M/S. ASSOCIATED CONSTRUCTION versus PAWANHANS HELICOPTERS PVT LTD

Citation: [2008] 7 S.C.R. 970 · Decided: 07-05-2008 · Supreme Court of India · Bench: TARUN CHATTERJEE · Disposal: Appeal(s) allowed

Judgment (excerpt)

[2008] 7 3 C.R 970 
A 
MIS. ASSOCIATED CONSTRUCTION 
v. 
PAWANHANS HELICOPTERS PVT LTD 
(Civil Appeals Nos. 3376-3377 of 2008) 
B 
MAY 7, 2008 
[TARUN CHATTERJEE AND HARJIT SINGH BEDI, JJ.] 
Arbitration - Award - Challenge to - Held: The Court 
does not sit in appeal over an arbitral award - If view taken by 
c arbitrator permissible, it cannot be interfered with, on the 
premise that a different view is also possible - On facts. it 
cannot be said that the arbitra! award was so unconscionable 
that it required interference by Court 
Contract - For construction work - Between Appellant 
D and Respondent-Government undertaking -
Delay in 
.. 
complr->tion of work on account of reasons attributable to 
Respondent - Respondent demanded "No Dues Certificate" 
for release of payment - Appellant gave such certificate -
Claim towards escalation by Appellant - On facts held: Even 
E assuming that there could be no price escalation during 
pendency of the contract, such embargo could not be carried 
beyond that period as time was essence of the contract- Plea 
raised by Appellant that it issued "No Dues Certificate" under 
duress not an after thought. 
F 
Appellant-contracting firm entered into a contract for 
construction work with the Respondent, a Government 
of India undertaking. The construction work was 
scheduled to be completed in 4 month but the Appellant 
could not meet the deadline due to the fault of the 
G Respondent. The Respondent demanded a "No Dues 
Certificate" for release of payment. Appellant gave such 
certificate allegedly "under duress" as it was in economic 
.. 
distress. There was a disagreement between the parties 
over the payment of bills. The matter was referred for 
H 
970 
MIS ASSOCIATED CONSTRUCTION v. PAWANHANS 
971 
HELICOPTERS PVT LTD. 
arbitration. The arbitral award passed was in favour of A 
Appellant. on which the Respondent moved the High 
Court. The Single Judge too held in favour of Appellant 
stating that clauses 18 and 34 of the contract, when read 
together, provided for the payment of escalation charges 
...... 
as the work had not been completed within four months B 
on account of the fault on the part of the Respondent and 
that the said clauses did not prohibit such payment, more 
particularly as time was essence of the contract and as the 
contract was not on a fixed price, the prohibition of 
escalation was, if at all, to be read during the period of c 
contract only. The Single Judge also repelled the arguments 
of the Respondent that after having submitted the final bill 
on 25th October 1991, it was not open to the Appellant to 
submit a second final bill on 2nd February 1993 by 
observing that the payment received as a consequence of D 
the bills submitted on 25th October 1991, was "under 
duress" and it is on that account that the App~llant had 
given the aforesaid "No Dues Certificate". The Division 
Bench of the High Court however set aside the order of 
the Single Judge. Hence the present appeals. 
E 
Allowing the appeals, the Court 
HELD:1.1. Clause 43 and 43 (1) and (2) of the contract 
in question when read together clearly visualize escalation 
of price on account of reasons beyond the control of the 
F 
contractor and attributable to the other side. Moreover, 
~ 
. 
clause 43 (2) clearly states that the remedy under clause 43(1) 
would be in addition to such other remedy that may be open 
to the contractor under the other provisions. Clause 43 
should be read in aid of the contractor as it clearly provides 
for indemnity in case there was a delay in the completion of G 
the work which could be attributable to the Respondent. 
Further, even assuming for a moment that there could be 
no price escalation during the period of 4 months i.e. during 
the pendency cf the contract, such embargo would not be 
carried beyond that period as time was the essence of the H 
972 
SUPREME COURT REPORTS 
[2008] 7 S.C.R. 
A contract. [Paras 7, 11] [981-C,D, 984-F,G] 
1.2. The Court does not sit as one in appeal over the 
award of the arbitrator and if the view taken by the 
arbitrator is permissible, no interference is called for on 
the premise that a different view was also possible. Also, 
8 
in commercial transactions, all situations cannot be 
visualized and the positive and unchallenged finding in 
the present case is that the delay in the execution of the 
work was occasioned on account of reasons attributable 
the to Respondent. It cannot, therefore, be said that the 
C awa

Excerpt shown. Read the full judgment & AI analysis in Lexace.