MUNICIPAL CORPORATION OF GREATER MUMBAIversusBUCON ENGINEERS AND INFRASTRUCTURE PVT.LTD.

           IN THE HIGH COURT OF JUDICATURE AT BOMBAY
              ORDINARY ORIGINAL CIVIL JURISDICTION

                  ARBITRATION PETITION NO.1158 OF 2014
                                WITH
                   NOTICE OF MOTION NO. 1148 OF 2018
                                  IN
                  ARBITRATION PETITION NO.1158 OF 2014


The Municipal Corporation of Greater          ....     Petitioner
Mumbai.
            Vs.
Bucon Engineers & Infrastructure Pvt.
Limited                                       ....     Respondent

                                 WITH
                   ARBITRATION PETITION NO.256 OF 2015

The Municipal Corporation of Greater          ....     Petitioner
Mumbai.
           Vs.
Bucon Engineers & Infrastructure Pvt.
Limited                                       ....     Respondent


Mr. P.G. Lad, Senior Advocate a/w Mr. Paras Pawar, Ms. Pooja
Yadav i/by Ms. Komal Punjabi for Petitioner- MCGM in both
Petitions.
Mr. Faran Khan i/b Ms. Pranjali Bhandari, Advocate for Respondent
in both Petitions.


                               CORAM : ARUN R. PEDNEKER, J.
                               RESERVED ON           : 28th AUGUST 2026
                               PRONOUNCED ON : 11th SEPTEMBER 2026



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JUDGMENT :


1.     Heard the learned Counsel for the parties.

2.     By the present Petitions, the Petitioners challenge the arbitral awards

dated 24th April 2014 and 10th October 2014 under Section 34 of the

Arbitration and Conciliation Act, 1996.

3.     Learned counsel appearing for the Petitioners–MCGM submits that

both the Awards are identical and that he has advanced his arguments in

Arbitration Petition No. 1158 of 2014, and the facts are set out from

Arbitration Petition No. 1158 of 2014.

4.     The Municipal Corporation invited a tender for the planning,

designing, and construction of community toilet blocks in slums in R-

Central Ward, Lot-7, Mumbai. The tender had two phases, one of which

related to the publicity for slum sanitation, community participation, and

health and hygiene education by creating awareness and understanding

through Community Based Organisations (CBOs), while the Second Phase

related to Construction. The slums in Mumbai are situated on Government

land, MHADA land, Municipal Corporation land, and private land.

5.     After the CBO was registered and the required upfront contribution

had been paid, the Bidder was required to prepare an architectural layout of

the proposed community toilet in consultation with the concerned CBO and
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QAC and submit the said layout to the Petitioner-MCGM. Once the layout

and RCC drawings were approved, the Bidder could commence

construction.

6.     The contract period was for 21 months, commencing on 25 th January

2001 and ending on 31st October 2002. The tendered work could not be

completed within the stipulated contractual period, and multiple extensions

were consequently granted. The contract ultimately remained operative until

31st December 2005, with the final extension being granted without levy of

liquidated damages. Thereafter, no further sites were available for

construction, and the work could not be proceeded with.

7.     The proposed construction comprised a total of 20 toilet blocks, each

having a maximum capacity of 20 seats. These toilet blocks were proposed

to be constructed in the slum areas and involved different types of disposal

systems.

8.     All the sites could not be handed over to the Respondent-Claimant at

one time. The sites that were made available to the Claimant were allotted at

different points in time and, consequently, the work was required to be

completed over an extended period. Accordingly, the Respondent-Claimant

raised various claims before the learned Arbitrator on different dates. The

Arbitrator has awarded certain amounts in respect of the said claims, against

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which the present Petitions have been filed.

9.          The learned Arbitral Tribunal rejected Claim No. 1 relating to

excavation of hard rock, disallowed the claim for idle establishment in its

entirety, and rejected Claim Nos. 9 and 12 in full. It further directed that the

costs of the Reference and the Arbitrator’s fees be borne equally by the

parties. The learned Tribunal rejected four heads of claim, substantially

reduced the claim of Rs.77 lakhs to Rs.14.69 lakhs, reduced the rate of

interest from 24% to 12%, and corrected the Respondent’s/Claimant’s own

computation against it. The total amount awarded against the Claims is set

out in the table below:

     Claim                     Claim Particulars        Claim Awarded
     No.                                                     (Rs.)
      1(i)     Excavation of hard rock at Kulupwadi        Rejected
               site, Rs.94,597.20.
      1(ii)    Construction of UCR masonry wall at        45,883.00.
               Shantidoot Site
      1(iii)   Providing and fixing individual tap to    1,78,500.00.
               each W.C. of toilet block
        2      Compensation towards revision of          13,92,853.47
               rates.
        3      Loss of interest due to delay in           3,49,998/-
               payment
        4      Compensation                               14,69,388/-
        5      Infructuous expenditure                    1,82,500/-
        6      Delay in returning the Retention money      41,252.80

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        7     Extra cost incurred                         56,111/-
        8     Loss of profits and overheads               3,180/-

        9     Compensation towards miscellaneous          Rejected
              expenses
       10     Appointment of sole Arbitrator              50,000/-
       11     Compensation towards loss of interest       Rejected
              on due amounts as per above claims
       12     Cost of Arbitration                         Rejected

              Total :                                  37,69,666.07


       12% interest on above amounts from 28.2.2008 to 24.4.2014



10.    Before considering the claims and the findings thereon, it is necessary

to examine the relevant clauses of the contract and the alleged breaches

thereof, if any. The General Conditions of Contract and the relevant clauses,

including the provisions defining the site and area under the contract, are set

out below.

