Delhi High Court
Union Of India vs Sab Industries Ltd. on 21 September, 2015
Author: V. Kameswar Rao
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment reserved on February 5, 2015
Judgment delivered on September21,2015
+ O.M.P.No. 161/2003
UNION OF INDIA
..... Petitioner
Through: Mr.Darpan Wadhwa, Senior CGSC
with Mr.Arnav Kumar, Govt.
Pleader, Ms.Roshini Namboodiry,
Advocate
versus
SAB INDUSTRIES LTD.
..... Respondent
Through: Mr.Nidhesh Gupta, Sr. Advocate
with Mr.Tarun Gupta, Advocate
CORAM:
HON'BLE MR. JUSTICE V.KAMESWAR RAO
V.KAMESWAR RAO, J.
1. The challenge in this petition by the Union of India under Sections
28, 31, 34 of the Arbitration & Conciliation Act is to the award dated
December 31, 2002 passed by the learned Sole Arbitrator, whereby the
learned Arbitrator has allowed certain claims of the respondent and
rejected/not granted certain counterclaims of the petitioner, whereby he
has awarded a sum of Rs.6,79,52,084.13 with interest @ 12% p.a with
effect from September 1, 1997 to December 31, 2002 amounting to
Rs.4,00,49,812.99 i.e a total sum of Rs.10,80,01,897.12 along with
interest @10% p.a with effect from April 1, 2003.
The facts:
2. The facts in brief are, the petitioner had floated a tender for
construction of accommodation for Army Hospital (R&R) in the Delhi
Cantonment Area. The bids were opened and the respondent was declared
successful. The respondent thereafter accepted the terms of the contract
on June 29, 1991. The total contract was for Rs.25,00,44,768.40/- less
12% debate amounting to Rs.22,00,39,396.19/-.
3. As per the contract, the construction work of the project was to
begin on July 17, 1991 and was supposed to be completed within 27
months of commencement i.e. October 16, 1993. The respondent
completed the construction work on March 25, 1997. The final bill dated
March 29, 1997 was considered by the petitioner who found that no
amount was due and in fact Rs.1,15,47,711.93/- was to be recovered from
the respondent. The respondent initiated arbitration proceedings against
the petitioner claiming Rs.46,91,71,288.69/- along with interest @ 24%
raising in total 41 claims. The petitioner herein had also raised
counterclaims of Rs.1,88,00,000/- along with 24% interest and the
recovery of negative amount arrived in the final bill. The Arbitrator
awarded Rs.10,80,01,897.12/- along with 10% future interest with effect
from April 01, 2003 to the respondent and Rs.7,50,000/- along with
interest towards the counterclaim to the petitioner.
4. The challenge in the petition is to the award of 21 claims of the
respondent i.e. claim Nos. 1, 2, 3, 7, 8, 9, 11, 12, 14, 18, 20, 21, 23, 29,
33, 34, 35, 36, 37, 40 & 41 and rejection/partially allowing counterclaims
No. 1, 2 & 5. The following is the conclusion arrived at by the learned
Arbitrator, while awarding the aforesaid claims/counter claims.
5. Claim No.1:-
Insofar as the claim No. 1 is concerned, the same relates to final bill dated
March 29, 1997 as certified by the Assistant Garrison Engineer and
forwarded to Garrison Engineer. The claim No. 1 consists of five sub-
claims, apart from claim 1(B). They are as under:-
(i) Schedule ‗A' items:-
The respondent had in the final bill, against Schedule „A‟ items claimed
an amount of Rs. 23,66,29,678.87/-. The petitioner had checked and
verified the bill with regard to Schedule „A‟ items to be Rs.
23,65,11,558.50/-. It was the case of the petitioner that the respondent
had not pointed out its disagreement with the changes carried out in the
final bill with regard to Schedule A items. The learned Arbitrator has
held that the amount of Rs. 23,65,11,558.50/- as checked and verified by
the petitioner for Schedule A items, is correct;
(ii) Deviation Orders:-
This is a claim wherein, the respondent has claimed certain amounts under
various deviation orders issued by the respondent. The learned Arbitrator
has awarded the amount against four deviation orders namely, DO No.
59(P); DO No. 30(P), DO No. 70(P), DO No. 6(P-1).
