TaxTMI 
TaxTMI 
2019 (4) TMI 2160
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....een 'Sheladia Associates Inc, Secunderabad', which is the sole respondent before AT and the lone petitioner in instant O.P (hereinafter 'contractor' for brevity, clarity and convenience) and 'Tamil Nadu Road Sector Project-II, Highways Department, Government of Tamil Nadu' (hereinafter 'RSP' for brevity, clarity and convenience) . To be noted, the short form / abbreviation 'RSP' stands for 'Road Sector Project'. 3 Said contract between contractor and RSP is for supervision / certain consultancy services which are in the nature of construction supervision services including monitoring the quality of road work, bridge work and approaches of 'Railway Over Bridge' (ROB) and other related works in Ramanadhapuram Bypass. To be noted, description of services which have to be provided by the contractor under said agreement have been elaborately set out in greater detail in Appendix-A to said contract and considering the nature of the controversy and the scope of instant O.P., it is not necessary to advert to technical specifications and particulars therein in greater detail. In other words, suffice to say that said contract between contractor and ....
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....d claims made by RSP. Besides denying / disputing the aforesaid claims made by RSP, contractor claimed a sum of Rs. 1,21,46,704/- towards services rendered for RSP, Rs. 21,36, 489/- towards remuneration of additional services rendered, Rs. 20,00,000/- towards reimbursement on cost of arbitration and another sum of Rs. 3,89,676/- towards other expenses in the nature of remuneration, insurance, travel, etc., 9 Thereafter, claimant filed a reply before AT. On the basis of aforesaid pleadings, AT framed 12 issues which reads as follows : "22.On the above pleadings, the following issues were framed by the Tribunal in the 2nd sitting held on 20/02/2016. 1) Whether retaining wall design was approved by the Claimant before Respondent took over responsibilities from the Claimant. 2) Whether the Respondent was required to review the design and bid documents that were already approved by the Claimant. 3) Whether the Detailed Project Report (DPR) was made available to the Respondent by the Claimant? 4) Whether the Respondent has committed any breach or violation of its duties and obligations under Supervision Consultancy Contract dated 02/03/2009....
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....ds expenses regarding insurance, travel, etc., the same was rejected by AT. 13 As already mentioned supra, net result was that AT awarded a sum of Rs. 47,07,489/- in favour of RSP with 8% per annum pendent lite interest and 12% per annum future interest. 14 Aggrieved, instant O.P has been filed by the contractor assailing the impugned award. State counsel has made it clear on instructions that RSP has not filed any petition under section 34 assailing impugned award. This is recorded. 15 To be noted, as alluded to supra, the nature of work to be done by the contractor in the instant case is in the nature of services and the same is being referred to as 'said services'. To state it with specificity, it is in the nature of supervisory services. With regard to this very work, which is part of a particular project, the task / responsibility of design consultant was given by RSP to another entity vide contract dated 18.6.2003, arbitrable disputes erupted from the said contract also and the same culminated in an arbitral award dated 30.01.2018, which is under challenge before this Court at the instance of the contractor entity (design consultant) therein vide O.P.No.455 of 2018. ....
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....arned counsel clause 6.2.1 ought to have been read along with clause 11.2 and therefore, impugned award is one where decision has not been made in accordance with the terms of the contract. This has resulted in infarction of sub-section (3) of section 28 of A and C Act, is learned counsel's further say. 18 Furthering his submissions on these lines, learned counsel submitted that infarction of section 28(3) of A and C Act is one which clearly leaves impugned award in conflict with public policy and therefore, impugned award is liable to be set aside. In this regard, it is to be noted that the expression 'arbitral tribunal shall decide in accordance with the terms of the contract' in section 28(3) was amended on and with effect from 23.10.2015 and this expression has now been replaced with the expression 'arbitral tribunal shall, in all cases, take into account the terms of the contract' while deciding and making an award. 19 Learned counsel for contractor submitted that commencement of arbitral proceedings is 16.7.2013 as that is the date of show cause notice and AT entered reference on 17.04.2015, both of which are prior to 23.10.2015 and therefore, he is predicating his ....
