Citattion for the supreme court judgment

mukesh Gupta (Querist) 12 December 2011 This query is : Resolved
Sir(s),

Recently a judgment was delivered by the Hon'ble Apex Court in the matter of Arbitration cases in which it was held that arbitrator can not give the rates more than the rates under contract. The title of the case is M/s Satyanarayanan vs UOI. I need the citation of the same . I tried to find out the judgment but unabale to get the same.

Thanks.

Follow Query

Report Abuse

Shailesh Kr. Shah (Expert) 12 December 2011
http://www.indiankanoon.org/doc/1040106/

Nadeem Qureshi (Expert) 12 December 2011
The Supreme Court has ruled that consumption of electricity in excess of the contracted load would amount to ‘unauthorised use’ under the Electricity Act 2003. Though it is not theft, penal provisions in Section 126 of the Act will apply to such cases, the court stated in the judgment, Executive Engineer vs Sri Seetaram Rice Mill. The inspectors found that the small scale unit was overdrawing power and issued notice to it. The punishment is twice the tariff for the whole period when the unauthorised use had taken place. The mill moved the Orissa high court arguing that overdrawing of power is not ‘unauthorised use’. The high court agreed with it. However, on appeal, the Supreme Court set aside the high court order. Apart from the overdrawal being breach of contract, it is “prejudicial to the public at large as it is likely to throw out of gear the entire supply system.”

Arbitrator cannot fix rate higher than in the contract
Once the rate for a works contract is fixed for a particular project, the contractor cannot demand additional amount merely because he had to spend more for carrying out the work, the Supreme Court stated while dismissing the appeal of the contractor in the case, M/s Satyanarayana vs Union of India. The contractor wanted arbitration in the dispute as the government did not pass its bill. The government contended that the work was unduly delayed. The arbitrator awarded Rs. 95 lakh to the contractor. The dispute was taken to the Andhra Pradesh high court which set aside the award. The contractor’s appeal to the Supreme Court was dismissed stating that the arbitrator went beyond his authority and wrongly awarded a rate higher than that fixed by the contract

Cut-off date in Kar Vivad scheme upheld
The Supreme Court last week upheld the cut-off date of March 31, 1998 set by the Finance Act for claiming the benefit of Kar Vivad Samadhana Scheme 1998. The Gujarat high court had quashed the provision in the Finance Act stating that the cut-off date was arbitrary and excluded certain persons from claiming the benefit merely on the basis of the date of notice of arrears. The Supreme Court set aside the high court judgment in a large batch of appeals by the government in the case, Union of India vs Swiss Pharma Ltd. In a taxation statute, the government can pick and choose people to be taxed for reasons of “functional expediency.” A power to classify being extremely broad and based on diverse considerations of executive pragmatism, the “judiciary cannot rush in where even the legislature warily treads,” the judgment said.

Dutch beer firm blocks use of trade mark in India
The Delhi high court last week passed a permanent injunction against Mohan Goldwater Breweries Ltd restraining it from selling, distributing or marketing beer under the trademark Castle and/or Old Castle. The order was passed on a petition moved by South African Breweries (SAB) of the Netherlands and its joint venture partner in India. According to SAB, the trademark Castle is well-known in India and is well-recognised worldwide on account of its extensive availability in various countries and duty free shops at various airports. It has also been sponsoring South Africa cricket team for the past ten years and therefore the name is familiar to Indian cricket fans. It has been selling beer in India since 1974 and it has obtained the registration of the trade mark. The court stated that the Indian company appeared to have applied for registration of the trade mark only to block the entry of the foreign brand to the Indian market. SAB has registered the name and has been the first user of the brand. The use of the name by the Indian company will affect the reputation of SAB and confuse the customer, the high court said.

Disney characters’ misuse stopped
The Delhi high court has passed a permanent injunction in favour of Disney Enterprises Inc against some firms which used its favourite characters for selling fast moving products like school bags. The US corporation moved the high court seeking to restrain the use of the marks like Mickey Mouse, Minnie Mouse, Donald Duck and Goofy. It claimed that it was the tenth greatest brand in the world with a brand value of £28,447 million. It alleged that the Indian manufacturers were passing off their goods as those of Disney’s or implying that their goods were connected with or approved by it in some manner. Accepting the complaint, the high court passed the injunction order and imposed damages on the defaulters.

Telecom firm gets compensation for fire mishap
The National Consumer Commission last week dismissed the appeal of United India Insurance Company against the order of the Gujarat state consumer commission asking it to pay compensation to Milap Telecom, a private telephone exchange. There was a fire in the unit, destroying its equipment. When the claim was made, the insurer repudiated it on several grounds, one of them being that Milap Telecom had obtained only a fire policy and had not taken “Electronic Equipment Policy for the Break Down” which could have covered the loss on account of alleged short circuit. The commission rejected the argument and pointed out from the proposal form that furniture, plant machinery and accessories and the whole stock-in-trade were insured.