(iii) Recovery for Schedule ‗B' items:-
It was the case of the respondent that while calculating the theoretical
consumption, the petitioner has not considered the wastage for cement and
free issue materials and has only considered an arbitrary percentage of
other material. It was the case of the petitioner that recovery against
Schedule „B‟ material has been worked out correctly as per condition
10(B) of IAFW-2249 forming part of the CA. Wastage of steel has been
considered and no wastage of cement has been allowed as wastage of
2.5% is already included in the constants applied for calculation of
theoretical consumption. It was the case of the respondent that the
petitioner has not considered the consumption of cement in preparatory
works of office, cement, godowns, stores, curing water tanks, repairs of
demolitions done by other agencies etc. In the case of reinforcement
steel, actual wastage with respect to reinforcement steel issue and
recorded by the board and allowed in RAR bills has not been taken by the
petitioners. It was the case of the respondent wastage of reinforcement
steel etc as per CPWD contracts and all government contracts is allowed
at 5%. It was also argued that wastage of free issue material have also to
be accounted for. According to the respondent, the total schedule B
material issued to it was for Rs. 5,94,66,320.03, which the petitioner
confirmed as Rs. 5,94,55,861.25/- as mentioned in the final bill corrected
by the petitioner.
6. The learned Arbitrator was of the view that the condition 10(B) of
the contract agreement (IAFW-2249) stipulate the use of material in all
preparatory works, of whatever description, as may be required and due
allowance for actual consumption for reasonable wear and tear and/or
waste. Further, it stipulated that on completion of works, if the contractor
fails to return surplus material out of those supplied by the Govt., then, in
addition to any other liability which the contractor would incur, the
Engineer-in-Charge, may, by a written notice to the contractor, require
him to pay within a fortnight of receipt of the notice for such unreturned
and surplus material at double the prevailing market rate as decided by the
Garrison Engineer. The learned Arbitrator noted that the petitioner had
admitted that the consumption of cement has not been recorded by it for
preparatory and temporary works and the wastage of reinforcement and
structural steel have not been worked out with respect to the length issued
vis-a-vis bar bending schedule and only 2.5% wastage was allowed by the
petitioner. It is also noted by the learned Arbitrator that no wastage as
been allowed for free issue material. The learned Arbitrator also observed
that the petitioner has already done the recovery for total material issued
under Schedule B at issue rates in the final bill. For these reasons, he was
of the view that the penal rate recovery is not justified which has been
done by the petitioner in the final bill. He also noted that no notice was
issued by the petitioner to the respondent as per the provisions of the
contract agreement. He has also held that, recovery for material issued
under Schedule B has been effected in the final bill. The reasoning given
by the learned Arbitrator for not agreeing with the penal rate of recovery
was that the petitioner has not proved any misuse on the part of the
respondent. He allowed the market rate recovery of over issue of
Schedule B material excluding cement taking 5% wastage on steel items
being a normal practice including free issue materials issued free of cost.
He allowed a recovery of Rs. 3,20,277/- in lieu of Rs. 39,11,873.56/-;
(iv) Recovery due to site examination:-
The respondent had submitted that the petitioner has shown a recovery of
Rs. 5 lakhs towards site examination, which according to the respondent
has no basis and was an afterthought. The case of the petitioner was that
certain defects have been noticed by the petitioner during contract and
maintenance period which have not been rectified by the claimant and
these defects have not been finalized so far and therefore, an amount of
Rs. 5 lakhs has been withheld in the final bill. It was admitted by the
petitioner that an amount of Rs. 56,717/- against finalized recoveries has
been effected from various RARs. The learned Arbitrator was of the view
that since the work was completed in March 1997, the recovery, if any has
not finalized by the petitioner and withholding of amount for over five
years is uncalled for cannot be done and concluded that the recovery of
Rs. 5 lakhs from the final bill is wrong. He in para 126 has held as
under:-
"126. The gross value (work done including DOs) of the
final bill as per UOI is Rs.27,08,33,062.44. In view of the
findings and payments allowed by me on the above claim,
the gross value of the final bill works out to
Rs.27,24,80,770.90".
(v) Escalation Bill:-
The claim of the petitioner was for escalation against material. It was the
case of the respondent that the escalation bill has been wrongly prepared
by the petitioner. The petitioner justified the bill, by taking a stand, that
reimbursement of prices has been corrected during Technical Check and
Audit Check. It is noted, during the arbitration proceedings, the
Arbitrator had called upon the respondent to comment on the
discrepancies of the escalation bill prepared by the petitioner. According
to the petitioner (i) the escalation amount payable in the last four quarters
ending March, 24, 1996, June 24, 1996, December 24, 1996 and March
24, 1997 has been shown as „Zero‟; (ii) the escalation in last four quarters,
the escalation was the highest; (iii) the appendix G is showing the
payment of star rates from 8th RAR to 105th RAR, is at variance with the
stand of the petitioner, that escalation is „Zero‟. The objection of the
petitioner before the learned Arbitrator was that the amendment No. 1 to
the contract dated January 6, 1994 had prohibited any escalation on
material after April 30, 1994 which includes the star rate items in the last
four quarters ending March 24, 1996, June 24, 1996 and March 24, 1997.
