The National Highways Authority ... vs Agrawal ??? Jmc (Jv)
2011 Latest Caselaw 3868 Del

22 & 23.

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

+                         Date of Decision: 10.08.2011

%                     O.M.P. 640/2009 and O.M.P. 641/2009


       THE NATIONAL HIGHWAYS AUTHORITY OF INDIA ..... Petitioner
                      Through: Mr.   Sudhir  Nandrajog,      Senior
                               Advocate, with Mr. Bibhakar Misra
                               & Mr. Sumit Gupta, Advocates.

                      versus

       AGRAWAL - JMC (JV)                               .....Respondent
                       Through:        Mr.  Harish     Malhotra,    Senior
                                       Advocate, with Mr. S.K. Chandwani,
                                       Advocate.


       CORAM:
       HON'BLE MR. JUSTICE VIPIN SANGHI


       1. Whether the Reporters of local papers may
          be allowed to see the judgment?           :         No

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

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



VIPIN SANGHI, J. (Oral)

1. The petitioner-NHAI by this petition under Section 34 of the

Arbitration & Conciliation Act, 1996 (the Act) assails the arbitral award

dated 04.07.2009 made by a Arbitral Tribunal consisting of three

learned Arbitrators, namely, Sh. H.S. Bhatia, Ex-Member (Engg.),

International Airports Authority of India; Lieutenant General (Retd.)

Prakash Suri, PVSM; and Sh. Prem Nath, Ex-Executive Director, Airports

Authority of India; in favour of the petitioner and against the petitioner.

The Tribunal primarily considered only one claim. The issue which

arose before the Tribunal was "Whether the work of stumps and roots

removal and back filling of pits of the trees above 300 mm girth, cut

and not forming part of the BOQ of the contract, is incidental to the

project or payable separately". The Tribunal has held that the said

work is payable separately.

2. The submission of Mr. Sudhir Nandrajog, learned senior counsel

for the petitioner, is that the award made by the learned Tribunal is in

ignorance of Section 201.1 of the Ministry of Surface Transport (MOST)

Instructions. Section 201.1, as amended by the technical

specifications, reads as follows:

"201.1 Scope: This work shall consist of cutting, excavating, removing and disposing of all materials such as trees of girth upto 300mm, bushes, shrubs, stumps, roots, grass weeds, rubbish etc. and top soil upto 150mm, which in the opinion of engineer is unsuitable for incorporation in the work including draining out stagnant water if any from the area of roadway, drain, cross drainage structure and other area as specified in the drawing or by Engineer. It shall include necessary excavation by suitable equipment, back filling of pits by suitable soil resulting from uprooting of trees & stumps and making the surface in proper grade by motor grader or any other suitable equipment and compacted by power roller to required compaction complete as per section 300." (underlining added)."

3. Mr. Nandrajog submits that the scope of the work covered by

Section 201.1 includes cutting and removal of trees of girth up to 300

mm. He submits that the work of removal and disposal of stumps and

roots of the cut trees, irrespective of the size of the girth, is also

covered by Section 201.1.

4. Before proceedings further, it would be appropriate to refer to a

few relevant facts. The contract was awarded to the respondent on

29.11.2005. On 01.02.2006, the petitioner conveyed that the

competent authority of NHAI has accorded in-principle approval to the

carrying out of work of cutting and removal of trees, which is not

covered under the scope of the main contract and are causing

encumbrance and obstruction in the execution of the contractual work,

as a separate job. The respondent-contractor was asked to give its

concurrence to carry out the work of cutting and removal of trees. It is

not in dispute that the trees in respect whereof this correspondence

took place, were of girth more than 300 mm and above. On

06.02.2006, the respondent conveyed its concurrence to carry out the

said job of cutting and removing trees, subject to, inter alia, the

condition that "the valuation indicated do not cover the scope of

uprooting/removal of roots and disposing of the same, filling of pits

including rolling & compaction, etc. which shall be paid separately as

per the mutually agreed rates as a variation order in the main contract

agreements.".

5. On 07.02.2006, the petitioner awarded the work of cutting and

removal of trees earmarked on both sides of the Highway in question.

The petitioner referred to its communication dated 01.02.2006 and the

respondent's letter dated 06.02.2006. One of the conditions in this

work order was that the trees are to be cut at ground level.