Nadeem Qureshi (Expert) 12 December 2011
M.V.V. Satyanarayana, ... vs Union Of India (Uoi), Rep. By Its ... on 18 August, 2006
Equivalent citations: 2006 (6) ALD 284, 2006 (5) ALT 656
Author: S A Reddy
Bench: S A Reddy
ORDER

S. Ananda Reddy, J.

1. By this application, filed under Section 11(5) and (6) of the Arbitration and Conciliation Act, 1996, the applicant seeks to appoint an Arbitrator and refer the dispute for adjudication.

2. It is stated that the applicant is a contractor, executing civil works. In response to the tender notice published by the respondents for construction of 3rd B. G. Electric Loco Shed to home 100 Locomotives at Kazipet and also for construction of Inspection shed and examining pits with attached repair section, the applicant submitted his tender on 07-08-1998, which was accepted by the respondents as a successful bid on 09-12-1998. In terms of the acceptance letter, the value of the work was Rs. 1,01,84,182-70 ps for both the schedules A and B works which are to be executed within a period of four months from the date of acceptance letter i.e. the work has to be completed on or before 08-04-1999. It is further stated that the parties have entered into an agreement dated 09-02-1999. As per the said agreement, the applicant was under an obligation to maintain the works other than track work for the period of six months from the certified date of completion. The general conditions of the contract governing the Engineering Department of South Central Railway and special conditions of the contract were made part of the agreement. Clauses 63 and 64 of the General Conditions of Contract contemplate arbitration in case of disputes between the parties.

3. It is stated that as per the acceptance letter, the applicant has to deposit a sum of Rs. 3,00,000/- towards security deposit, but, however, as the applicant has already deposited one lakh of rupees towards EMD and requested the respondents to recover the balance from the running bills and accordingly, the respondent has recovered the balance amount of Rs. 2,00,000/- towards security deposit. Clause-2 of the Special Conditions of the Contract states that the quantities mentioned in the tender schedule are only approximate and during the actual execution of the work, there may be variation in the quantities and such variations up to 25% beyond the agreement does not vitiate the contract. If the respondents desire to execute any additional quantities and extra items and quantities beyond 25% of the agreement quantities, rates shall be arrived through negotiations.

4. It is stated that due to improper planning of the respondents, a need arose for additional quantities and extra items and said quantities were beyond the permissible limits of 25%. Further, according to the applicant, the respondents did not allot sufficient funds for the subject work due to which there was a delay in decision making process as well as payment, which aggravated the situation. Due to lapses committed by the respondent, the work, could not be completed within the stipulated time of four months and finally the work was completed in July, 2001 except for some minor rectifications. It is also stated that the respondents extended the contract without penalty throughout as the delay was on their account.

5. It is stated that the applicant submitted a Qualified No Claim Certificate for getting the final payment as well as for refund of security deposit. Due to increase in various items as well as for the delay caused by the respondents in execution of the work, certain disputes arose for non-payment of the amounts on the above counts, therefore, the applicant requested the respondent by letter dated 15-03-2004 to resolve the disputes. But the respondent, however, by their letter dated 12-05-2004, rejected the claim of the applicant. Therefore, the applicant by letter dated 14-06-2005, requested the 1st respondent to resolve the dispute or in the alternative refer the disputes to arbitration. In spite of receiving the said request the respondents did not refer the matter to arbitration. Since the respondents did not refer the matter for arbitration, the applicant was constrained to approach this Court by this application.

6. A counter is filed on behalf of the respondents, disputing and denying the claims made by the applicant. The respondents admitted that the parties have entered into an agreement for execution of certain works. But, however, denied that the delay in execution was on their account. The respondents also denied that the delay in taking decisions as well as in releasing payments caused the delay in execution of the work entrusted to the applicant. It is stated that the applicant by letter dated 13-03-2004 addressed to the Chief Engineer, Constructions, Office of the South Central Railway, Secunderabad, made certain claims and requested him to release the final bill and security deposit. In response to the said letter, a reply dated 12-05-2004 was given by the Chief Engineer, rejecting the claims made by the applicant, where he had put forth nine claims, which according to the respondents, are either outside the terms of the contract or remote claims under the provisions of the Contract Act. It is stated that since the applicant had submitted a final bill and also No Claim Certificate, the applicant is not entitled to seek any further relief.

