TaxTMI 
TaxTMI 
2025 (5) TMI 1740
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....AT while making the Impugned Award. It is further contended by the Appellant that the Impugned Award is also liable to be set aside on the ground that it suffers from patent illegality due to lack of any evidence to substantiate the claims of the Respondent/claimant. To buttress this argument, the Appellant would contend the following: a. While the Ld. AT has placed reliance on the Chartered Accountant's Certificates [CA Certificate] for the claims with respect to the 'Basic Idling Claim' and 'interest on claim of basic idling of work', no evidence was led by the Respondent to prove the legal sanctity of the CA Certificates. Additionally, neither the Chartered Accountant was examined, nor were any audited statements of accounts/documents produced before the Ld. AT to corroborate the respective claim of the Respondent. The Appellant would further contend that the claims that have been awarded on the basis of the CA Certificates, are perverse and are liable to be set aside on the sole ground that the same has been awarded based on no evidence at all. b. Secondly, the claim regarding the Interest on Profit-loss on delayed payment awarded by the Ld. AT is also pervers....
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.... between the parties. The said CA Certificates thereafter tabulate what is under various heads and arrive at a figure. No breakup of details as to the various amounts mentioned as against each expense head has been provided in the certificates and it is these certificate upon which complete reliance has been placed by the Respondent and on which the Ld. AT in its Award has dealt with in the following manner: - "168. The Claimants, on demand by the Respondents for reasonable and demonstrable compensation for the delays caused by the owner, submitted their Chartered Accountants certificates as per the books of Accounts (for the project) as below, vide their letter TEN/RD/C-1264 dated July 24, 2003 (pages 45-50 of statement of claims) Break-up of expenditure claimed for the period August, 1993 to December 1999: Sl. No. Expense Head Amount (in Rs.) 1. Staff salary and related costs 46,43,718.00 2. Wages and related costs 58,66,424.00 3. Stores consumed and storage charges 15,05,565.00 4. Bank guarantee commission 10,17,826.00 5. Insurance 37,98,590.00 6. Office maintenance 2,39,591.00 7. Travelling a....
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....terest amount computed @20% by the claimants comes to Rs. 2,39,52,256.00 only. We consider 20% rate of interest as high. It is well settled that work contract between the two parties is a commercial transaction and, therefore, the interest charged by banks on commercial loans and advances could be well deserved, However, in our considered view in the circumstances of this case, 12%per annum simple rate of interest would be a reasonable recompense on the money due to the party of which it was deprived of. The amount of interest at this rate will, therefore, work out to Rs. 1,43,71,354.00 only. .....(B) The total amount of claim in respect of idling including interest thereon will be Rs. 2,28,72,264.00 + Rs. 1,43,71,354.00 = Rs. 3,72,43,618.00 (Rs. Three crores seventy two lacs forty three thousand six hundred eighteen) only. .......(C) The Claimants have not claimed any interest during the period from November, 2001 to 24th July, 2003 (i.e, the date of completion of the Transmission Line). As such we also have not considered the same." 9. The Ld. AT unquestioningly, without giving any reasoning, accepts the CA certificates. This acceptanc....
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....ed this finding in their application under Section 34 of the A&C Act in the following terms: - "I. Because the Ld. Tribunal has allowed the claims on the basis of certificate of the chartered accountant. The said evidence of the chartered accountant could not have been relied upon in view of the fact that neither any books of account, ledger or account were placed. During the cross examination of the respondent's witness, it is clearly evident from the following that no such amounts recoverable from the petitioner was shown in the respondent's record. "Question No. 32: I am putting it to you any amount recoverable by the company is not required to be shown in the IT Return. Is that correct or not? Answer: It is not correct. Question No. 35: I put to you that your company has not shown any recoveries against the DTL in the IT Return on the basis of idle labour or the claims raised in this arbitration proceedings since 1993 till date. Answer: This question has already been answered. Question No. 37: I put it to you that the claims raised not mentioned in any of the accounting records of the company w.e.f. 1993 till date. ....
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....e credibility of the evidence, therefore, is the evidence of the credibility of such claim. 18. Hudson's formula, while attained acceptability and is well understood in trade, does not, however, apply in a vacuum. Hudson's formula, as well as other methods used to calculate claims for loss of off-site overheads and profit, do not directly measure the contractor's exact costs. Instead, they provide an estimate of the losses the contractor may have suffered. While these formulae are helpful when needed, they alone cannot prove the contractor's loss of profit. They are useful in assessing losses, but only if the contractor has shown with evidence the loss of profits and opportunities it suffered owing to the prolongation. 19. The law, as it should stand thus, is that for claims related to loss of profit, profitability or opportunities to succeed, one would be required to establish the following conditions: first, there was a delay in the completion of the contract; second, such delay is not attributable to the claimant; third, the claimant's status as an established contractor, handling substantial projects; and fourth, credible evidence to substa....
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.... mentioned therein (accounts, contract ledger and, related documents), based on which the said certificates were drawn and which form the foundation of the said certificate have not been examined and the Respondent has, therefore, failed to provide any basis for the claims made by it. 24. The Award of a sum of Rs. 65,50,795/-, which is set out in paragraph 175 (iii) is the interest awarded on the amount which has been awarded under paragraph 175 (i). The said amount is completely based on the alleged CA Certificates and consequently, would also stand disallowed. 25. To wit, any sums awarded, based on the CA certificates, would necessarily have to be disallowed. 26. As regards the remaining challenge to the award, one of which is with respect to the interest on profit and loss on delayed payment, we have gone through both the majority and minority opinions of the Ld. AT and believe that no interference is required in the exercise of our jurisdiction under Section 37 of the A&C Act. 27. This Court is also of the opinion that the arbitration costs, as awarded, do not require any interference by this Court in the exercise of its jurisdiction under Section 37 of the A&C Act.....