The escalation amount payable for these quarters has been shown by them
as zero. According to the learned Arbitrator, in view of Appendix G,
wherein, the petitioner has shown the payment of star rates from 8th RAR
dated June 24, 1992 upto 105th RAR dated March 24, 1997, the learned
Arbitrator held that the stand of the petitioner is contrary to the Appendix
G. The learned Arbitrator also held that the work done against star rate
items carried out in various quarters have been wrongly taken by the
petitioner in the last four quarters only. According to the learned
Arbitrator, in the last four quarters escalation on the work done was the
highest which has been shown by the petitioner as zero. The learned
Arbitrator was also of the view that during the original completion period
of work and thereafter, the indices which were being applied were for the
month of June, 1994 for material only as contended by the respondent.
According to the learned Arbitrator, now in the final bill, as prepared,
these indices were sought to be reworked on the basis of month of March,
1994. According to the learned Arbitrator, there was no basis for doing
so. The learned Arbitrator agreed to the submissions of the respondent
that no freeze whatsoever could have been applied since the wordings of
the amendment do not permit a freeze to be applied as done by the
petitioner.
7. On the aspect of amendment No. 1, it was the case of the
respondent that they were forced to sign the amendment under coercion.
It was also contended by the respondent that the amendment No. 1 does
not restrict the payment of escalation as per its wordings and its contents.
The learned Arbitrator has also held that a perusal of the amendment
makes it clear that it has been stated that no reimbursement due to the
variation in prices of material is to be admissible except as permitted in
the subsequent paras. The subsequent para starting with the word
„secondly‟ clearly shows that the reimbursement due to the variation in
the prices for "any new material ordered now onwards and luxalon and
door shutters shall remain admissible provided further that contractor
places firm orders for procurement of luxalon and door shutters by April
13, 1994, failing which no reimbursement due to variation in prices for
luxalon and door shutter shall be admissible beyond April 30, 1994".
According to the learned Arbitrator, a plain reading of the aforesaid
makes it clear, there is no bar on account of variation in prices for any
new material which may be ordered henceforth.
8. The learned Arbitrator has also observed that the petitioner has
freezed the indices and has considered the whole sale price index of 252.1
applicable for the quarter ended in March 24, 1994, which is nowhere
mentioned in the amendment and as such, the stand of the petitioner
cannot be sustained. The learned Arbitrator was of the view that it does
appear that the respondent was made to sign the amendment No. 1 under
the threat of petitioner that it would not grant extension of time. The
respondent continued to object both prior to and subsequent to its signing
the amendment. The learned Arbitrator held, from a reading of the
amendment, same is in accordance with the contention put forth by the
counsel for the respondent. He has held that a plain reading of its words
does not permit any freeze to be applied and the escalation claimed in the
final bill is based on the June 1994 indices as per the department‟s
interpretation.
9. The learned Arbitrator allowed the claim of the respondent. He has
also held that the petitioner has not incorporated the value of the star rate
items in the respective quarters in terms of Appendix G. It is also his
finding that the petitioner has not interpreted the Amendment No. 1
correctly. He relied upon the contention of the respondent in its letter
dated December 5, 2002, as correct. He worked out the total amount
payable under claim No.1 as Rs. 38,74,466.85/-.
Claim No. 1(B) Security Deposit along with interest @ 24% p.a.:-
10. According to the respondent, as per condition 68 of IAFW-2249,
the security deposit of Rs. 1.50 lakhs should have been released after a
Defect Liability Period of one year. The respondent had claimed the
refund of FDR No. 519401 of Rs. 1.50 lakhs with interest @ 24% p.a. for
42 months of the extended contract period and have claimed an amount of
Rs. 3,39,136/-. The case of the petitioner was, the final bill could not be
finalized for want of vouchers and also the respondent has not given a No-
Claim Certificate. The petitioner, on interest, had stated that the FDR
deposited by the respondent bears interest which the bank must have been
accruing to their Account. The learned Arbitrator, on the basis of the
finding that as per the contract provisions, the payment of the final bill
was to be made within 6 months from the date of submission by the
respondent, which in this case has been delayed by more than 4 years, has
directed the release of FDR amount of Rs. 1.50 lakhs, but, denied the
interest on the ground that the FDR interest has already been credited to
the Account holder.
Claim No. 2-Cost due to time over run:-
11. It was the case of the respondent that the date of start of work was
March 17, 1991 and stipulated date of completion was October 16, 1993.
