BHARAT HEAVY ELECTRICALS LTD.versusTATA PROJECTS LTD.

                    [2014) 9 S.C.R. 479


           BHARAT HEAVY ELECTRICALS LTD.                           A
                            v.
                  TATA PRQjECTS LTD.
             (Civil Appeal No. 8373 of 2014)
                   SEPTEMBER 01, 2014
                                                                   B
    [FAKKIR MOHAMED IBRAHIM KALIFULLA AND
             SHIVA KIRTI SINGH, JJ.]

     Arbitration and Conciliation Act, 1996 - s.34 - Works
contract - Appel/ant-BHEL engaged respondent as a sub-             C
contractor to erect, test and commission boilers - Disputes and
differences between the parties - Award passed by Arbitral
Tribunal - Objections raised by appellant, claiming payment
of crane hire_ charges by the respondent - Held: On facts,
provisions contained in the Work Order read with the Tender        D
Document/agreement made it clear that appellant was entitled
for crane hire charges which were wrongly disallowed by the
order under appeal - Such amount to be deducted from the
amount payable to respondent under the Award on other
heads.                                                             E

     Arbitration and Conciliation Act, 1996 - s. 34 - Works
contract - Dispute between the parties - Arbitral award - Grant
of pre-Award interest - Propriety - Held: On facts, not proper,
in view of clause 1. 15. 5 of the tender document I agreement
entered into between the parties.
                                                                   F

     Arbitration and Conciliation Act, 1996 - ss.31(7)(b) and
34 - Works contract - Dispute between the parties - Arbitral
award - Post-Award interest granted by Arbitral Tribunal @
10.5% -- Plea of respondent for enhancement of Post-Award          G
interest to 18% p.a. in light of s.31(7)(b) - Held: Not tenable,
since the Arbitral Tribunal had, already granted post-Award
interest@ 10.5% -- Only if the Award had not made such a

                              479                                  H
    480        SUPREME COURT REPORTS [2014] 9 S.C.R.

A direction, the statutory rate of interest@ 18% p.a. would have
    been payable from the date of the Award to the date of
                         '
    payment as per the statutory provision.

          The appellant-SHEL engaged respondent as a sub-
s contractor to erect, test and commission two 120 MW
  boilers (Unit II and Unit Ill) on behalf of the appellant.
  Pursuant to disputes and differences between the parties,
  an Arbitral Tribunal came to be constituted which
  awarded Rs.69.22 lac on various heads and Rs.25.39 lac
C on account of interest. The appellant instituted
  proceedings under Section 34 of the Arbitration and
  Conciliation Act, 1996. A Single Judge of the High Court
  allowed the objections of the appellant in part in respect
  of over-run charges, crane hire charges and interest. The
  respondent filed appeal which the Division Bench
0 allowed in part- in respect of crane hire charges and
  interest.

       In the present appeal, it was contended on behalf of
  the appellant that the Division Bench had wrongly
E reversed the order of Single Judge on the issue of crane
  hire charges. In respect of the issue relating to interest,
  the appellant confined its claim only against grant of pr~­
  Award interest.

