour to cover up all overheads and profits. The Arbitrator has not awarded the entire 15%, but has

awarded 5% only. It is thus apparent that the arbitrator has admitted the claim for loss of profit after due consideration and to a real and reasonable extent.

27.

The judgment of the Bombay High Court in the case of M/s Jeevat Construction (supra) has also been placed by the learned counsel. He has referred to paragraph no. 17 to reiterate the same submission that where there was breach of contract and wrongful termination, the party who is not in default, in the present case being the claimant is entitled to recover the damages. 28.

This court has to accord consideration to the rival submissions within the limited purview of interference in an arbitral award within the scope of sections 34 and 37 of the 1996 Act. There are decisions galore reiterating the limited scope of appellate jurisdiction based on the statutory provisions contained in the above two noted sections of the 1996 Act. We therefore are required to confine ourselves within the well established limits as an appellate court in respect of an arbitral award.

29.

The submission of the appellant that the conclusion in respect of claim no.6 cannot be at variance with the conclusion in respect of claim no.7, in our opinion, does not hold water. The claim no.7 is with regard to damages and loss due to idling of machineries, Tools and Plants and site over head expenses for the entire period. The claim under this head is also based on alleged procurement of

unskilled, semi-skilled, highly skilled workers from the mainland but there is no material and evidence in support of this distinct claim. However, insofar as claim no.6 is concerned, the claimant has produced income tax returns showing a steady decline in the gross total income starting from the years 2010-2011 to 2015-2016. It is also not in dispute that the tender amount was inclusive of a margin of 15% as percentage on cost of materials and labour to cover all overheads and profits.

30.

The court is also required to consider the fact that the appellant has invoked clause 3A to foreclose the contract much beyond 1/8 of the stipulated time for completion of work. In fact, though clause 3A was required to be invoked within a month from the stipulated date of commencement (1.12.2010), we find that the same has been invoked on 23.03.2015, more than four years after the stipulated date of commencement.

31.

It is apparent that the authorities have resorted to clause 3A even though the clause was not available to foreclose the contract beyond 1/8th of the stipulated time for completion of the work. The same has obviously been done on extraneous consideration to avoid the obligations arising out of foreclosure of the contract under clause 13 of the GCC. We find that there are various correspondences from the claimants, to the authorities asking them to take steps so that the objections raised by the Forest Department Revenue Authorities,

agriculturists including the Agriculture Department can be overcome for executing the contract. On the record there is also a note issued by the Executive Engineer, Construction Division-III, APWD, Prothrapur. The same relies upon a joint inspection conducted on 13.12.2012 by a team including the Pradhan, Guptapara Gram Panchayat, Joint Director (AE), Agriculture Department, Assistant Conservator of Forest, Forest Department, Assistant Engineer, APWD, CD-III, Assistant Director (Soil), Range Officers and Patwari Guptapara. The note clearly records as follows:- "... Since the land owner denied surrendering land and the Department failed to provide within 1/8th of the stipulated period for completion of work, either party may close the contract and also there is no indication for availability of land any more. Hence it is propose to foreclose the contract under provision of Clause-3A of the contract by the competent authority.

Submitted for perusal and obtaining approval of the competent authority. ..."

32.

The breach of contract by the appellant is thus also undeniable in view of the facts and circumstances on record. The circumstances, therefore, does give rise to a claim under section 73 of the Indian Contract Act in favour of the claimant for loss of profits. The same is distinct from the damages sought to be quantified by the claimant under claim no.VII. As noted above, the tender amount includes 15% being percentage on cost of materials and Labour to cover all overheads and profits. If this 15% being the percentage of overheads and profits is excluded from the tender amount (Rs. 6,14,77,827/- (Rupees six crores fourteen lakhs seventy seven thousand eight

hundred twenty seven only) the contract value comes to Rs. 5,22,56,173/- (Rupees five crores twenty two lakhs fifty six thousand one hundred seventy three only). Had the claimant been allowed to perform the contract, he would have earned legitimate profit from this work, the cost of which as noted above is 5,22,56,173/-(Rupees five crores twenty two lakhs fifty six thousand one hundred seventy three only) i.e. 85% of the tender amount. The arbitrator has held that the work could not be performed on account of breach of contract by the employer. However, the arbitrator has not accepted the deployment of any material on site, including labour.

The arbitrator as well as the court exercising the jurisdiction under section 34 of the Act have rightly excluded such claims while quantifying the amount of loss of profit and limited the amount of loss of profit to 1/3rd of this 15%. Thus the arbitrator has awarded the loss of profit only to the extent of 5% of the net contract amount (5,22,56,173/- Rupees five crores twenty two lakhs fifty six thousand one hundred seventy three only) quantified at Rs. 26,12,808/- (Rupees twenty six lakhs twelve thousand eight hundred eight only) as a reasonable profit. We are also in agreement with the submission of the learned counsel for the respondent that the employer has not challenged the award of the arbitrator on any of the grounds, available for challenging an award as contemplated in section 34(2) or (2-A) of the 1996 Act.

of the 1996 Act, raising a limited challenge to the award in respect to Claim No.-VI.

33.

The said award therefore in respect Claim No. VI is quantified by the arbitrator acting on the basis of the net contract amount and calculating the percentage on loss of profits as a 5% component above the net contract amount. It has excluded the remaining 10% margin over and above the net contract amount, also implicit within the 15% margin over and above the net contract amount as found in Clause 2(x) of schedule F of the contract, which reads as follows:- " 2 (x) Percentage on cost of materials and Labour to cover all overheads and profits 15%"

34.