       14 :    Site Investigation Reports :
       14.1 The Contractor, in preparing the Bid, shall rely on any
       Site, Investigation Reports referred to in the Contract Data,
       supplemented by any information available to the Bidder.

       17. The Works to be completed by the Intended Completion
       Date :

       17.1 The Contractor may commence execution of the Works
       on the Start date and shall carry out the Works in accordance
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       with the Programme submitted by the Contractor, as updated
       with the approval of the Engineer, and complete them by the
       Intended Completion Date.

       18.     Approval by the Engineer :

       18.5 All Drawings prepared by the Contractor for the
       execution of the Temporary or Permanent Works, are subject to
       prior approval by the Engineer before their use.

       21. Possession of the Site :
       21.1 The Employer shall give possession of all parts of the Site
       to the Contractor. If possession of a part is not given by the date
       stated in the Contract Data, the Employer is deemed to have
       delayed the start of the relevant activities, and this will be a
       compensation event.

       39. Variations :
       39.1 All Variations shall be included in updated programmes
       and Activity Schedule produced by the Contractor.

       40. Payments for Variations :
       40.1 The contractor shall provide the Engineer with a quotation
       (with breakdown of unit rates) for carrying out the Variations
       when requested to do so by the Engineer. The Engineer shall
       assess the quotation, which shall be given within 7 days of the
       request or within any longer period stated by the Engineer and
       before the Variations is ordered.

       40.4 If the Engineer decides that the urgency of varying the
       work would prevent a quotation being given and considered
       without delaying the work, no quotation shall be given and the
       Variation shall be treated as a Compensation Event.

       48.     Retention :
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       48.1 The Employer shall retain from each payment due to the
       Contractor, the proportion stated in the Contract Data until
       completion of the whole of the Works.

       48.2 On completion of the whole of the Works, half the total
       amount retained is repaid to the Contractor and half when the
       Defects Liability Period has passed and the Engineer has
       certified that all Defects notified by the Engineer to the
       Contractor before the end of this period have been corrected.

11.    Before deciding each claim, the law governing interference under

Section 34 with an arbitral award passed by a technical expert may be noted

from the judgment of Hindustan Construction Company Limited v. National

Highways Authority of India1,wherein the Supreme Court observed as under:

       “25. This Court in Voestalpine Schienen GmbH v. DMRC2
       commenting on the value of having expert personnel as
       arbitrators, emphasised that "technical aspects of the dispute
       are suitably resolved by utilising their expertise when they act
       as arbitrators". Such an approach was commended also in
       Delhi Airport Metro Express (P) Ltd. v. DMRC3 wherein this
       Court held that: (Delhi Airport Metro Express case4, SCC p.
       155, para 41)

              "41. The members of the Arbitral Tribunal, nominated
              in accordance with the agreed procedure between the
              parties, are engineers and their award is not meant to
              be scrutinised in the same manner as one prepared by
              legally trained minds. In any event, it cannot be said
              that the view of the Tribunal is perverse. Therefore,
              we do not concur with the High Court's opinion21 that
              the award of the Tribunal on the legality of the
              termination notice is vitiated due to the vice of
              perversity."

1 (2024) 2 SCC 613
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       26. The prevailing view about the standard of scrutiny
       review, of an award, by persons of the disputants' choice being
       that of their not judicial decisions to stand and not interfered
       with, (save a small area where it is established that such a view
       is premised on patent illegality or their interpretation of the
       facts or terms, perverse, as to qualify for interference, courts
       have to necessarily choose the path of least interference, except
       when absolutely necessary). By training, inclination and
       experience, Judges tend to adopt a corrective lens; usually,
       commended for appellate review. However, that lens is
       unavailable when exercising jurisdiction under Section 34 of
       the Act. Courts cannot, through process of primary contract
       interpretation, thus, create pathways to the kind of review
       which is forbidden under Section 34.”

(ii)   In the case of PSA Sical Terminals Private Limited v. Board of

Trustees of V.O. Chidambaranar Port Trust, Tuticorin & Ors.2, the Supreme

Court considered the scope of judicial interference with an arbitral award

under Section 34 of the Arbitration and Conciliation Act, 1996, and observed

as under:

       40. It will thus appear to be a more than settled legal position,
       that in an application under Section 34, the court is not
       expected to act as an appellate court and reappreciate the
       evidence. The scope of interference would be limited to
       grounds provided under Section 34 of the Arbitration Act. The
       interference would be so warranted when the award is in
       violation of "public policy of India", which has been held to
       mean "the fundamental policy of Indian law". A judicial
       intervention on account of interfering on the merits of the
       award would not be permissible. However, the principles of
       natural justice as contained in Sections 18 and 34(2)(a)(iii) of
       the Arbitration Act would continue to be the grounds of
       challenge of an award. The ground for interference on the basis
       that the award is in conflict with justice or morality is now to
2 (2023) 15 SCC 781
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       be understood as a conflict with the "most basic notions of
       morality or justice". It is only such arbitral awards that shock
       the conscience of the court, that can be set aside on the said
       ground. An award would be set aside on the ground of patent
       illegality appearing on the face of the award and as such,
       which goes to the roots of the matter. However, an illegality
       with regard to a mere erroneous application of law would not
       be a ground for interference. Equally, reappreciation of
       evidence would not be permissible on the ground of patent
       illegality appearing on the face of the award.”