The time period of completion of work was 27 months. The work was
actually completed in March 25, 1997, with a total delay of 42 months. It
was the case of the respondent that the delay was attributable to the
petitioner because of late handing over of the sites, delay in approval of
mix-design, delay in nomination of E/M agencies, delay in approval of
Luxalon, delay in issues of drawings, delay in issue of Schedule B
material. Learned Arbitrator has observed the filing of Ex.CC-2 to CC-
716 by the respondent in support of its claim. The respondent had
claimed an amount of Rs. 6,79,79,232/- which was later amended to Rs.
8,44,55,527.52/- before the earlier Arbitrator. The case of the petitioner
was that the extension was granted under clause 11(A) and according to
clause 11(C) of IAFW-2249, this claim cannot be granted. The
respondent relied upon the decision of this Court in Arbitration
Application No. 417/1998, wherein, in this Court, in its order dated March
28, 2001 had noted that the argument of the petitioner that clause 11(A)
and 11(C) of IAFW-2249 applies, as per which, the decision is final and
binding. According to the respondent the clauses pertain to extension of
time, whereas, the claim which has been made is on account of damages,
non availability of sites, designs etc. The learned Arbitrator had observed
that this Court had referred to the decision of M/s. Simplex Concrete Piles
India Ltd. Vs. Engineer-in-Chief, Army Headquarters (Suit No.
2543/1995), where the same clauses have been interpreted by holding that
the disputes raised are not covered under clauses 11(A) and 11(C) of the
contract and the petitioner cannot raise the plea in the present proceedings
as the aforesaid decisions are binding. The learned Arbitrator was of the
view that in view of the decision of this Court, the contention of the
petitioner that the respondent is estopped from raising its claim in view of
its acceptance in the letter granting extension of time that the final effect
shall be NIL is incorrect and cannot be sustained. He agreed with the
stand of the respondent that clause 11(A), makes it absolutely clear that
the reason for costs over run are different and are not covered under the
reasons provided in clause 11(A). He was of the view that the various
items falling under heads (i) to (vii) as set out in clause 11(A) makes it
clear that the reasons mentioned therein pertain to force majeure, bad
weather, fire etc. Insofar as sub-clause (vii) providing for any other
reason, has to be read in consonance with the earlier sub-clauses (i) to
(vi), which are in the nature of matters which are out of control of the
petitioner. He was of the view that the various reasons for delay, clearly
establishes that the delay was on account of reasons which do not fall
under clause 11(A). According to him, the petitioner should have acted
more efficiently in order to avoid delay. On the plea of the petitioner that
the respondent had not raised these claims during the currency of the
work, the learned Arbitrator was of the view that correspondence has been
placed by the respondent with regard to late handing over of site,
drawings etc. He was also of the view that the letters of the respondent
indicates that it had made it clear in its communication to the petitioner
that it shall be seeking damages from the petitioner and also interest. It
was also contended on behalf of the petitioner that this claim is covered in
the payment which has been made on account of escalation. The reference
has been made to clauses 24 & 25 of the Special Conditions of Contract.
This stand was controverted by the respondent by stating that clauses 24
& 25 deal with material, labour and petrol oil and lubricant only. The
claim which has been made is not related to the said items, therefore,
clauses 24 & 25 have no applicability. It was also contended by the
petitioner that the claim is an „excepted matter‟. This contention of the
petitioner was also with regard to claim No. 17, 18 and 27. The learned
Arbitrator held that such an objection was rejected by this Court, which
order has become final and has been accepted by the petitioner. The
learned Arbitrator has also observed that the petitioner has admitted the
reasons for extension as has been mentioned by the respondent in its
letters inasmuch as the delay in completion of work was attributable to the
petitioner. On acceptance of the extension of time, it was the case of the
respondent that the letters regarding extension of time were on a printed
performa and the respondent had no option but to sign the letters at the
time of extension of time, and the same would not affect the claim as the
respondent had written many letters indicating its intention to claim
damages, interest on account of cost over run for the reasons mentioned
therein. The learned Arbitrator ultimately was of the view that the
petitioner was solely responsible for the delay in completion of works. He
has also concluded that the respondent has conclusively established the
expenses that were incurred by it on account of various overheads,
administrative expenses, payments being made to various Provident Funds
of the employees, charges on account of insurance, conveyance, labour
welfare and a large number of various heads which have been set out in
detail. The expenses incurred from month to month during the extended
period have been shown and examined in detail. The figures of the
respondent have been substantiated from the audited accounts and various
other documents, which have been produced by the respondent. He has
sustained the amount of Rs. 2,40,54,080/- which has been claimed by the
respondent and as certified by the statutory auditors on account of
administrative and over heads during the extended period. The
respondent has also shown an amount of Rs. 19,68,945/- on account of
hire charges for plant and machinery were paid during the extended period
as hiring charges. The learned Arbitrator had allowed an amount of Rs. 1
lakh per month on the loss suffered by the respondent because of the plant
and machinery remained underutilized for a period of 42 months and
amount of Rs. 1 lakh per month, which according to the learned Arbitrator
is reasonable. He has also held that 32 months in total, delay has occurred
on account of reasons not covered under clause 11(A) and 11(B), and as
such, the respondent has suffered loss. He has awarded compensation to
the respondent for actual loss suffered for 32 months period on account of
site/office overheads, tools and plants, underutilization/depreciation etc.
an amount of Rs. 2,30,00,000/-.
