Tulip Kanth

Ernakulam, June 3, 2022: Placing reliance on the judgment of the Apex Court in State of Maharashtra v. Hindustan Construction Co. Ltd., and after noticing that the provision for appeal under the Arbitration Act, 1940 as also the provision for appeal under the Arbitration and Conciliation Act, 1996 being pari-materia, the Kerala High Court has held that a party who has not urged a ground in the application to set aside an arbitral award cannot raise the same for the first time in an appeal. 

The Division Bench of Justice P.B. Suresh Kumar and Justice C.S.Sudha was considering an appeal directed against the judgment of the Subordinate Judge, Kottarakkara and the dispute related to a canal formation work namely “KIP Formation of L.B. Main Canal from Ch.40516m to 31700m excluding Aqueduct Part I from Ch.40516m to 31000m” executed by the respondent as contractor in connection with the Kallada Irrigation Project of the State Government. The agreement in this regard was executed between the parties which provided for recourse to arbitration for resolution of the disputes. In the course of execution of the work, disputes arose between the parties which were referred to the Arbitral Tribunal for adjudication.

The respondent had raised several claims and the Arbitral Tribunal passed an award in favour of the respondent directing the appellants to pay a sum of Rs 1,05,294 on claims (a) and (d), a sum of Rs.2,26,485  on claim (f) and a sum of Rs.2,80,000 on claim (g). The remaining claims have, however, been rejected. The respondent thereupon filed a petition before the court below under Section 17 of the Arbitration Act, 1940 for pronouncing a judgment in terms of the award. Consequently, the court disposed of the petition directing the appellants to pay to the respondent the amounts covered by the award on claims (f) and (g) with interest at the rate of 12% per annum. The appellants were aggrieved by the said decision of the court below.

The dispute in this matter related to claim (f) which was made by the respondent for compensation for the additional expenditure stated to have been incurred by him for carrying out the work from Ch.40820m to Ch.41000m, the alignment of which was shifted in the course of execution of the work and claim (g) which was also made by the respondent for compensation for the loss caused to him on account of the rehandling of certain quantity of earth cut and removed while forming the canal.

On claim (f) , the stand taken by the appellants in the defence statement before the Arbitral Tribunal was only that the change of alignment was trivial and the respondent was not entitled to any additional payment on that ground, merely for the reason that there was variation in the quantity of the earth to be removed. The Bench took note of the fact that the contentions now advanced by the learned Government Pleader were not contentions urged before the Arbitral and the impugned order indicated that the award on claims (f) and (g) were not seriously challenged in applications preferred by the appellants for setting aside the arbitral award.

As per the government pleader, the appellants were not precluded from raising contentions for the first time in an appeal under Section 39 of the Act but the Bench relied on Hindustan Construction Case(Supra) and opined that such ground to set aside the arbitral award not urged in the application couldnot be raised the same for the first time in an appeal. 

Regarding claim (f), the Bench also took note of the fact that the question whether there was any impediment at all for the respondent in carrying out the works simultaneously and the question whether the respondent had re-handled the cut earth were pure questions of facts which had been answered by the Arbitral Tribunal in favour of the respondent. Thus, without finding any merit in the argument advanced by the Government Pleader on claims (f) & (g) , the Bench dismissed the appeal.

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