12.    Claim No.1-
       (i)  Excavation of hard rock at Kulupwadi site, Rs.94,597.20.
            This Claim is rejected.

       Claim No.1-
       (ii) Construction of UCR masonry wall at Shantidoot Site and is of
            Rs.45,883.00.

.      This Claim relates to the construction of UCR masonry wall at the

Shantidoot Site and is of Rs.45,883.00. The Petitioner objected to this Claim

on the ground that the same could not be claimed as an extra item. Claimant

had not shown the work to the Petitioner during the site visit nor demanded

any of the interim payment certificate or in final certificate, and that the

work was not certified by the Engineer.

.      The learned Tribunal, however allowed the claim on the ground that

the existing compound wall collapsed due to heavy rains at site and the

Petitioner had directed the Respondent to construct the wall at the site again.

The item was not included in the tender and as such it is an extra amount of

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Rs.45,883.00.

13.    The learned Arbitrator has observed that the UCR masonry wall at the

Shantidoot Site, which was constructed in place of existing compound wall

had collapsed due to heavy rains at the site and that the Claimant had

thereafter completed the work. The Claimant submitted that, contrary to the

contention of the Petitioners, said work was not done as a variation, as there

was no description of the compound wall in the contract. The Arbitrator

observed that the construction of wall was an existing fact and the Employer

did not object for the construction of the wall, which was required to make

good the collapsed wall and though the Claimant did not have the written

approval of the Employer, since the work had been completed, as admitted

by the Respondent, and physically existing at the site, the claim merits

considerations and hence the claim amounting to Rs.45,883.00 is allowed.

14.    Considering that the actual work had in fact been completed, and that

the same constitutes a measure ordinarily required to be undertaken and was

existing at the site, the claim allowed by the learned Arbitrator for Rs.

45,883.00 is a reasonable allowance towards the construction. Merely

because there appears to be a violation of Clause 44.04, and there is no

dispute regarding the necessity of the work, the award cannot be interfered

with. Since the entire work has been executed and the Tribunal has granted

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the claim, it would not be permissible for this Court, in exercise of its

jurisdiction under Section 34 of the Arbitration and Conciliation Act, to

interfere with the same on any of the grounds available under Section 34.

.      The Claim has been correctly decided and no case is made out to

interfere with.

15.    Claim No.1- (iii) Providing and fixing individual tap to each W.C. of
                         the toilet block for Rs.1,78,500.00.

.      The learned Tribunal observed that the drawing did not provide for

taps, nor were such taps mentioned in the specifications forming part of the

contract. Accordingly, the Respondents/Claimants placed an order for the

supply of taps at the negotiated rate of Rs. 1,050/- per tap. The learned

Tribunal      further    held   that   the   contract   did   not   obligate   the

Respondents/Claimants to provide individual taps for each W.C. However,

since it subsequently became necessary to provide such taps, and the

Claimants accordingly supplied them, the Tribunal found the claim to be

reasonable and justified.

16.    It is the submission of the learned counsel for the Petitioner-MCGM

that the provision of taps formed part of the contract. However, the Tribunal

has recorded a finding that the provision of taps was not included in the

original contract. The learned counsel for the Respondent/Claimant, in the

course of arguments, has also submitted that one of the reasons for the same
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was that the tap was initially intended to be provided only outside the

common toilet block, as the provision of individual taps in each W.C. would

result in the taps being left open and thereby cause wastage of water.

Initially, it was contemplated that the persons using the toilets would carry

water collected in the tank situated outside the toilet block. Subsequently,

however, it was decided that each W.C. should have an individual tap.

Accordingly, taps were fixed in each of the toilets. In view of the aforesaid

facts and circumstances, the finding recorded by the Tribunal cannot be

interfered with in the exercise of appellate jurisdiction under Section 34 of

the Arbitration Act.

17.    The finding of the Tribunal are that the original contract did not

provide for taps, and that taps were subsequently provided, thereby

justifying the claim, and the same cannot be interfered with in the Petition

under Section 34.

.      The Claim has been correctly decided and no case is made out to

interfere with.

18.    Claim No. 2 : Compensation towards revision of rates.

       The compensation towards revision of rates for execution during the

extended period i.e. from 1st November 2002 to 31st December 2005 of

Rs.13,92,853.47. The said claim is allowed by the learned Tribunal.