          Disposing of the appeal, the Court
F
      HELD:1.1. On behalf of respondent, the gr.ant of pre-
  Award interest could not be successfully defended in
  view of clause 1.15.5 of the Agreement which provides
  that "no interest shall be payable by BHEL on earnest
G money/security deposit or any money due to the
  contractor by BHEL". The ambit and scope of aforesaid
  clause was subject matter in Civil Appeal No.7423 of 2005
  between the .appellant and M/s. Globe Hl-Fabs Ltd.
  decided on 12.11.2009 wherein this Court accepted and
H held that in view of such a provision in the Agreement,
    BHARAT HEAVY ELECTRICALS LTD. v. TATA                  481
               PROJECTS LTD.
interest is only payable from the date of the Award. The           A
aforesaid legal position ought to have been accepted by
the Division Bench of the High Court. Clearly the order
under appeal ought not to have approved grant of any
pre-Award interest. [Paras 4, 6] [484-E-G; 485-D]
                                                                   B
     1.2. On the issue of award of interest, the respondent
tried to persuade this Court to enhance the post-Award
interest granted by the Arbitral Tribunal@ 10.5% to 18%
p.a. in the light of provisions in Section 31 (7)(b) of the Act.
This contention cannot be accepted because the Arbitral            C
Tribunal has already granted post-Award interest@ 10.5%.
Only if the Award had not made such a direction, the
statutory rate of interest @ 18% p.a. would have been
payable from the date of the Award to the date of payment
as per the statutory provision. [Para 5] [485-B, CJ
                                                                   D
     Sayeed Ahmed & Co. v. State of UP. & Ors. (2009) 12
SCC 26: 2009 (10) SCR 841 and Union of India v. Concrete
Products & Construction Co. & Ors. (2014) 4 SCC 416 -
referred to.
                                                                   E
      2.1. So far as the issue relating to crane hire charges
is concerned, Clause 12 and other sub-clauses of the
Work order show that a high capacity crane (250 T) is
included in the Tools and Plants which will be provided
by BHEL to the respondent free of charge as per
provisions of contract on availability but only upto "drum         F
lifting of Unit II" as specified in clause 12.2.2. There is no
provision either in the Work Order or in the Agreement/
Tender Document to entitle the respondent to claim that
it was not obliged to pay the nigher charges as fixed,
subject to the conditions laid down by BHEL from time              G
to time in respect of user of crane for Unit No.Ill. To the
contrary, the extracts from the Tender Document contain
a clear stipulation for recovery of such charges from the
contractor's bill/security deposit in one instalment. [Paras
7, 8 ] [485-E; 487-D-E]
    482        SUPREME COURT REPORTS [2014] 9 S.C.R.


A      2.2. The Division Bench did not keep in mind the
  aforesaid provisions in the Work Order and the Tender
  Document. SHEL was neither required to issue any notice
  for exercising its right to recover crane hire charges for
  Unit Ill, nor was it required to deduct such charges from
B the running bills of the respondeht. There is no dispute
  or issue as regards quantum of such charges claimed by
  the' appellant but the Arbitral Tribunal allowed it only to
  the extent of Rs.8.25 lac although the Tribunal itself found
  that the respondent had failed to produce any material in
c support of its defence that because the crane was out of
  order for a number of days when Unit No.II was under
  erection/instalment and, therefore, the respondent
  became entitled to use the crane without hire charges for
  Unit No.Ill. In such circumstances, the crane hire charges
  claimed by the appellant were wrongly disallowed by the
0
  order under appeal passea by the Division Bench. [Para
  9] (487-F-H; 488-A-8]

       3. In conclusion, it is clear that the appellant is entitled
  for crane hire charges and, therefore, that amount needs
E to be deducted from the amount payable to the
  respondent under the Award on other heads. Also, the
  appellant is not liable to pay any pre-Award interest and
  the interest @ 10.5% p.a. shall be payable by the appellant
  only from the date of Award tiH- the date of payment on
F the Award amount now found payable, if any. [Para 10]
  [488-8-D]
                         Case Law Reference:
      2009 (10) SCR 841           referred to       Para 4
G
      (2014) 4 sec 416            referred to       Para 4
         CIVIL APPELLATE JURISDICTION : Civil Appeal No.
    "8373 of 2014.

H         From the Judgment and Order dated 12.06.2013 of the
    BHARAT HEAVY ELECTRICALS LTD. v. TATA                    483
               PROJECTS LTD.

High Court at Calcutta partly allowing the Appeal being A.P.O.       A
No. 60 of 2013.

     Gourab Banerji, Mayuri Raghuvanshi, Charu Ambwani for
the Appellant.
                                                                     B
    Gopal Jain, Srid!'Jar Potaraju, Arjun Singh, Mukunda Rao
Angara for the Resp-ondent.

    The Judgment of the Court was delivered by

    SHIVA KIRTI SINGH, J. 1. Leave granted.                          c
     2. Heard Mr. Gourab Banerji, Senior Advocate for the
appellant and Mr. Gopal Jain, Senior Advocate for the
respondent. The appellant was required to set up some plant
or boiler units. For completing that work, appellant issued a        D
notice inviting tender for engaging a sub-contractor to erect,
test and commission two 120 MW boilers (Unit II and Unit Ill)
on behalf of the appellant. The value of the contract awarded
in favour of the respondent was Rs.6.99,40,000/-. Pursuant to
disputes and differences, an Arbitral Tribunal consisting of three
arbitrators came to be constituted. The Arbitral Tribunal            E
awarded Rs.69.22 lac on various heads and Rs.25.39 lac on
account of interest. The appellant instituted proceedings under
Section 34 of the Arbitration and Conciliation Act, 1996 (for
brevity, 'the Act'). That proceeding bearing A.P. No.213 of 2006
was finally decided by a learned Single Judge of the High Court      F
of Calcutta on 04.01.2013. The objections of the appellant were
allowed in part in respect of only three counts relating to over-
run charges, crane hire charges and interest.