7. It is admitted that there is a provision as to the resolution of the disputes by reference to the Arbitration. As per Clause 64(1)(i) of the General Conditions of the Contract to refer the claims or disputes to the arbitration request has to be made within the stipulated. period. The request made by the applicant on 14-06-2005 was more than one year after the rejection of the original claim and therefore, the said request is barred by limitation. It was also stated that the claims made by the applicant are contrary to the terms of the agreement and contrary to law. Alternatively, it is contended that if the Court comes to the conclusion that there are disputes to be referred to the arbitration, since the General Conditions of the Contract of the Railways will prevail, therefore, an arbitrator may be directed as per the procedure provided under the said clauses. The respondent also relied upon a decision in Union of India v. M.P. Gupta (2004) 10 SCC 504 and sought to dismiss the application.

8. At the time of hearing, the learned Counsel for the petitioner reiterating the contentions, stated that the No Claim Certificate submitted by the applicant was a qualified No Claim Certificate in order to get the payment out of the final bills as well as security deposit, but the respondent railways declined for release of the final bill amount as well as the security deposit. The learned Counsel also contended that because of the delay caused on behalf of the respondents, the execution of the work was delayed, which has resulted not only in the loss of the turn over due to the withholding of the payments and also caused idle labour causing incurring of extra expenditure on that count. Further the learned Counsel contended that the claims that are made to which the applicant is entitled are specific and are in accordance with law, therefore, sought for appointment of an arbitrator for adjudication of the disputes between the parties.

9. Sri C.V. Rajeeva Reddy, the learned Counsel appearing for the respondents contended that the claims made by the applicant are neither tenable nor allowable under law, as well as in accordance with the terms of the contract. The learned Counsel also reiterated the contentions that many of the items claimed by the applicant are either overlapping or repetitive. It is stated that there is no escalation clause under the terms of the contract, therefore, the applicant is not entitled to make a claim. Similarly, when the applicant was making a claim for the delayed payment, again interest cannot be claimed. Apart from all these contentions, the learned Counsel contended that the claim made by the applicant is barred by limitation in terms of the Clause 64 of the General Conditions of the Contract, therefore, no cause of action survives for appointment of an arbitrator for adjudication. The learned Counsel relied upon the following decisions:

1. Superintending Engineer v. Kehar Singh .

2. Superintending Engineer v. P. Radhakrishna Murthy .

3. L. Nagi Reddy v. Union of India .

4. State of Orissa v. Sudhakar Das .

5. Chief Signal and Telecommunication Engineer (Projects) v. Hytronics Enterprises .

6. P. Satyanarayanarao Construction Co. v. Union of India .

10. From the above rival contentions, the issue to be considered is whether the applicant has made out any ground for appointment of an arbitrator in terms of the provisions of the Act and the general conditions of the contract, governing the agreement between the parties.

11. Admittedly, the applicant was successful bidder for execution of the work that was entrusted and in fact, the applicant also executed the work, but in the process, it is stated that the extra items and additional quantities of work that were executed by the applicant, exceeded 25% of the original work and with reference to the said work, the rates have to be settled through negotiations and further even with reference to the measurements and also for the delay caused in execution of the work, the respondents are liable to pay additional amounts either by way of enhanced rates, interest or loss of profit etc. It is also an admitted fact that the applicant had executed the work, and thereafter the applicant raised certain disputes for resolution by the respondents. The said disputes were raised through a letter dated 15-04-2004, apart from earlier letters. With reference to the said letter, the respondents have considered the claims item-wise and gave a reply dated 12-05-2004, rejecting the same. Thereafter, the applicant was also asked to submit 'no claim certificate' and accordingly, the applicant submitted the 'no claim certificate' on 22-06-2004 with a qualified statement with the items appearing in the savings column of the final variation statement and the objections certification was given without prejudice to his genuine rights. Further it was stated in the said communication that he had no claims against the above agreement. Thereafter, it is stated that by a letter dated 14-06-2005, the applicant requested to refer the claims for arbitration as per the terms and conditions of the agreement and in which the applicant made as may as 9 claims under different heads. On the ground that the dispute was not referred to the arbitration, the applicant has come up with the present application, which was filed before this Court on 18-04-2006. The contention of the counsel for the applicant is that since there is a dispute as to the claims of the applicant, which were rejected by the respondents, the disputes have to be resolved by appointment of an arbitrator.

12. The contention of the respondents, on the other hand, is that the claims made by the applicant were rejected even before submitting the 'no claim certificate' by the applicant, and thereafter the applicant also submitted a 'no claim certificate' and it is only after more than a year of the rejection of the claims by the respondents, the applicant issued a letter dated 14-06-2005 requesting for appointment of an arbitrator though the rejection was as early as on 12-05-2004. Therefore, prima facie, the claim itself is barred by limitation in terms of clause-64(1) of the general conditions of the contract. According to the learned Counsel, in terms of the above said clause, if the contractor is aggrieved, he has to make an application for appointment of an arbitrator within 180 days of presenting his final claim on the disputed matters. The applicant did not even sought for appointment of an arbitrator within one year from the date of rejection of the claims. The claim made by the applicant, seeking appointment of an arbitrator is clearly beyond the time, fixed under the above clause, therefore, the claim is devoid of merit. Apart from that, the learned Counsel also contended that most of the claims are overlapping and therefore, even on that ground also, the claims are liable to be rejected.