Thus, it cannot be said that the arbitrator has arrived at the quantification in respect of loss of profits arbitrarily or in a whimsical manner. The approach appears to be bonafide, fair and reasonable without being actuated by any extraneous consideration. In the circumstances the court exercising jurisdiction under section 34 of 1996 Act, has rightly not substituted its own opinion by interfering with the award in this regard. Insofar as the Claim No.-VII regarding damages, the conclusion of the arbitrator in this regard has rightly been based on an assessment of parameters relevant to damages since the damages was claimed due to idling of machinery, tools and plants and site overhead expenses for entire period. This claim also included expenditure over procurement of man power. The arbitrator

has thus rightly concluded that since that the site had never been handed over and work never commenced, the damages or loss claimed on account of idling of man power, machinery or expenses incurred over them without any materials in support thereof, could not be accepted.

35.

We therefore are not inclined to accept the submission of the learned counsel for the appellant that the claim no.6 under the heading loss of profit could not have been allowed since the arbitrator had rejected the claim no.VII for damages. In view of the above discussion, we find the nature of the two claims to be distinct and based on different parameters, in the present facts and circumstances as emanating from the records.

36.

In view of the facts and materials on record, we find that there is no scope for the appellant to rely upon the decision of the Apex Court in the case of Batliboi Environmental Engineers Limited (supra) even though the legal proposition in the said judgment is undeniable and is binding upon this court.

37.

In the case before the Apex Court, it is apparent that there was no basis for quantification and the judgment was passed in a set of facts and circumstances where there was manifest lack of reasoning in arriving at the conclusion and the calculation of the amount awarded by the arbitrator. In the case of Batliboi Environmental Engineers Limited (supra), the Apex Court has found the decision to

award loss of overheads and loss of profit/profitable, and its quantification to be unsustainable as observed by Apex Court in paragraph 28 of the judgment, which reads as follows:- "28. The Arbitral tribunal in the present case has given complete go by to these principles well in place, overlooked care and caution required and taken a one-sided view grossly and abnormally inflated the damages. The figures quoted in paragraph 11 supra show the overstatement and aggrandizement in awarding Rs. 1,57,37,666/-, towards loss of overheads and loss of profits/profitability, in a contract of Rs. 5,74,35,213/-. Rs.1,21,95,859.68/- was paid for the work done within the term. Rs. 2,92,07,619.13 was paid for the work done post the term. Thus, Rs. 4,14,03,478.81/- was paid for 80% of the work. The balance was Rs.1,14,87,042.00/.

The amount awarded towards loss of overheads and profits/profitability is Rs.1,57,37,666/- . No justification for computation of the loss is elucidated or can be expounded. Even if one were to rely upon the chart given by the BEEL, and ignore the contradictions in findings, the amount awarded is highly disproportionate and exorbitant. It is clearly a case of overlapping or at least a part doubling of the loss/damages." The present case is however different in facts and circumstances. As we have noted hereinabove, the award in respect of loss of profit is after arriving at a conclusion regarding breach of contract by the employer, which we find to be sustainable.

The quantification also is after meticulous examination of the tender amount, the net contract amount, the margin in between the net contract amount and the tender amount and the various components of margin within the 15% margin between the net contract amount and the tender amount. Out of this 15%, the arbitrator has found the award of 1/3rd, i.e, 5% to be a reasonable quantification. In our opinion the same requires no interference.

38.

From decision of the Apex Court in the case of Batliboi Environmental Engineers Limited (supra), we find that the extent of a "second look by the courts under section 34" of the 1996 Act has been considered in paragraphs 31 and 32:- "31. The scope and ambit of the court's power to review the awards under Section 34 of the A&C Act has been contentious viz., on the interpretation to the expression 'in conflict with the public policy of India'. There have been legislative interventions as well as judicial pronouncements. In the context of the present case, we are required to interpret the provisions as they existed on the date on which the objections to the award were filed i.e., on 21.06.1999. Accordingly, the amendment introduced to Section 34 of the A&C Act vide Act No. 3 of 2016 with retrospective effect from 23.10.2015 and the judgments of this Court examining the amended Section 34 of the A&C Act need not be examined.

32. Post award interference and the extent of the second look by the courts under Section 34 of the A&C Act has been a subject matter of perennial parley. The foundation of arbitration is party autonomy. Parties have the freedom to enter into an agreement to settle their disputes/claims by an arbitral tribunal, whose decision is binding on the parties. It is argued that the purpose of arbitration is fast and quick one-stop adjudication as an alternative to court adjudication, and therefore, post award interference by the courts is unwarranted, and an anathema that undermines the fundamental edifice of arbitration, which is consensual and voluntary departure from the right of a party to have its claim or dispute adjudicated by the judiciary. The process is informal, and need not be legalistic.

Per contra, it is argued that party autonomy should not be treated as an absolute defence, as a party despite agreeing to refer the disputes/claims to a private tribunal consensually, does not barter away the constitutional and basic human right to have a fair and just resolution of the disputes. The court must exercise its powers when the award is unfair, arbitrary, perverse, or otherwise infirm in law. While arbitration is a private form of dispute resolution, the conduct of arbitral proceedings must meet the juristic requirements of due process and procedural fairness and reasonableness, to achieve a 'judicially' sound and objective outcome.

If these requirements, which are equally fundamental to all forms of adjudication including arbitration, are not sufficiently accommodated in the arbitral proceedings and the outcome is marred, then the award should invite intervention by the court."

39.

We do not find the award of the arbitrator to suffering from any lack of reasoning, absence of any material in support of the claim, or any infirmity in the above noted of facts and circumstances, to arrive at a conclusion regarding the amount to be quantified towards loss of profit. We therefore find no reason to interfere with the award of the sole arbitrator or the order passed by the Court considering the appeal under Section 34 of the 1996 Act.

40.

The appeal is accordingly dismissed.

( Madhuresh Prasad, J. ) I agree.

( Supratim Bhattacharya, J. )