    3. The respondent filed an appeal being A.P.O. No.60 of          G
2013. The Division Bench, by the order under appeal dated
12.06.2013, allowed the appeal in part in respect of charges,
namely, crane hire charges and interest. In the present appeal
only those two issues have been raised on behalf of the
appellant. According to learned senior counsel for the appellant,    H
    484        SUPREME COURT REPORTS [2014) 9 S.C.R.


A the Division Bench has wrongly reversed the order of learned
  Single Judge on the issue of crane hire charges inasmuch as
  the claim of the appellant asking for payment of crane hire
  charges by the respondent for Unit Ill was based upon clause
  12.2.2 of the Work Order read with clauses 2.8.11, 3.38.3 and
B 3.38.14 of the Agreement/Tender Document. In respect of
  second issue relating to interest, learned-senior counsel has
  confined the claim of the appellant only against grant of pre-
  Award interest on the oasis of clause 1.15.5 of the Tender
  Document/Agreement.
c        4. On the other hand, learned senior counsel for the
    respondent has submitted that the Award in respect of crane
    hire charges is based on an overall view of entire material
    available before the Arbitral Tribunal and, therefore, although
    the Tribunal finally concluded that "there is nothing on record of
D   the Arbitral Tribunal to substantiate the 'understanding' between
    the parties regarding swapping of crane usage days between
    Units II and Ill as has been pleaded by the claimant", it only
    allowed Rs.8.25 lac in favour of appellant's claim for such
    charges. According to him, for the same very reason, taking a
E   holistic view of the whole matter, the Division Bench in the
    impugned order took the same view. On behalf of respondent,
    the grant of pre-Award interest could not be successfully
    defended in view of clause 1.15.5 ·of the Ag~eement which
    provides that "no interest shall be payable by SHEL on earnest
F   money/security deposit or any money due to the contractor by
    SHEL". The ambit and scope of aforesaid clause was subject
    matter in Civil Appeal No.7423 of 2005 between the appellant
    and M/s. Globe Hl-Fabs Ltd. decided on 12.11.2009 wherein
    this Court accepted and held that in view of such a provision
G   in the Agreement, interest is only payable from the date of the
    Award. The 'aforesaid legal position ought to have been
    accepted by the Division Bench of the High Court in view of
    law settled by judgments of this Court in the case of Sayeed
    Ahmed & Co. v. State of UP. & Ors. (2009) 12 SCC 26 and
H
     BHARAT HEAVY ELECTRICALS LTD. v. TATA                    485
       PROJECTS LTD. [SHIVA KIRTI SINGH, J.]
several other cases including the case of Union of India 11.          A
Concrete Products & Construction Co. & Ors. (2014) 4 SCC
416.

     5. On the issue of award of interest, learned senior counsel
for the respondent tried to persuade us to enhance the post-          B
Award interest granted by the Arbitral Tribunal @ 10.5% to 18%
p.a. in the li~ht of provisions in Section 31 (7)(b) of the Act. We
are unable to accept this contention because the Arbitral
Tribunal has already granted post-Award interest @ 10.5%.
Only if the Award had not made such a direction, the statutory        C
rate of interest @ 18% p.a. would have been payable from the
date of the Award to the date of payment as per statutory
provision noted above.

     6. In the. light of aforesaid discussion, we are constrained
to hold that the order under appeal ought not to have approved        D
grant of any.pre-Award interest.                             '

     7. So far as the issue relating to crane hire charges is
concerned, before expressing our views we think it proper to
extract the relevant clauses of the Work Order, i.e., clause 12,      E
12.2, 12.2.1 and 12.2.2 as well as the relevant clauses of the
Tender Document/Agreement :

     "Relevant extract of Work Order dated 16.03.1999

     Terms and conditions                                             F
      12.0 TOOLS & PLANTS AND CONSUMABLES

            You shall provide all necessary consumables and
            T & Ps (other than those specified below),
            measuring instruments, handling equipments as             G
            per provision of contract for timely completion of the
            total job· as per contract within the accepted rates.