Claim No. 3-Payment due to increase in DO limit upto 30%:-
12. It was the case of the respondent that as per the conditions of the
contract agreement and condition 7 of IAFW-2249, they were bound to
execute the work upto a deviation limit of 10% over the contract sum of
Rs. 22,00,39,396.19. But due to increase in the scope of work, they had to
execute the work beyond the scope of 10% deviation limit. It was the
case that they had asked revision of rates for the work beyond 10%
deviation limit. They had informed the petitioner on August 1, 1995 as
regards exceeding of the deviation limit. They had submitted the revised
rates on October 4, 1995 for the all the items of the work. They had relied
upon certain documents in support of their claim. It was the case of the
respondent as noted by the learned Arbitrator that the petitioner had been
promising them for early settlement of these rates but ultimately did not
settle anything, rather, accounted for the quantities beyond the deviation
limit on the same contract rates. It was the case of the respondent that the
only relief given by the petitioner was way of not deducting the rebate
offered by them for the work done beyond 92nd RAR when the deviation
limit had reached the 10% limit. But the relief of non application of rebate
for the work done beyond deviation limit had been withdrawn by the
petitioner in 105th RAR dated March 24, 1997. They have claimed final
amended amount of Rs. 4,97,27,082.65 including escalation on the
amended claim amount of Rs. 2,82,30,391.61. It was the case of the
petitioner before the learned Arbitrator that in terms of clause 7 of IAFW-
2249, it is clear that the claimant was not to make any deviation unless
asked by written orders. They had not given any written orders for the
execution of the quantities/items for which the claim has been made.
According to the petitioner, this would not entitle the respondent the claim
it had raised before the learned Arbitrator. The petitioner had stated that
the respondent has not submitted the rates/analysis or any other evidence
at any time during the progress of the work. It had contested the
entitlement of the respondent to escalation on this amount and the
respondent has considered the WO, LO, FO as that of last date of receipt
of tender and W1, L1 and F1 as that on the date of completion which is
not admissible. The respondent in its rejoinder before the learned
Arbitrator had submitted that the petitioner‟s contention that it was not
supposed to make any deviations unless ordered in writing, is incorrect.
The issuance of construction drawing is itself an instruction. The
respondent referred to CD-25 to highlight that information was given to
the petitioner that work is exceeding the deviation limit. It is also noted,
the respondent had also relied upon the reply of the petitioner dated
September 27, 1995 vide enclosure CD-27 to highlight that it was the
stand of the petitioner that the additional work is closely connected to the
original work and the petitioner had advised the respondent to do the work
beyond the deviation limit and asked the respondent to intimate and
submit their revised dates trade-wise. In fact, the respondent also relied
upon a letter dated September 30, 1995 enclosed as CD-26 whereby the
petitioner asked the respondent to submit revised rates in the given
performa. It was the case of the respondent that vide an enclosure CD-17
dated October 4, 1995, it submitted the revised rates for items, trade wise
as sought by the petitioner. It was also pointed out by the respondent that
increase in DO limits was duly approved by Chief Engineer and
Command Chief Engineer and the respondent was partly compensated,
temporarily, by way of non-reduction of rebate beyond the deviation limit.
This payment had however later been recovered by the petitioner in the
105th RAR.
13. The petitioner raised an issue that the respondent has not given
proper break up details, locations and vouchers etc. in support of its claim.
It was the case of the respondent that the work being item rate, they had
quoted their revised rates based on market rates at that point of time.