6. The respondent carried out the work of cutting and removal of

trees of girth more than 300 mm under the work order dated

07.02.2006. It is not in dispute that the Engineer as well as the Project

Director of the NHAI approved provisional payment for the work of

stumps and roots removal and back filling of pits of the trees of girth

300 mm or more. The respondent made payment on provisional basis

up to IPC 8 for the said work. However, the petitioner, in its

communication dated 28.08.2007, issued from the Headquarters of

NHAI, stated that, based on the stipulation of Section 201.5, and

considering that the work of cutting of trees was entrusted to the

respondent as a separate job outside the scope of the contract

agreement, it had been decided that variation proposal for stumps,

roots removal including pit filing is not acceptable, and cannot be paid

as variation item.

7. The dispute travelled to the Dispute Resolution Board, which

unanimously took a view in favour of the respondent. Thereafter, the

arbitration agreement was invoked by the petitioner and that is how

the arbitration award in question has come to be rendered.

8. The submission of Mr. Nandrajog is that the question framed by

the Tribunal itself was erroneous. It proceeds on the assumption that

the work of stumps and roots removal and back filling of pits of the

trees of above 300 mm girth does not form part of the BOQ of the

contract. He submits that this is contrary to a plain reading of Section

201.1, as aforesaid. He further submits that the work order dated

07.02.2006 pertained only to the cutting and removal of the trees of

girth more than 300 mm, about which there is no dispute. The said

work having been done, the stumps and roots of the cut trees had to

be removed and the back filling of pits had to be carried out under

Section 201.1. The respondent was not entitled to claim any extra

rates for carrying out the said work.

9. Mr. Nandrajog submits that the Tribunal has been influenced by

the fact that the Engineer and the Project Director had recommended

provisional rates to the NHAI Headquarters for payment to the

respondent for the work of removal of stumps and roots and back

filling of pits of trees above 300 mm girth. He submits that the mere

recommendation made by the Project Director is neither here nor

there, as the employer, who is alone entitled to approve the additional

rates, is the Chairman of the NHAI. He submits that the authorization

of the Project Director as the authorized representative of the

employer is only for the purpose of Clause 68.2 of the contract

agreement. Clause 68.2 provides that any notice to be given to the

Employer or to the Engineer under the terms of the Contract shall be

sent by post, cable, telex, facsimile transmission to or left at the

respective addresses nominated for that purpose in Part-II of these

conditions. He submits that the nomination of the authorized

representative, i.e., the Project Director was only for the purposes of

Clause 68.2 and for no other purpose. Therefore, the provisional

decision of the Project Director to pay provisional rates for the work in

question cannot be said to be the final decision of the employer.

10. He further submits that under Clause 2.1 of COPA Part-II, it

defines the Engineer's duties & authority. It is provided that the

Engineer shall obtain prior permission from, and specific approval of,

the employer before taking the decision, inter alia, "certifying

additional cost determined under Clause 12"; "before issuing orders to

execute new items of work (non BOQ item), Engineer shall obtain

technical approval from employer".

11. Mr.Nandrajog submits that the understanding of the respondent-

contractor was also very clear in this regard, that the approval granted

by the Project Director was only provisional and subject to the approval

by the employer. In this regard, he places reliance upon the

respondent's pleading contained in para 19 of the statement of claim,

which reads as follows:

"The Claimant commenced the removal of stumps and roots and back filling of pits and continued to execute the

item pending final approval from the employer. The Engineer certified the payments for the work done at provisional rates and Respondent duly released the certified payments till June 2007 on provisional rates recommended by Engineer and paid by Employer per tree subject to the approval of rates by NHA HQ."

12. The next objection of Mr. Nandrajog pertains to the award of

interest @ 10% per annum. He submits that the rate of interest is

excessive.

13. On the other hand, the submission of Mr. Harish Malhotra,

learned senior counsel for the respondent, is that even prior to the

award of contract the petitioner had given clarification on various

issues to the pre-bid queries. He refers to the following queries and

the answers given by the petitioner in this regard:

         Sl.     Queries                          Clarification
         No

2. The Co-ordination for shifting The Contractor is of utilities is thrown on required to co-

contractor for which he is not ordinate only with entitled for any payment. It the respective is invariably seen that authorities.

                 utility         agencies/Tee     Responsibility of
                 authorities take their own       shifting lies with
                 sweet time and do not            NHAI.
                 bother to shift/cut in time
                 putting the work progress
                 to complete disruption.
                 Please hence do take up with
                 them instead of saying „hands
                 up‟, and go to hell.
         31.     It is seen that there is no      The same has been
                 BOQ item included for            clarified in Sl.No.2.
                 cutting of trees.       It is
                 hence presumed either no
                 cutting     of    trees   are
                 involved or the same is


                  not to be done by the
                 Contractor.