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.      Learned counsel appearing for the Petitioner submits that the learned

Tribunal has erred in allowing the claim. It is contended that the Respondent,

by letter dated 7th February 2003, had sought an extension of time and

expressly stated that it would carry out the work at the same rates and on the

same terms and conditions as stipulated in the contract, without claiming any

compensation under the contract. It is further submitted that, relying upon

the said terms, the Petitioner granted an extension of time to the Respondent

on three occasions. In these circumstances, learned counsel contends that the

Arbitrator erred in allowing the said claim.

.      The learned Tribunal has analysed the Petitioner’s contention that they

were required to hand over all the sites to enable the Claimant to commence

and proceed with the work. However, the Petitioner-MCGM were able to

hand over only five sites pursuant to their letter dated 12 th February 2001.

Even these sites were subsequently cancelled on 31st January 2002.

.      Thereafter, the Petitioner-MCGM, vide letter dated 15 February 2001,

issued work orders in respect of five additional sites. Out of these, four sites

were subsequently cancelled on 28th June 2001 and 9th January 2002,

respectively. Further, two sites were handed over on 9 th May 2001 and 13th

July 2001. The Petitioner thus failed to hand over all the sites to the

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Respondent-Claimant within the time contemplated, thereby preventing the

Claimant from proceeding with and completing the work as stipulated.

19.     It is significant to note that the last site was handed over only on 15

September 2001 and, even thereafter, the said site was cancelled on 31 st

January 2002 for various reasons. Consequently, the Respondent-Claimant

was left with substantially reduced time to complete the work within the

stipulated period of 21 months, which was due to expire on 24th October

2002.

20.     Clause 21.1 of the Contract provides that the Employer shall give

possession of all parts of the sites to the Contractors. It further provides that

if possession of any part is not given by the date stated in the Contract Data,

the Employer shall be deemed to have delayed the commencement of the

relevant activities, and such delay shall constitute a compensation event.

21.     Further, by letter dated 23rd September 2002, the Respondent-Claimant

had informed the Petitioner as to how the delay was being caused in giving

possession of the sites in accordance with the Contract. The Respondent-

Claimant also stated therein that the undertaking given by them, to the effect

that the work on the alternative sites would be carried out at the rates

specified in the original contract, was withdrawn.

22.     It is further noted that the method adopted for computing the excess

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amount claimed is set out by the Tribunal in paragraph 10.79. It cannot be

said that the valuations have not been worked out appropriately by the

learned Arbitrator. The contention is that the higher rates could not have

been granted in view of the undertaking given. However, the Tribunal has

noticed the breach of contract as well as the withdrawal of the undertaking

during the subsistence of the contract. The increase granted is also marginal,

as the same is based on the prevailing SSR rates and determined on the basis

of the increase in costs for work executed in 2003, 2004 and 2005.

23.    The challenge is essentially with regard to the consideration of the

escalation in the cost of raw materials and the natural increase in costs. The

Arbitrator has merely granted the amount towards such increase in cost.

.      The Claim has been correctly decided and no case is made out to

interfere with.

24.    Claim No. 3 : Compensation towards loss of interest due to delay in
       payment of Rs.7,88,406/- - granted Rs.3,49,998/-

       The Respondent-Claimant has submitted that its claim for interest is

based on Clause 43.1 of the Conditions of Contract, which provides that

payments shall be adjusted for deductions towards advance payments,

retention, other recoveries under the Contract, and taxes at source applicable

under law. Clause 43.1 further provides that the Employer shall pay the

Contractor the amount certified by the Engineer within 28 days from the
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date of each certificate. In the event of delayed payment by the Employer,

the Contractor shall be paid interest on the delayed payment in the next

payment, calculated from the date on which the payment became due until

the date on which the delayed payment is actually made, at the rate of 12%

per annum.

25.    The Respondent-Claimant has accordingly claimed interest on the

ground that the R.A. Bills were not cleared within 28 days from the date of

their submission. The Petitioner-MCGM, however, has contended that, in

terms of Clause 43.1, the period of 28 days is to be reckoned from the date

of certification of each R.A. Bill by the Engineer and not from the date of

submission of the bill by the Claimant.

26.    The Petitioner-MCGM denied that the Claimant was entitled to make

any claim for compensation and submitted that, as per Clause 43.1 of the

Conditions of Contract, read with Clause 6 of the Special Conditions of

Contract, the Employer was under an obligation to pay the amount certified

by the Engineer within 28 days from the date of each certificate, and not

within 28 days from the submission of the bill, as contended by the

Respondent-Claimant. Learned counsel for the Petitioner-MCGM submitted

that, despite having received the advance payment, the Claimants

considerably delayed the commencement of the work. It was further

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submitted that the Petitioner-MCGM had taken a liberal view of the matter

and had refrained from imposing any penalty for the breach committed by

the Claimants. It was also submitted that the Claimants had never made any

request for payment of interest, nor had they raised or included any such

demand in any of the Interim Payment Certificates or the Final Certificate.

Accordingly, the Petitoner-MCGM contended that it was not liable to make

any payment towards interest.

