Asian Resurfacing Of Road Agency ... vs Union Of India
2010 Latest Caselaw 398 Del

*             IN THE HIGH COURT OF DELHI AT NEW DELHI

+                         OMP No.49/2010

                                                 25th January, 2010.


ASIAN RESURFACING OF ROAD AGENCY PVT. LTD.
                                        ...Petitioner

                                 Through:        Mr. Sandeep Sethi, Sr.
                                                 Advocate with Mr. Ashish
                                                 Mohan, Advocate

                          VERSUS

UNION OF INDIA                                               ...Respondent

                                 Through:        Nemo.


CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA

1. Whether the Reporters of local papers may be allowed to see the judgment?

2.      To be referred to the Reporter or not?         Yes

3.      Whether the judgment should be reported in the Digest?           Yes

    %                            JUDGMENT (ORAL)

VALMIKI J.MEHTA, J

1. By this petition under Section 34 of the Arbitration and Conciliation

Act, 1996, the petitioner challenges the Award dated 7.12.2009 passed by

the sole Arbitrator declining the claim of the petitioner for grant of increased OMP-49/2010 Page 1 prices of bitumen, used in the work performed under the subject Contract.

The contracted work in question, awarded to the petitioner by the

respondent, was for strengthening and post- strengthening development

works for Main Road No. 56 from RD-O to RD-5600, strengthening of main

carriageway and raising of footpath and improvement of Central verge.

2. By the impugned Award, the Arbitrator has dismissed the claim of the

petitioner for reimbursement. The Arbitrator has taken the view that when

oil marketing companies increased the cost of bitumen, the same cannot be

said to be on account of subsequent legislation or equivalent order thereby

entitling the petitioner to the benefit of Clause 10C of the Contract.

3. Mr. Sandeep Sethi, learned senior counsel for the petitioner drew my

attention to the said Clause 10C to contend that the same has been wrongly

understood by the Arbitrator. This Clause reads as under:-

"If after submission of the tender, the price of any material incorporated in the works (not being a material supplied from the Engineer-in-Charge‟s stores in accordance with Clause 10thereof) 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 in the price and/or wages prevailing at the time of the last stipulated date for receipt of the tenders including extensions if any for the work, and the contractor thereupon necessarily and properly pays 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 such increased wages, then the amount of the contract shall accordingly be varied and provided further that any such increase shall not be payable if such increase has become operative after the stipulated date of completion of the work in question."

OMP-49/2010 Page 2

4. The issue before the Arbitrator was, and before this court is, the

interpretation to be put on the expression "any fresh law or statutory rule or

order". The Arbitrator, as already stated above, has held that increased price

of bitumen by the oil companies cannot be construed to be an increase under

the expression a „statutory order‟.

5. The language of the aforesaid expression used in Clause 10C of the

contract is quite clear that reimbursement to the contractor is for any

increased cost of material or labour when the same is on account of any

increase as a result of an order which has a statutory/legislative flavor,

meaning thereby, when the input cost to the contractor increases only

because of any statute or ordinance or statutory rule or statutory order, only

then in such circumstances, the contractor can claim reimbursement for the

higher cost incurred by it.

6. In my opinion, the expression "or order" is a part of the larger

expression "statutory rule or order" meaning thereby the order has to be a

statutory order emanating from either the legislature or it ought to be passed

under a delegated legislation. Merely because bitumen is under an

administered price mechanism of the oil companies, cannot mean that, the

increased cost of bitumen can be said to be on account of fresh law or

statutory rule or statutory order.

OMP-49/2010 Page 3

7. During the course of arguments, the counsel for the petitioner was put

a query as to whether the increased rates of bitumen are notified by the

Government as statutory rule or order. Mr. Sandeep Sethi fairly stated that

he is not aware of any such position.

At this stage, I see from internal page 6, para 2 of the Award that the

fact of the matter is that when rates of bitumen are increased, the same are

not notified in the Gazette, and which notification in the Gazette necessarily

happens in the case of coming into force of a statute, or a statutory rule or a

statutory order.

8. The counsel for the petitioner has very strenuously canvassed before

me that the respondent has accepted certain Awards of Arbitrators whereby

the Arbitrators had given the increased price of bitumen by holding the same

as falling in Clause 10C. Firstly, those Awards, are admittedly not of the

present Arbitrator. Secondly, in my opinion, unless there is a judgment of a

Court which would have confirmed the interpretation as stated by the

Arbitrators holding that price of bitumen is statutory order of the oil

companies, I am not bound by such Awards. In my opinion the Union of

India was not prudent in those cases and have wrongly accepted the Award

of the Arbitrators, but, I do not find that I, as a Court should in any manner

be influenced by those actions of the Union of India whereby it has accepted,

OMP-49/2010 Page 4 and in my opinion wrongly, an interpretation of Clause 10C of the contract.

I may only state that it has been repeatedly held by the Supreme Court while

dealing with Article 14 of the Constitution that equality is a positive concept

and it cannot be enforced for the purpose of committing an illegality.

Though that principle is strictly not applicable herein, but applying the spirit

of that principle, I do feel that those Awards which have wrongly held

entitlement of payment to the contractors of increased price of bitumen, on

account of the orders of the oil companies, as equivalent to statutory orders,

if I enforce the same, I would be enforcing the illegal principle in those

Awards, and which I cannot and I am not inclined to do so.

9. In view of the above, I am unable to agree with the contentions of the

counsel for the petitioner and find that there is no reason for issuing any

notice in this petition, which is dismissed, leaving the parties to bear their

own costs.

                                              VALMIKI J. MEHTA, J
January 25, 2010
ib




OMP-49/2010                                                               Page 5