                 Delay on this affecting the
                 progress shall be to the
                 account of Employer.

14. He submits that the rates quoted by the respondent were based

on the answer to the aforesaid queries given by the petitioner.

Mr.Harish Malhotra submits that the contractor, in view of the aforesaid

pre-bid clarifications, did not include the work involved in removal of

stumps & roots and back filling of pits in relation to the trees of girth

more than 300 mm. Therefore, the petitioner cannot, now, seek to

enlarge the scope of the respondents responsibility under Section

201.1. Mr. Malhotra submits that a meeting was held between the

representatives of the petitioner, the Engineer and the contractor on

31.03.2006. In this meeting, the representative of the petitioner,

namely, the Project Director informed that trees of girth more than 300

mm will be cut by the respondent-contractor under a separate work

order. The respondent requested for variation order for removal of

stumps & roots and back filling of pits by suitable soil resulting from

uprooting of trees & stumps and also making the surface in proper

grade by Motor Grader and compacted by Power Roller to the required

compaction as per Section 300 of TS. The petitioner-employer and the

consultant informed the respondent-contractor to carry out the

removal of stumps & roots and back filling immediately in view of

safety of road users. At the same time, the respondent-contractor was

requested to make proposal for variation order.

15. Mr. Malhotra further submits that the Engineer is not powerless

to issue instructions to the contractor, without approval of the

employer. He refers to Clause (viii) of Clause 2.1 of COPA Part-II, which

provides that, "notwithstanding the obligation, as set out above, to

obtain approval, if, in the opinion of the Engineer, an emergency

occurs affecting the safety of life or of the works or of adjoining

property, he may, without relieving the contractor of any of his duties

and responsibilities under the contract, instruct the Contractor to

execute all such work or to do all such things as may, in the opinion of

the Engineer, be necessary to abate or reduce the risk. The contractor

shall forthwith comply, despite the absence of approval of the

employer. The Engineer shall determine an addition to the Contract

Price, in respect of such instruction, in accordance with Clause 52 and

shall notify the contractor accordingly, with a copy to the employer."

16. Mr. Malhotra submits by reference to the minutes of the meeting

held on 31.03.2006 that the instruction to remove the stumps & roots

of trees of girth more than 300 mm was issued by the Engineer "in

view of safety of road users". This was an emergency and the power

under Clause 2.18 A of COPA Part-II was invoked by the Engineer. He

further submits that the work order dated 07.02.2006 had also been

issued by the Project Director on behalf of the employer. He submits

that the Chairman of the NHAI, who is the employer, does not

individually deal with the construction contracts and it is the Project

Director, who represents him in all matters. He submits that the rate

analysis provided by the respondent was approved by the Engineer in

its communication dated 17.11.2006. He also submits that the

petitioner has not even questioned the rate analysis relied upon in the

calculation of the amount awarded to the respondent.

17. Mr. Harish Malhotra also refers to Section 201.5 of the MOST

Specifications, which provide as follows:

"201.5. Measurements for Payment

Clearing grubbing for road embankment, drains and cross- drainage structures shall be measured on area basis in terms of hectares. Clearing and grubbing of borrow areas shall be deemed to be a part of works preparatory to embankment construction and shall be deemed to have been included in the rates quoted for the embankment construction item and no separate payment shall be made for the same. Cutting of trees upto 300 mm in girth including removal of stumps and roots, and trimming of branches of trees extending above the roadway shall be considered incidental to the clearing and grubbing operations. Removal of stumps left over after trees have been cut by any other agency shall also be considered incidental to the clearing and grubbing operations.

Cutting, including removal of stumps and roots of trees of girth above 300 mm and backfilling to required compaction shall be measured in terms of number according to the sizes given below"

       (emphasis supplied)

       i)     Above       300mm     to      600 mm

       ii)    Above       600mm     to      900mm



        iii)   Above       900mm      to 1800mm

       iv)    Above 1800mm

For this purpose, the girth shall be measured at a height of 1 metre above ground or at the top of the stumps if the height of the stumps is less than one metre from the ground."