27.    The learned Tribunal allowed the claim, observing that neither the

Respondents-Claimants nor the Petitioner-MCGM had furnished the dates

on which the R.A. Bills were certified by the Engineer. The learned Tribunal

further noted that Annexure-III to the Statement of Claim (“S.O.C.”)

contained complete particulars of the bills, including the bill numbers, bill

amounts, etc. It was also held that the Petitioner-MCGM had merely denied

the contents of the claim without furnishing any particulars or supporting

details to substantiate such denial. In the absence of any contrary material,

the learned Tribunal accepted the dates of submission of the bills as

furnished by the Respondents-Claimants for the purpose of determining the

period of delay and consequential interest. Accordingly, the learned Tribunal

awarded a sum of Rs. 3,49,998/- towards compensation for loss of interest

arising out of the delay in payment of the R.A. Bills. This Court finds no

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error in the same.

.      The Claim has been correctly decided and no case is made out to

interfere with.

28.    Claim No. 4 : Compensation due to idle labour, staff, machineries etc.
                     Rs.77,07,468.00.

       It is the contention of the Petitioner-MCGM that they have brought to

the notice of the Respondent-Claimant, on several occasions, the slow

progress of the work and asked the Respondent-Claimant to expedite the

work or face action under the provisions of the Contract. The claim also does

not fall under any of the conditions of Clause 44.1 and is not covered under

any Compensation Event. It is also submitted that the Contract is an item-

rate contract, and the grievance of the Respondent-Claimant that, due to non-

provision of sufficient sites, a claim for idle resources is being made.

29.    It is further submitted that the Tribunal has failed to consider that, in

terms of the contract between the Respondent-Claimant and the Petitioner-

MCGM , the Respondent-Claimant will execute the said work at the same

work site and will not ask for compensation, and that the work would not

commence at the site on account of the failure of the N.G.Os. to convince

the slum dwellers. The Tribunal has noted that the Petitioner has not initiated

any action against the Claimants for not adhering to the programme

submitted by them, in spite of the provisions available in the contract for
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levying liquidated damages. The Claimants were granted three extensions of

time after expiry of the original period without liquidated damages, which

would      indicate     that   there   was   no   fault   on   the   part   of   the

Respondents/Claimants for not maintaining the progress of the work as per

the programme.

30.     In terms of Clause 44.1(a), if the Employer does not give access to

any part of the Site as per the stated date in the Contract, it shall be a

Compensation Event. So also, Clause 44.2 provides that if a Compensation

Event would cause additional cost or would prevent the work from being

completed before the Intended Completion Date, the Contract Price shall be

increased and/or the Intended Completion Date shall be extended. The

Engineer shall decide whether, and by how much, the Contract Price shall be

increased and whether, and by how much, the Intended Completion Date

shall be extended.

31.     Since the Petitioner-MCGM had granted an extension of time, it was

required to take into consideration the increased cost incurred in executing

the contract works. Accordingly, the additional expenditure incurred by the

Claimants towards idle labour, machinery, establishment, etc., was found to

be tenable by the learned Arbitrator. The Arbitrator, therefore, assessed the

charges towards labour, staff, machinery and establishment, setting out the

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details of each component, which aggregated to Rs. 77,07,408.00, with the

following break-up:

        a)     Idle labour        :     Rs.19,78,250/-
        b)     Idle Staff         :     Rs. 9,60,350/-
        c)     Idle Machinery :         Rs.27,25,700/-
        d)     Idle establishment :     Rs.20,43,108/-

The grant is made in terms of the Chart given below :

      Sr.          Period          Value of Compensation % of idle
      No.                         W.D. (Rs.) towards idle charges on
                                                labour    the value of
                                               claimed     work done
      1 Agreement period      12,69,894/-         7,50,100/-     59%
        1.3.2001 to 1.10.2002
      2 1st extension             69,13,000/-     2,94,310/-    4.25%
        1.11.2002 to
        31.12.2003
      3 2nd extension             28,37,000/-     2,20,230/-    7.8%
        1.1.2004 to
        31.12.2004
      4 3rd extension             11,54,000/-     7,13,610/-    61.8%
        1.1.2005 to
        31.12.2005
                                                19,78,250.00


32.     It has been held that the Petitioner-MCGM committed breaches of the

contract by failing to hand over proper sites for execution of the works

entrusted to the Claimants. To the extent that the sites were handed over, the

works were carried out in different spells over a period of 59 months, as

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against the 21 months stipulated under the agreement. Consequently, the

Claimants were required to deploy labour for the execution of the works

over an extended period. Accordingly, the Tribunal proceeded to award the

claim after undertaking a detailed and voluminous examination of the matter.

.      This Court finds no error in the same. The Claim has been correctly

decided and no case is made out to interfere with.

33.    Claim No.5. : Compensation due to infructuous expenditure
       incurred on appointment of N.G.O. due to certain sites becoming
       infeasible later Rs.1,82,500/-:

.      Learned counsel for the Petitioner-MCGM submits that the claim

arises out of the additional expenditure incurred in appointing an N.G.O. for

various sites, as contemplated under the contract. However, the sites made

available by the Petitioner-MCGM subsequently turned out to be infeasible,

thereby rendering the expenditure incurred by the Claimants infructuous.

Accordingly, the Claimants are entitled to recover the infructuous

expenditure so incurred, the consequences of which could not have been

reasonably foreseen at the time of incurring such expenditure.