13. Before proceeding further, it would be appropriate to refer to the decisions, relied upon by the learned Counsel for the respondents. In Superintending Engineer v. Kehar Singh (2 supra), the Division Bench of this Court while considering an appeal arising out of the award, held that compensation not to be given for any remote or indirect loss or damage sustained by reason of the breach of contract, awarding damages by arbitrator on the claim made by the contractor that he would have earned more profit if money due to him is paid in time, is unsustainable as it is too remote a claim to be allowed.

14. In Superintending Engineer v. P. Radhakrishna Murthy(3supra), the Division Bench of this Court, while considering an appeal against the award, had come to the conclusion that award of compensation towards loss of profitforthe delay in payment of the claim amount was held to be illegal on the ground that damages on damages is not permissible under law, and therefore, allowing of interest by way of damages is equally impermissible. It was held that the award of interest by way of damages is not recognized in law is a proposition well established by a series of judgments.

15. In L. Nagi Reddy v. Union of India (4 supra), a Division Bench of this Court, while considering an appeal arising against the orders of the Court below, where the award of the arbitrator was set aside on claim Nos. 1,2 and 3, though the arbitrator rejected the said claims on the ground that they are hit by clause-17(3) of the General Conditions of the Contract, which is dealing with the delay in handing over the site to the contractor by the railway when expressly prohibit that the contractor is not entitled to damages or compensation except seeking extension or extensions for completion of the work. The Division Bench set aside the orders of the Court below which set aside and remanded to the arbitrator on claims 1,2 and 3 and upheld the award of the arbitrator, rejecting the above said claims.

16. In Chief Signal and Telecommunication Engineer (Projects) v. Hytronics Enterprises(6 supra) a Division Bench of this Court, while considering the merits of the award, held that the amount awarded for the delay attributable to the railways is contrary to clause-17(3) of the General Conditions of the Contract, therefore, the same is liable to be set aside and accordingly set aside. The same Division Bench had reiterated the above proposition in P. Satyanarayanarao Construction Co. v. Union of India (7 supra).

17. In State of Orissa v. Sudhakar Das (5 supra), the Apex Court held that where there is no escalation clause in the agreement, the arbitrator could not assume jurisdiction and could not award any amount towards escalation.

18. In Union of India v. M.P. Gupta (1 supra) the Apex Court held that where agreement specifically provided for appointment of two gazetted railway officers of equal status as arbitrators, the appointment of a retired Judge as sole arbitrator was held invalid and accordingly set aside.

19. If we examine the facts of the present case in the light of the above decisions, it is clear that many of the items are overlapping. As rightly contended by the respondents, items-3, 5, 6 and 8 are overlapping. Further, even with reference to the item-1, the rejection proceedings issued by the respondents, are specifying how the size of the metal was inadvertently specified as 12 mm instead of 20 mm. Apart from all the above facts of the case, the applicant raised a dispute with reference to the various items by his letter dated 15-04-2004, which was rejected by proceedings dated 12-05-2004. Thereafter, with reference to the final bill, the applicant has even submitted his 'no claim certificate' dated 22-06-2004. No doubt the said no claim certificate is a qualified one, but if the applicant was seriously disputing the rejection of the respondents with reference to his claims, he would have sought for a reference to the arbitration within a reasonable time, at least within the time prescribed in terms of clause-64(1)(i) of the General Conditions of the Contract. A perusal of the said clause clearly shows that even in the absence of any decision by the railways, the contractor is expected to make a demand for arbitration within 180 days of his claim. But in the present case, not only from the date of his claim, but even when the applicant had received rejection of claims by letter dated 12-05-2004, he did not make a demand for arbitration. This clearly shows that the applicant is not very serious about the claims. Further, since the demand for arbitration was not made within the time stipulated under Clause 64(1)(i) of the General Conditions of the Contract, the applicant is precluded to make such a demand, after the expiry of the said period, since it was already held by this Court that the conditions of the contract specifically provide for certain aspects and the contractor is not entitled to make any claim contrary to the said terms of the contract. As the General Conditions of the Contract also forms part of the agreement of contract, the applicant is not entitled to seek the relief. Even on merits also, if the claims are examined, most of the claims are not only overlapping, but they are stale claims.

20. Under the above circumstances, the Arbitration Application is devoid of merit and the same is, accordingly, dismissed.

mukesh Gupta (Querist) 12 December 2011
Thanks for such an early reply.

But Mr. Shah the reference given by you is of Andhra High Court. I want the citation for supreme court.

Mr. Nadeem can you give me the citation for the second news item in your reply.