According to the respondent, detailed analysis of rates and supporting
vouchers are not required as while quoting for Schedule-A item,
originally, also they have not supplied the same. It is for the petitioner to
ascertain the fair market rates which they have failed to do so. On the
basis of the stand taken by the parties, the learned Arbitrator was of the
conclusion that as per clause 7 of IAFW, the deviation limit of 10% is
provided in the contract and the respondent is entitled to the revision of
the rates beyond a deviation limit of 10%. He relied upon documents
filed by the respondent to conclude that the same proves the respondent‟s
stand. He was of the view that the petitioner was aware of exceeding of
deviation limits. He also concluded that a Board of Officers was
constituted for assessing the market rates of items of contract agreement
and Board‟s proceedings were concluded by May 15, 1996, which was not
done. The learned Arbitrator relied upon the document No. CAA-1 dated
February 26, 1996 to the statement of claim that settlement of revision of
rates submitted by the respondent vide letter dated October 4, 1995 was
under finalization. The learned Arbitrator was also of the view that the
respondent has been paid escalation on the contract rates for the work
done beyond the deviation limit. It is also noted in the award that
petitioner in terms of the letter dated January 31, 2002 pursuant to the
directions of the Arbitrator has paid an amount of Rs.92,82,000/- as
escalation beyond 10% of DO limit.. The amount which was claimed by
the respondent against this claim was Rs. 4,84,99,130.32. The learned
Arbitrator noted that Board of Officers was constituted for fixing the rates
to be applied beyond deviation limit of 10%, however, same was not
prepared by the Board of Officers. Despite promises made by the
petitioner that the rates were under finalization, the petitioner did not
finalize the rates. The learned Arbitrator held that the respondent is due
for extra negotiated rates beyond 10% DO limits. He also concluded that
the work done beyond 10% deviation limit at contract agreement rate is
Rs. 356 lakhs appox. The learned Arbitrator assessed the extra amount
payable beyond 10% DO limit (market increase w.e.f. June 1990 when the
rates were quoted) which is 60% over contract rates (including rebate).
The learned Arbitrator noting that the petitioner has paid escalation which
has to be deducted from total extra amount, granted an amount of Rs.
1,21,00,000/- to the respondent against this claim.
Claim No. 7--Payment due to double recovery of rock:-
14. It was the case of the respondent that as per clause 2.1.3 the
excavated hard rock was the property of the contractor i.e. the respondent.
The petitioner was to recover Rs. 70.5 per cubic meter towards cost of
material from the RAR and final bill. The respondent protested the
recovery effected by the petitioner. It was stated that in the RARs and
final bill, recovery of double of the quantity paid for hard rock was made.
The case of the petitioner was that mode of measurement for these two
items are different and relied on clause 3.1.4. It was stated that mode of
measurement of quantity payable is as per solid contents of hard rock or
50% of that measured in stack which has been followed in this work.
The learned Arbitrator came to the conclusion that the quantity of hard
rock excavated and recovered shall remain the same. The stack
measurements have to be reduced to 50% on account for the voids or in
case solid measurements are to be taken as per drawings/trench
dimensions. The quantities of hard rock in both the cases shall remain the
same. The learned Arbitrator granted an amount of Rs. 1,42,280/- to the
respondent holding that it is the excess amount recovered by the
petitioner.
Claim No. 8-Balance payment in excavation in hard rock and soft
rock:-
15. The respondent had made a claim for Rs. 1,04,41,618/- as they had
to do the excavation in soft rock and hard rock of depth of 3 to 9 meters
for sewerage lines and sewage sump, foundation work etc. in different
blocks. As the blasting was not permitted, they had to go for chisel
excavation. On account of rocky terrain, the excavation was not possible
as per drawing dimensions. According to the respondent, the actual width
of excavation was more than what has been considered for payment by the
petitioner. The respondent had also stated that the contract is silent
regarding width of hard rocks and provides for extra depth only. The
respondent had claimed 75% of the quantities considered for payment by
the petitioner as extra quantity payable to it.
16. The case of the petitioner was that the method of measurement to
be adopted in this contract shall be as laid down in MES Standard
Schedule of Rate 1988. According to the petitioner, only authorized
width is payable irrespective of actual width excavated by the claimant.
The extra width should have been considered in the unit rates quoted by
them. It was also stated that the respondent was required to examine the
site before tendering. The extra width stated by the respondent is totally
arbitrary and without any basis and rate was also high.
17. The learned Arbitrator was of the view that quantities of soft rock
and hard rock should have been arrived by measurement of stack and
reducing the quantities for voids as per clause 3.1.4 on serial page 12 of
SSR 1988 Part II of MES. According to the learned Arbitrator, the
petitioner had taken the drawing dimensions with authorized width,
wherein, the actual quantities of excavation done in soft rock and hard
rock do not get accounted for. He was of the view that from sound
engineering practice, the quantity of 70 % extra and uniform rate of Rs.
300/m3 claimed by the respondent, is on higher side. He was also of the
view that the average rates of Rs. 56/m3 and Rs. 145/M3 was worked out
by him with respect to item No. 9, 10 and 11 of Schedule A for soft
disintegrated rock and item No. 22, 23, 24 & 25 for hard rock
respectively. According to him, out of 19759 m3, the quantity of hard
rock is 2018 m3, therefore, the quantity of soft rock so arrived is 17741
m3. Considering a reasonable extra quantity of 50% for extra width over
and above the authorized width, the extra quantity of soft rock and hard
rock, worked out to 8870 m3 and 1009 m3 respectively. He worked out
extra amounts of Rs. 4,96,720/- and Rs. 1,46,305/- considering the
average quoted rates for these items of soft rock and hard rock
respectively. He was of the view, an amount of Rs. 6,43,025/- is payable.