18. He submits that the measurement in respect of cutting, including

removal of stumps & roots, of trees girth above 300 mm and back

filling to required compaction is measured on a separate basis

altogether, i.e., in respect of each such case, the measurement is to be

taken separately and the amount is to be paid depending on the girth

of the tree that is cut and removed, and of which the stumps and roots

are removed and for filling done to the required compaction. On the

other hand, the payment of work of cutting and removal of trees and

for back filling and compaction, where the girth of the trees is up to

300 mm is to be paid on per hectare basis.

19. It is also submitted by Mr. Malhotra that before the Arbitral

Tribunal the submission of the petitioner was that the activity of

clearing and grubbing, i.e., removal of the stumps and roots and the

activity of rolling and compaction in relation to the trees with girth

more than 300 mm formed part of the scope of the work awarded

under the work order dated 07.02.2006. It was claimed by the

petitioner that the said work was incidental to the work awarded by the

said work order. This submission of the petitioner has been rejected

by the Tribunal by referring to Clause 3 of the respondent's

communication dated 06.02.2006. He submits that Section 201.1 was

not even specifically relied upon by the petitioner before the Tribunal.

20. Having heard the submissions of learned counsels for the parties,

perused the award and the materials relied upon by the parties, in my

considered view, the petitioner has failed to make out a case of either

a patent illegality in the impugned award, or a case of the tribunal

ignoring, or acting contrary to a contractual term (and therefore

exceeding its jurisdiction) while making the impugned award. The

view taken by the arbitral tribunal, which is a body of three

experienced experts in the field, is a plausible view and, that being the

position, does not call for interference in these proceedings under

Section 34 of the Act.

21. A perusal of Section 201.5 supports the contention of the

respondent that the activity of not only the cutting and removing of

trees of girth more than 300 mm was excluded from the scope of the

work detailed in Section 201.1, but even the work of removal of stumps

and roots of such trees and of backfilling to required compaction was

not covered by Section 201.1. It is precisely for this reason that the

said activity is to be paid for not on hectorage basis, but on the basis

of individual cases, depending on the girth of the trees.

22. Even a reading of Section 201.1 does not support the submission

of the petitioner. The said section uses the expression "... ... It shall

include excavation ........ backfilling ........ resulting from uprooting of

trees and stumps ....... ..........". Therefore, the process of excavation,

backfilling and compaction is a process which is to accompany the

process of cutting and removal of the trees. Since Section 201.1 talks

of cutting and removal of trees of girth upto 300 mm only, the process

of excavation, filling and compaction provided in Section 201.1 would

only pertain to those trees and not to trees having girth more than 300

mm. The process of excavation, filling and compaction in relation to

stumps and roots of trees, for it to be covered by Section 201.1 has to

relate to those trees which have girth upto 300 mm and no more.

23. I also find force in the respondents submission that clause (viii)

of clause 2.1 of COPA-II entitles the Engineer, in emergency situations

- which affect the safety of life or of the works, to instruct the

contractor to carry out works as may be necessary to reduce or abate

the risk. Such instructions do not require the approval of the

employer. The correspondence shows that the petitioner invoked the

said clause while requiring the respondent to carry out the work of

cutting and removal of trees of girth more than 300 mm. The

respondent accepted the said work while making it clear that the

respondent would be entitled to be paid extra for carrying out the work

of removal of stumps, excavation, backfilling and compaction. The

petitioner did not question this stand of the respondent by placing

reliance of Section 201.1 of MOST specifications as applicable. The

respondent was entitled to be paid extra in accordance with clause 52.

The view taken by the arbitral tribunal appears to be a perfectly

plausible view and it cannot be said that its view does not take into

account the contractual terms and conditions.

24. So far as the rate of interest is concerned, I am of the view that

considering the period in question, the fair and reasonable rate would

have been 8% p.a. Accordingly, the rate of interest awarded by the

tribunal stands reduced to 8% p.a.

25. With the aforesaid modification in the impugned award, this

petition stands disposed of.

26. Parties are left to bear their respective costs.

VIPIN SANGHI, J

AUGUST 10, 2011 'BSR'