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....ining routines and procedures to be applied in contract management, construction supervision and administration. The routines and procedures shall be in accordance with the requirements; (g) To assist/advice the Employer in handing over the sites and in establishing milestones for completion of contracts; (h) Approve and/or issue working drawings including variations thereof, in this connection, give instructions to the contractor; (i) To ensure that the construction works are in accordance with the Technical Specifications, Environmental Management Plan and other stipulations of the construction contract documents. The Engineer shall draw the Employer's attention to any instances of non-conformity of the contractor's works with the Technical Specifications, Environmental Management Plan and other stipulations of the construction contract documents; (j) To ensure a system of quality assurance work; approve materials and their sources, review bituminous mix designs and concrete mix designs proposed by the contractors and approve/ suggest modifications to the contractor's proposed mix designs, laying methods, sampling and testing proced....
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....ports together with detailed quality control test statements in an approved format and to prepare a detailed sectional/ final report for the project; (w) Issue interim certificates for monthly payments to the contractors, and certify completion of parts of the totality of the works, details of progress. Payments are to be recorded in the measurement book before issue of interim certificate; (x) To issue variation orders, fix rates for unpriced works, all after obtaining prior approval of the Employer, except in the situations described under para 7, and/or to make recommendations to the employer; (y) Assist the Employer in providing clarifications/explanations to observations made, from time to time by the Auditor; (z) To assist the Employer in taking over of completed works from the contractors in particular by preparing list of defects to be corrected by the contractor; (aa) to write a daily project diary which shall record all events pertaining to the administration of the contract, requests from and orders given to the contractors, and any other information which may at a later date be of assistance in resolving queries which may ari....
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....by AT have already been extracted and reproduced supra. A careful perusal of the issues will reveal that issue Nos.1, 2 and 4 are pivotal in deciding whether there is infarction of section 28(3) of A and C Act. 22 Elaborating his submission on aforesaid lines, learned counsel for contractor / petitioner submitted that contractor would not have been permitted to make changes in the design and in the 'detailed project report' (DPR) and that would become a breach by itself if contractor had done so. On a careful analysis of evidence before it, AT has come to the conclusion that contractor was required to review the design and bid document that were already approved by the claimant. Relevant portion of the impugned award reads as follows : "24............ .... It is clear from the above documentary evidence that the design for one retaining wall alone might have been approved by the Claimant's representative who was acting as SC then and design for remaining three walls were yet to be approved at the time of taking over responsibilities by the Respondent from the Claimant. I have come to the above conclusion because none of the parties pleaded whether t....
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....lity by the contractor. To be noted, this finding has been returned by AT while dealing with issue No. 1 and relevant portion has already been extracted and reproduced supra. 25 AT on a thorough analysis of documentary evidence before it and on the basis of oral hearings, had come to the conclusion that main responsibility of contractor was supervision of construction work to ensure that work is executed as per approved design, desired quality and within the stipulated time, besides bill certification, contract management and reporting. AT has also observed that from the duties and responsibilities assigned to contractor, it comes to light that role of the contractor was more or less same as that of a Project Management Consultant (PMC) . Thereafter, AT had returned a finding that RSP had no serious complaint with regard to these duties and complaint of RSP was primarily pivoted on the plank that contractor had not reviewed the design to the entire satisfaction of RSP, i.e., for successful completion of the project. 26 Therefore, the argument pivoted on effective date, i.e., 2.3.2009 does not hold water. Furthermore, narration narrowed down the entire scope of interpretation ....
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....rable. 16.It is equally important to observe at this juncture that while interpreting the terms of a contract, the conduct of parties and correspondences exchanged would also be relevant factors and it is within the arbitrator's jurisdiction to consider the same. [See McDermott International Inc. v. Burn Standard Co. Ltd. [McDermott International Inc. v. Burn Standard Co. Ltd., (2006) 11 SCC 181]; Pure Helium India (P) Ltd. v. ONGC [Pure Helium India (P) Ltd. v. ONGC, (2003) 8 SCC 593] and D.D. Sharma v. Union of India [D.D. Sharma v. Union of India, (2004) 5 SCC 325] .] " 29 A careful examination of the impugned order and the manner in which documentary evidence before AT has been appreciated, leaves this Court with the considered opinion that interpretation of clauses 6.2.1 and 2.3 in the Appendix to said contract made by AT is clearly a possible view based on reasonable construction / interpretation and therefore, it is a fit case for this court to refrain from exercising judicial intervention under section 34 of A and C Act. 30 This Court has also reminded itself of Hodgkinson principle. Hodgkinson principle has been explained by Hon'ble Supreme Court in ....