He has also held, as per clause 2: 1: 3 of agreement, an amount of Rs.
71,135/- is to be recovered towards cost of hard rocks by the petitioner for
the extra quantity. He had also found that the escalation on the above
amounts is payable to the respondent on account of application of average
contract rates of soft rocks and hard rocks items of Schedule A. He had
calculated the escalation amount of Rs. 1,71,000/- on the above net
payable amount of Rs. 5,71,890/- as against Rs.45,13,842/- claimed by the
respondent and accordingly granted an amount of Rs. 7,42,890 to the
respondent.
Claim No. 9 - Payment due to circuit wiring:-
18. The respondent had claimed an amount of Rs. 3,08,24,783.72 under
this claim and relied upon items No. 482 and 568(K), which are items for
point wiring and circuit wiring respectively. It was the respondent‟s case
that the petitioner had not made the payment of circuit wiring and paid
only for point wiring. It was the case of the respondent that the description
of point wiring is amply explained from light point to switch point only.
According to the respondent, item 482 is clear and does not tally with the
description of items of SSR and therefore preamble to SSR is not
applicable to this item. There are changes in the materials and activity of
making good of chases being included in the description and circuit
wiring have been excluded from the description of items. According to the
respondent, the description of item as per clause 6A of IAFW-2249 is
prime and takes precedence over particular specifications, drawings and
general specifications. The respondent worked out the details of circuit
wiring from the drawings. It had claimed an amount of Rs. 1,75,00,000/-
for the circuit wiring and Rs. 1,33,25,783.72 towards escalation on the
above amount.
19. The stand of the petitioner was that the payment had been made to
the respondent as per contract provision and SSR forms part of the
contract agreement. Schedule A is to be read in conjunction with
preamble to SSR. According to the petitioner, as per the preamble the
rates for point wiring includes supplying and fixing/drawing cables for
carrying out wiring of a circuit of any length. From the distribution board
or iron clad switch upto ceiling rose or connector, socket outlet, lamp
holder, switch or fan regulator including additional length from connector
to lamp holder. The respondent refuted the stand of the petitioner and
stated that Schedule A items are different from the SSR items. Therefore,
the preamble is not applicable and referred to Condition 6A of IAFW-
2249. It was argued by the petitioner that the quantities of cables cannot
be checked from drawings and also on site as the work of wiring is
concealed. The case of the respondent was the various drawings numbers
mentioned have been issued by the petitioner itself for execution of work.
The learned Arbitrator was of the view that in terms of condition 6A of
IAFW 2249 in case of discrepancies between Schedule A, the bills of
quantities, the specifications and/or drawings the precedence shall be as
under:
A. Description of Schedule A/Bill of quantities.
B. Particular specifications.
C. Drawings.
D. General Specifications.
20. The learned Arbitrator concluded that item 482 of Schedule A on
page 142 (R) of the contract agreement does not have the same
nomenclature as the SSR item. He on an interpretation of the definitions
of „point‟ and „circuit‟, found that the stand of the respondent is correct.
The learned Arbitrator had noted that the petitioner had agreed with the
arithmetical calculations of the claim and had not denied the execution of
the work by the respondent. According to him, the stand taken by the
petitioner is contrary to the documents on record. He had also stated that
the respondent had shown various drawing numbers issued by the
petitioner itself pertaining to different rooms in different blocks in the
building. The learned Arbitrator on the basis of the conclusion that the
details have been submitted only with respect to 1,13,742.90 meters had
allowed the claim on the basis of the contract rate of Rs. 140 per running
meter which was calculated as Rs.1,59,24,006. The escalation payable on
the aforesaid amount, would also be in the same proportion as has been
granted hereinabove. However, he found the rate of 140/rm is high.
According to him, the rate based upon the contract item and worked out
the total cost of circuit wiring of 1,13,743 RM, there will be no escalation
payment since the rate assessed by him will be star rate and accordingly
granted an amount of Rs. 1,18,30,000/- against this claim.
Claim No. 11: Cost due to damage and demolitions done by E/M
Agencies:-
21. It was the case of the respondent that the petitioner had delayed the
appointment of agencies related to Airconditioning, Fire Detection,
External Electrification, MATV System and Acoustic Treatment. On
account of delayed start of work by these agencies, they had dismantled
and damaged the finished work of the respondent. The agencies were not
equipped by adequate material and skilled manpower to make good the
damages. Therefore, the respondent had to do the repairing and the
replacement before handing over the building to the petitioner. The
learned Arbitrator had observed that various documents have been filed
by the respondent along with their claims showing that they had informed
the petitioner of the damages and demolitions. They have given the details
of the expenditure on different works done by them and claimed an
amount of Rs.20 lacs and interest thereof.