      12.2 Following T & Ps will be provided by BHEL to you
                                                                      H
    486         SUPREME COURT REPORTS [2014] 9 S.C.R.


A                free of charge as per provision of contract on
                 availability.

     SI.      Description            Capacity          Quantity

     01.      Electric winches       10 MT             2 nos.
S
     02. 10 Sheave pulley block       100 MT           4 nos.

     03. Hydro test pump                               1 no.

     04. High Capacity crane (250 T)*                  1 no.
c
           12.2.1     The above T & Ps will be made available for
                 the project. You may make use of the T & Ps as
                 per the provision of tender document.

           12.2.2     * In case of 250 T capacity crane, operator
D
                 and consumable shall be provided by SHEL.
                 However, the fuel for operation of this crane shall
                 have to be arranged by you. 250 T Crane shall be
                 available only upto 'drum lifting of Unit-2' ."

E          "RELEVANT EXTRACT OF TENDER DOCUMENT

           NO.PSER:SCT:JSA:S2

           2.8.11       It is not obligatory on the part of SHEL to
                 supply any tools and tackles or other materials other
F                than those specifically agreed to do so by SHEL,
                 however, depending upon the availability, SHEL's
                 customer's handling equipment and other plants
                 may be made available to the contractor on
                 payment of the hire charge as fixed, subject to the
G                conditions laid down by SHEU customer from time
                 to time. Unless paid to advance such hire charges,
                 if applicable shall be recovered from contractor's
                 bill/ security deposit in one instalment.

H          3.38.3     The operation of all SHEL equipment (except
    BHARAT HEAVY ELECTRICALS LTD. v. TATA                       487
      PROJECTS LTD. [SHIVA KIRTI SINGH, J.]
            250 T Crane) will be in the scope of the contractor.        A
            BHEL will provide free of cost (including operator
            and consumables) one number 250 T Crane only
            upto the Drum Lifting Milestone of Unit 11 only.
            However the Fuel for operating this 250 T Crane
            shall have to be arranged by the contractor.                B

      3.38.14 BHEL will provide free of cost (including
            operator, fuel and consumables) 250 MT Crane only
            for the first unit (Unit-2)."

      8. Clause 12 and other sub-clauses thereunder as                  C
extracted above show that a high capacity crane (250 T) is
included in the Tools and Plants which will be provided by BHEL
to the respondent free of charge as per provisions of contract
on availability but only upto "drum lifting of Unit II" as specified
in clause 12.2.2. There is no provision either in the Work Order        D
or in the AgreementfTender Document to entitle the respondent
to claim that it was not obliged to pay the higher charges as
fixed, subject to the conditions laid down by BHEL from time
to time in respect of user of crane for Unit No:lll. To the contrary,
the extracts from the Tender Document contain a clear                   E
stipulation for recovery of such charges from the contractor's
bill/security deposit in one instalment.

      9. On going through the order under appeal, we find that
the learned Division Bench has not kept in mind the aforesaid
provisions in the Work Order and the Tender Document. BHEL              F
was neither required to issue any notice for exercising its right
to recover crane hire charges for Unit Ill, nor was it required to
deduct such charges from the running bills of the respondent.
There is no dispute or issue as regards quantum of such
charges claimed by the appellant but the Arbitral Tribunal              G
allowed it only to the extent of Rs.8.25 lac although the Tribunal
 itself found that the respondent had failed to produce any
 material in support of its defence that because the crane was
out of order for a number of days when Unit No.II was under
                                                                        H
    488        SUPREME COURT REPORTS [2014] 9 S.C.R.


A   erection/instalment and, therefore, the respondent became
    entitled to use the crane without hire charges for Unit No.Ill. In
    such circumstances, we find that the crane hire charges
    claimed by the appellant were wrongly disallowed by the order
    under appeal passed by the Division Bench.
B
       10. As a result, it is held that appellant is entitled for crane
  hire charges and, therefore, that amount needs to be deducted
  from the amoun1.payable to the respondent under the Award
  on other heads. It is also held that the appellant is not liable to
C pay any pre-Award interest and the interest@ 10.5% p.a. shall
  be payable by the appellant only from the date of Award till the
  date of payment on the Award amount now found payable, if
  any. We order accordingly. The order under appeal is set'aside
  to the a~oresaid extent. The appeal is allowed accordingly. No
  costs.
D
    Bibhuti Bhushan Bose                             Appeal disposed of.