Bombay High Court Upholds ₹10.54 Crore Arbitration Award Against CADA In Beed Irrigation Project

The Bombay High Court has recently upheld a Rs. 10.54 crore arbitral award arising from delays in the repair and renovation of 19 minor irrigation tanks in Beed district, holding the Command Area Development Authority responsible for stalling the project.

A Division Bench of Justices Arun R. Pedneker and Vaishali Patil-Jadhav dismissed an appeal filed by senior officials of the authority and affirmed the Commercial Court's refusal to set aside the award. The bench agreed with the arbitrator that the department could not rely on contractual clauses barring compensation after being found in breach of its own obligations.

"Notwithstanding the clauses in the contract, when the party has failed to standby it's part of the contract, it is not available for the defaulting party to insist upon implementation of the clauses of the contract providing for no claim for idling of machinery or escalation of price. The argument raised is, thus, rejected.”, it said. 

The contract was awarded in 2006 to Hule Constructions Private Limited for irrigation works valued at about Rs 29.40 crore. The stipulated completion period was twelve months, ending in November 2007. The work, however, continued for nearly three years beyond the deadline. The arbitrator found that the delay was caused by the department's failure to hand over work sites in time, failure to complete silt surveys, and repeated release of water into canals without prior notice, which prevented execution of desilting work.

Before the High Court, the department's officials argued that the contractor's claims were barred by limitation and that the contractor itself was in default. They also challenged the validity of the arbitration, contending that consent for reference was given only by the government advocate.

The contractor maintained that it was ready to perform the work but was rendered idle by administrative lapses. It sought compensation for prolonged overheads, loss of productivity of men and machinery, and royalty deductions made from running bills without authority.

The High Court rejected these objections. It noted that the officials had participated in the arbitration proceedings without raising any timely challenge to the tribunal's constitution. It also agreed that the compensation awarded for loss of productivity and overheads was supported by evidence and fell within the arbitrator's domain.

The appeal was dismissed. The arbitral award of Rs 10,54,54,600, covering six allowed claim heads along with interest and Rs 20 lakh as costs, stands confirmed.

For Appellants: Advocate Amit A. Yadkikar;

For Respondents: Advocate J. N. Singh (Hule Constructions Private Limited) and Advocate A. R. Kale, AGP (State, Water Resources Department).