Shri B.P. Sharma vs Union Of India
1995 Latest Caselaw 957 Del

JUDGMENT

K. Ramamoorthy, J.

1. On 18.12.1992 the Arbitrator had passed the award directing the Union of India to pay to the claimant Shri B. P. Sharma a sum of Rs. 7,55,552.16 and also directed the Union of India to pay a simple interest @ 10% per annum on the awarded amount in respect of claim Nos. 1 and 2 that is, Rs. 84,570.31 from 10.1.1990 till the payment.

2. There are nine claims dealt with by the Arbitrator.

3. The Union of India has raised objections only with reference to claim No. 8. The arbitrator has given cogent reasons for the award and they are as follows :

"Claim No. 8 (As per the agreement the stipulated date of start of the work was 24.11.1981 with stipulated date of completion as 23.5.1982 since the period of completion stipulated was only 6 months. The actual date of completion of work as recorded by the Respondent was 6.7.1988. For a job of this magnitude and of this type of underground cable-costing work in such a Metropolitan City requiring close coordination with various authorities concerned with roads, telephones, water-supply, electricity supply, sewage disposal etc., and with the local corporation/municipality the time period of 6 months had been very tight. In a job of this nature and magnitude both parties of the contract must be very cautious and careful, and should take every possible step to ensure that there is no lapse on their parts to allow any slippage of time. But this work was ultimately completed on 6.7.1988. Thus, a job of stipulated period of completion of 6 months was delayed by a period of about 5 years 7 months. This delay was obviously abnormal. The Respondent was bound to take abundant precautions in planning out the work and in coordinating with the various authorities involved in underground services prior to start of work and also during the progress of work. The Respondent failed in fulfillling these obligations grossly resulting in such abnormal delay in completion of the work. The grant of extension of time without levy of compensation by the Superintending Engineer, vide his letter No. Constn./WI/523/S (C) TND/2062 dated 13.7.1989, shows that the claimant contractor was not found liable to pay compensation as per the contract condition by the Respondent for such abnormal delay in completion of the work. Considering all these aspects, the evidence adduced and the arguments advanced on this issue I find that the Respondent committed breaches of contract and hence the Respondent is liable to pay damages on this account of such abnormal delay in completion of work. During the forth hearing of the case held on 7.11.1992 it was calculated that the net work done by the claimant in respect of this contract after the 4th R/A bill (paid on 26.6.1982) after deducting cost of materials issued by the Department and consumed in the work was Rs. 24,39,934/-, vide the minutes of the fourth hearing issued by the Arbitrator in his letter No. CE(ARB.)/JP/3 dated 11.11.1992. This is a very fair estimate of the value of work done after stipulated date fair estimate of the value of work done after stipulated date of completion (23.5.1982) as per contract after deducting cost of materials issued by the Respondent and consumed in the work during this period for which there had been no price escalation. This net amount of Rs. 24,39,934/- had been carried out during the prolonged period of about 5 years 7 months (say 5-1/2 years). Considering a reasonable price rise @ 10% per year for such work the average price rise during the period of 5-1/2 years will be 55/2 = 27.5%. Therefore, a fair and reasonable calculation of damage for the prolongation of work.

= (27.5/100) x 24,39,934 = Rs. 6,70,981.85

The above calculation of damages includes all direct losses suffered by the claimant due to prolongation of the work, I, therefore, consider that the claim No. 8 of the claimant is partly justified for an amount of Rs. 6,70,981.85."

4. The objections of the Union of India on this claim is that this is covered by Clause (c) of the contract and the decision of he Superintending Engineer is final and, therefore, the Arbitrator has no jurisdiction to go into that questions. Clause 10(c) reads as follows :

"If during the progress of the work the price of any material incorporated in the work not being a materials supplied from the Engineer-in-Charge's stores in accordance with Clause 10 hereof) and/or wages of labour increases as a direct result, of the coming into force of any fresh law or statutory rule or order (but not due to any changes in Sales Tax) and such increase exceeds ten per cent of the price and/or wages prevailing at the time of receipt of the tender for the work and the contractor thereupon necessarily and properly pay in respect of that material (incorporated in the works) such increased price and/or in respect of labour engaged on the execution of the work at such increased wages then the amount of the contract shall accordingly be varied provided always that any increase so payable is not in the opinion of the Superintending Engineer (whose decision shall be final and binding) attributable to delay in the execution of the contract within the control of the contractor.

Provided however, no reimbursement shall be made if the increase is not more than 10% of the said prices/wages and if so the reimbursement shall be made only on the excess over 10% and provided further that any such increase shall not be payable if such increase has become operative after the contract or extended date of completion of the work in question.

If during the progress of the work the price of any material incorporated in the work (not being a material supplied from the Engineer-in-Charge's stores in accordance with Clause 10 hereof), and/or wages of labour is decreased as a result of the coming into force of any fresh law or statutory rules or order (but not due to any changes in sales tax), as such decrease exceeds ten per cent of the prices and/or wages prevailing at the time of receipt of the tender for the work Government shall in respect of materials incorporated in the works (not being material supplied from the Engineer-in-Charge's stores in accordance with Clause 10 hereof) and/or labour engaged on the execution of the work after the date of coming into force of such law, statutory, rule or order be entitled to deduct from the dues of the contractor such amount as shall be equivalent of difference between the prices of materials and or wages as they purchased at the time of receipt of under for the work minus ten per cent thereof and the prices of materials and for wages of labour on the coming into force of such law statutory sub of order.

The contractor shall for the purpose of this conditions keep such books of account and other documents as are necessary to show the amount of any increase claimed or reduction available and shall allow inspection of the same by a duly authorised representative of Government and further shall at the request of the Engineer-in-Charge furnish, verified, in such a manner as the Engineer-in-Charge may required any documents so kept and such other information as the Engineer-in-Charge may require.

The contractor shall within a reasonable time of his becoming aware of any alteration in the price of any such material and/or wages of labour give notice thereof to the Engineer-in-Charge stating that the same is given pursuant to this condition together with an information relating thereto which he may be in a position to supply."

5. Learned counsel for the objector relied upon the judgment of the Supreme Court in the case of Vishwanath Sood v. Union of India and others , and also a decision of this court in the case of R. S. Rana v. Delhi Development Authority and others (1993 (2) Arb. LR page 165). These two cases were dealt with in different situation and they have absolute no application to the facts and circumstances of the instant case.

6. Learned counsel for the Claimant referred to the decision in the case of M/s. Metro Electric Co. New Delhi v. Delhi Development Authority and others (AIR 1980 Delhi 266). Where this court has held that the claimant would be entitled to compensation if there was a delay on the part of the employer. Hence, I do not find any infirmity in the award passed by the Arbitrator. The Petitioner is entitled to interest @ 12% per annum of the decretal amount from the date of award till the date of realisation.

7. The suit stands disposed of.