.      Learned Counsel for the Petitioner–MCGM submits that the

expenditure incurred by the Respondent–Claimant towards NGO/CBO

activities was not infructuous. Guideline A-2, sub-clauses (e) to (h), required

registration of the CBO, payment of the upfront contribution, and approval

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of the layouts and drawings before construction could commence. The

Contract, therefore, compelled the Respondent-Claimant to incur such

expenditure before the feasibility of the sites could be ascertained. The

Petitioner subsequently cancelled the sites on the basis of the very reports

for which the Respondent-Claimant had incurred the expenditure and which

it had duly submitted. Accordingly, the Petitioner/MCGM submits that the

Respondent-Claimant is not entitled to claim the said expenditure as

infructuous.

.      The learned Tribunal has rendered a finding that the Bidder was

expected to engage a non-governmental organisation for the purpose of

programme publicity, to create awareness about the programme and an

understanding among the community about the conditions to be satisfied to

qualify for participation in the programme, and to assess the interested slum

communities' willingness to pay an upfront contribution towards the

operation and maintenance of improved sanitation facilities. Twenty-two

sites were found to be infeasible for various reasons, such as the community

being interested in 10 seats, but the land being unsuitable; the toilet having

recently been repaired by the Corporation and, the people not being

interested; as well as political misunderstandings. The same was

communicated by the Respondent-Claimant to the Petitioner-MCGM.

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.      After carrying out the activities expected to be performed by the

NGO, the sites were thereafter not made available for the work. As such, the

cost incurred by the Respondents-Claimants towards expenditure on

engaging NGOs and undertaking the groundwork was allowed to the extent

of ₹1,82,000/-. There is no material to interfere with the finding that the

computation is ex facie erroneous. There is no error in the Tribunal granting

the claim.

.      The Claim has been correctly decided and no case is made out to

interfere with.

34.    Claim no. 6 : Interest due to delayed payment of Retention money :

.      Learned counsel for the Petitioner-MCGM submits that the claim

arises out of the delay in returning the retention money, both in the form of

cash and bank guarantee. Learned counsel further submits that the Petitioner

had quoted its tender on the premise that the entire retention money would

be returned upon completion of the Defect Liability Period of 12 months,

following completion of the stipulated contract period of 21 months.

However, owing to the extension of the completion period from 21 months

to 60 months, the release and return of the retention money, both in the form

of cash and bank guarantee, were abnormally delayed, thereby necessitating

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the payment of heavy interest charges.

.      Learned counsel for the Petitioner-MCGM submits that the Claimants

had not submitted the MOU in respect of certain works and, consequently,

the bank guarantee was required to be extended. It is therefore contended

that the works could not be treated as completed and that the claim is wholly

misconceived.

.      The Tribunal has observed that Clause 48.2 provides that, upon

completion of the whole of the work, half of the total amount retained is to

be repaid to the Contractor, while the remaining half is to be repaid after the

expiry of the Defect Liability Period and upon certification by the Engineer

that all defects notified by the Engineer to the Contractor before the expiry

of the said period have been duly rectified.

.      Clause 48.3 further provides that, upon completion of the whole of the

works, the Contractor may substitute the retention money with an on-

demand Bank Guarantee (BG).

.      The value of the work executed by the Claimant as on 31.12.2005 was

accordingly taken into consideration. Thus, half of the amount retained was

required to be paid to the Contractor upon completion of the whole of the

work, while the remaining half became payable after the expiry of the Defect

Liability Period, i.e., on 31.12.2006. There was a delay in making payment

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of the said amounts. Accordingly, interest at the rate of 12% per annum was

awarded on the delayed payments, which worked out to Rs. 41,252.80. I find

no error in the aforesaid reasoning or in the award of interest.

.      The Claim has been correctly decided and no case is made out to

interfere with.

35.    Claim no.7 : Compensation towards extra cost incured towards
                   supplies made by B.S.E.S. Ltd. (Electricity Supply
                   Company Rs.56,111.00)

.      Learned counsel for the Respondent-Claimant submits that the claim

arises out of the Petitioners’/MCGM’s failure to pay certain charges levied

by the Electric Supply Company towards the supply of service cables, GT

land, earthing charges, connection fees, etc. The Petitioner-MCGM was

required to make payment of the said charges pursuant to the demand notice;

however, they failed and neglected to do so, thereby compelling the

Claimants to make payment of the same, contrary to Condition No. 1 under

the General Specifications for Electrical Installation Works forming part of

the contract. It is further submitted that, although the Petitioner-MCGM had

initially paid the said charges, they subsequently recovered the amounts

from the Respondents-Claimants through deductions from their R.A. bills.

.      Learned counsel for the Petitioner-MCGM submits that the

Petitioners-MCGM were liable to pay only the security deposit required for

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obtaining the electricity connection from the electricity supply company,

whereas all other incidental charges were to be borne by the Claimants

themselves. The Petitioner-MCGM further submitted that, during the pre-bid

meeting, it was expressly clarified that the cost of the cables, meter, and the

connection from the meter room to the cabin would be borne by the

Contractor. The minutes of the said meeting form part of the contract and are

binding upon the parties.

.      The learned Tribunal held that, as per the contract, the electrical

installation work, including the arrangement for supplying a connection to

the meter room, was the responsibility of the Petitioner/MCGM. Thereafter,

other electrical connections, such as providing the main switch, fuses,

MCBs, etc., were to be carried out as approved by the Engineer.

.      It was further observed that the Claimant had made a provision of Rs.

30,000/- in respect of electrical works in each block, for each type of work,

towards other expenditure to be incurred as described in the General

Specifications for Electrical Installation Works. The said amount was

accordingly allowed by the Tribunal.

.      The demand raised by the electricity supply company against the

Petitioner-MCGM was initially paid by the Claimants. Although the

Petitioner-MCGM had paid the charges, the same were subsequently

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recovered from the running account (R.A.) bill. The Tribunal found that the

liability to pay the said charges was that of the Petitioner-MCGM and,

accordingly, awarded an amount of Rs. 37,000/-. No case is made out for

interference with the said findings under Section 34 of the Arbitration and

Conciliation Act, 1996.

.      The Claim has been correctly decided and no case is made out to

interfere with.

36.    Claim No. 8 : Compensation towards loss of profits and overheads
                     Rs.1,27,33,000/- :

.      Learned counsel for the Respondents-Claimants submitted that the

present claim arises out of the loss suffered by the Claimants on account of

the Petitioners’-MCGM failure to permit the Respondent-Claimants to

execute the entire contracted work. It was further submitted that

approximately 40% of the work that was permitted to be executed was not

carried out within the original stipulated contract period, but during the

extended contract period, which ultimately extended to 59 months. The

Claimants, therefore, contend that the Respondents are liable to compensate

them for the losses suffered on this account.

.      Learned counsel for the Petitioner-MCGM denied the submissions,

contending that the contract was admittedly based on a demand-based

programme and, therefore, the quantum of work could not be ascertained in
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advance. It was further submitted that it was the obligation of the NGO

appointed by the Respondent-Claimants to create awareness among the

public regarding S.S.P., generate demand, and facilitate the formation of

C.B.Os. The Petitioner-MCGM permitted the Respondents-Claimants to

utilise the funds in the P/North Ward during the extended period, subject to

the same terms and conditions as stipulated in the contract.

.      The learned Tribunal considered 15% of the value of the work that

could not be executed, amounting to Rs.212 lakhs, as a reasonable measure

of loss of profit. Accordingly, the claim towards loss of profit, quantified at

Rs. 31.80 lakhs, was allowed.

.      The Claim has been correctly decided and no case is made out to

interfere with.

37.    Claim No.9 : Compensation towards miscellaneous expenses,
                    Rs.7,82,050/- :

.      Learned counsel for the Respondent-Claimants submits that the

various expenses like (a) Consultation charges, (b) Diesel and Petrol charges

for inspection vehicles, (c) Telephone, Fax, Mobile etc. charges, (d)

Emergency Repairs required to be carried out to machineries, (e) Medical

expenses, (f) Insurance Charges, (g) Electric & Water charges and (h) Other

Miscellaneous Charges.

.      Learned Counsel for the Petitioner-MCGM submitted that any such
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expenses alleged to have been incurred by the Respondents-Claimants are

part of the rates quoted by the Respondents-Claimants and are not separately

payable.

.      Learned Tribunal held that the Respondents-Claimants are not

justified to claiming this amount and rejected the claim.

.      The Claim has been correctly decided and no case is made out to

interfere with.

38.    Claim No.10 – Compensation towards expenses incurred towards
                     appointment of Sole Arbitrator Rs.75,000.00 :

.      The learned Tribunal granted Rs.50,000.00 on the ground that

Petitioner-MCGM failed to follow the contractual obligation and neglected

to settle the genuine claim, disputes and differences of the Respondents-

Claimants as per Clause 3.1(d) of Special Condition of Contract which states

that the expenses incurred by each party in connection with preparation,

presentation, etc. shall be borne by each party itself. However, the fees and

expenses paid to the Arbitrator appointed shall be shared equally by both the

parties.

.      The Claim has been correctly decided and no case is made out to

interfere with.

39.    Claim No. 11 – Compensation towards loss of interest on due amounts
                      as per above claims :

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.      Learned counsel for the Claimant/Respondent submits that this claim

is arising out of interest on amounts claimed and not paid by the Petitioners-

MCGM and that is claimed from the due dates considered for each of the

claims from 1 to 9 till the actual date of payment for the ante-lite, pendent-

lite and post-pendent-lite.

.      Learned counsel for the Petitioner-MCGM submitted that since no

amount is due to be paid to the Claimants, question of payment of interest

does not arise and that the claims for interest made are prior to 3 years of

invoking the Arbitration clause and are hopelessly barred by law of

limitation.

.      The learned Tribunal held that the Respondent-Claimant submitted the

claim towards loss of interest on due amount. The submission of the

Petitioner-MCGM that no payment is due to be paid to the Respondent-

Claimant is considered untenable in as much as analysis made earlier with

reference to each claim. The learned Tribunal considers it appropriate to

allow the interest @ 12% and accordingly awards interest @ 12% on the

amounts awarded on all the claims, from the date of final bill i.e. 28 th

February 2008 till the date of the Award.

.      The Claim has been correctly decided and no case is made out to
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interfere with.

40.    Claim No. 12 : Cost of Arbitration Rs.10,00.000/- :

.      Learned counsel for the Respondent-Claimant submits that this claim

is arising out of the extra expenses required to be incurred on account of

arbitration process, which was thrust upon them and that this at present

tentative, on the probable expenditure which is likely to be incurred by them

and they crave leave to amend this claim amount at the end of arbitration

proceedings, on the basis of actual expenditure incurred by them.

.      Learned counsel for the Petitioner-MCGM submitted that since the

proceedings filed by the Respondents-Claimants are totally false and

frivolous, they are not liable to pay any amount towards the alleged cost of

Arbitration and that in Clause 3.1(d) of the Special Conditions of Contract, it

is clearly provided that the expenses incurred by each party in connection

with preparation, presentation etc. of its proceedings, shall be borne by each

party itself and that is further provided that the fees and expenses paid to the

Arbitrator shall be shared equally by both the parties and submitted that the

claim is liable to be rejected.

.      The learned Tribunal held that as per Sub-Clause 4 (c) of Clause 7 of

Arbitration and Conciliation Act, the Arbitration Agreement deem to have

been made when an exchange of statements and defence in which the

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existence of the agreement allegedly by one party and not denied by the

other. In as much as the Arbitration clause is invoked by the Respondent-

Claimant which has been agreed to by the Petitioner-MCGM in the present

case, no question of considering that the Arbitration has been thrust upon the

Respondent-Claimant and as such he cannot claim any amount so claimed.

Hence, the claim is rejected. Accordingly, the learned Tribunal has not

awarded cost to either party, the cost of Arbitration proceedings and the fee

of the Arbitrator is borne by both the parties on 50:50 basis. No case is made

out for interference.

41.    The arguments regarding the alleged overlapping of claims,

particularly in respect of idle charges and revision of rates, are

misconceived. The revision of rates pertains to the cost of executing the

work and constitutes a price claim in respect of the work actually executed.

In contrast, idle charges relate to the costs incurred towards labour, staff,

machinery and other resources that remained available at the site but could

not be utilised, or were under-utilised, due to circumstances beyond the

Respondent/claimant’s control. Thus, the two claims arise from distinct

heads of loss and compensate for different consequences. The revision of

rates compensates for the increased cost of executing the work, whereas idle

charges compensate for the resources that remained idle or under-utilised

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during the relevant period. Accordingly, there is no overlap between the two

claims, and both are independently recoverable.

42.     The Tribunal has awarded compensation under different heads and at

different rates. In particular, the Tribunal has awarded compensation towards

idling charges for the extended period required to complete the works at the

sites. Separately, it has awarded compensation towards loss of profits. Thus,

there is no overlap between the respective claims, as they pertain to distinct

heads of compensation, and the Tribunal has correctly treated them as such.

43.     As held by the Supreme Court in the judgment of Associate Builders

V. Delhi Development Authority3, the limited scope of Judicial interference

under Section 34, at paragraph 33 is noted below :-

       “33. It must clearly be understood that when a court is
       applying the "public policy" test to an arbitration award, it
       does not act as a court of appeal and consequently errors of
       fact cannot be corrected. A possible view by the arbitrator on
       facts has necessarily to pass muster as the arbitrator is the
       ultimate master of the quantity and quality of evidence to be
       relied upon when he delivers his arbitral award. Thus an award
       based on little evidence or on evidence which does not
       measure up in quality to a trained legal mind would not be
       held to be invalid on this score 17. Once it is found that the
       arbitrators approach is not arbitrary or capricious, then he is
       the last word on facts. In P.R. Shah, Shares & Stock Brokers
       (P) Ltd. v. B.H.H. Securities (P) Ltd. 18, this Court held: (SCC
       pp. 601-02, para 21).”

.       Thus, once the quantum of compensation awarded by the Tribunal is


3   (2015) 3 SCC 49
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                      found to be reasonable, free from patent illegality, and within the terms of

                      the contract, the same cannot be interfered with in a petition under Section

                      34 of the Arbitration and Conciliation Act, 1996. Accordingly, no case for

                      interference with the impugned order is made out.

                      44. Learned counsel submitted that the claims in both petitions, i.e.

                      Arbitration Petition No. 1158 of 2014 and Arbitration Petition No. 256 of

                      2015, are identical, and that the contracts and claims therein are also

                      identical. The difference in the amounts awarded is attributable to the

                      respective allotment of the sites. Since the principal issues involved are

                      similar, no separate arguments were advanced in respect of the second

                      petition. In view of the same, no case is made out for interference in the

                      second petition also.

                      45.    The Arbitration Petitions stand dismissed.

                      46.    In view of dismissal of the Arbitration Petitions, Notice of Motion

                      does not survive, the same is also disposed of.

                      47.    Learned counsel appearing for the Petitioner prays for a stay of the

                      order passed today. However, as the Award is in favour of the Claimant and

                      the challenge thereto has also been dismissed, the prayer for stay of the order

                      is rejected.

                                                                          (ARUN R. PEDNEKER, J.)
BHALCHANDRA
GOPAL DUSANE
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Digitally signed by
BHALCHANDRA
GOPAL DUSANE
Date: 2026.09.11
19:51:12 +0530