22. On the other hand, it was the case of the petitioner that the
respondent was required to work in close coordination with other
agencies. They had relied upon various documents filed by it along with
its reply. It was also stated by the petitioner that the respondent has not
substantiated the damages suffered by it nor pointed out the location of
damages.
23. The learned Arbitrator has noted that the respondent has pointed out
to a document wherein the petitioner has admitted the damages caused by
the E/M Agencies. The learned Arbitrator was of the view that there had
been definite damages to the completed works. He referred to various
letters brought on record by the respondent which clearly establishes that
losses were being caused, more particularly the losses pertained to false-
ceiling which had to be replaced. He found that an amount of Rs.12 lacs
claimed on account of replacement of the damaged false-ceiling as valid,
but on high side and assessed as Rs.10,75,000/-. He also noted an amount
of Rs.12 lacs claimed on account of replacement of doors, windows,
repair of flooring, brick work, plastering and painting continuously
damaged by other agencies yet according to him instead of Rs.8 lacs a
sum of Rs.3 lacs need to be awarded under the said head and in total
allowed the claim of the respondent for an amount of Rs.13,75,000/-.
Claim No. 12: Payment on account of deficient water supply and
refund of water charges:-
24. The respondent‟s case under this claim was that as per clause 22.1
the water was to be supplied for use in the works at the point shown in the
site plan. A recovery of Rs.3.75 for every Rs.1000/- value of work was to
be done by the petitioner for the same. It was their case that against the
requirement of 80,000 gallons per day, the petitioner failed to supply them
water. The respondent filed 22 documents in support of its claim. The
respondent had demanded the refund of the amount of water charges
recovered in the RAR. The respondent had claimed an amount of
Rs.1,44,36,795/- under this claim along with interest, the total of which
was Rs.2,03,54,073.91/-.
25. The case of the petitioner also relied on clause 22.1 of the contract
agreement. According to the petitioner, the respondent was allowed to
augment the departments water supply by boring wells at its own costs as
per the said clause, which would have proved more economical to it.
Therefore, the respondent was not entitled for the extra amount claimed
by it. The respondent per contra refuted the aforesaid stand of the
petitioner and stated that in terms of clause 22.1 it was the responsibility
of the petitioner to supply water for the works. The respondent had also
taken a stand that despite promises adequate quantity of water could not
be supplied. They had augmented the water supply through tankers.
26. The learned Arbitrator concluded that there was deficiency in
supply of water. The respondent had to augment the water supply and bear
additional expenditure for the same. He had referred to the letter of the
respondent, by which it had brought to the notice of the petitioner that it
had purchased huge quantity of water running into approximately 80,000
gallons per day, including the fact that the same was bought at a very huge
cost. The learned Arbitrator concluded that since larger part of water was
not supplied by the petitioner, it cannot recover money against the same.
He held that the recovery of Rs.12,92,343/- which has been effected by
the petitioner from the claimant‟s final bill is wrong since it includes
escalation amount also. He was of the view that since some water has
been supplied by the petitioner to the respondent, he allowed the
petitioner to recover an amount of Rs.5,11,000/- and directed balance of
Rs.7,81,343/- be refunded by it. He also observed that, as per contract, the
primary responsibility for supply of water was upon the petitioner. The
learned Arbitrator was also of the view that since the clause also provided
that in the event of the petitioner failing to supply water the respondent
would be required to augment the supply, the claim of the respondent for
Rs.1,31,10,000/- on account of water which it had to purchase on its own
costs was rejected. Suffice to state that the learned Arbitrator has awarded
an amount of Rs.7,81,343/- against this claim.
Claim No. 14: Cost due to excessive water logging in basement
constructed by other agency:-
27. It was the case of the respondent that the work of the basement was
in the scope of other agency. The scope of the work of the respondent was
to do construction and finishing of the building above the basement. The
respondent‟s case was that due to seepage and leakage in the basement
constructed by the other agency, there used to be water logging in the
basement. This resulted in spoiling/damaging the finished work. The
construction activity also suffered on account of the water logging. The
respondent had also stated that the petitioner had failed to provide a
proper drainage which resulted into monsoon water coming into the
basement and aggravating the problem of water logging of the basement.
It had to do dewatering of the basement at all times during the monsoon
On account of the same they claimed an amount of Rs.57,37,200/- for the
de-watering done by them and Rs.65,02,819.47/- towards interest on the
above amount. A total of Rs.1,22,40,019.47/- has been claimed.
28. The petitioner denied the claim and had stated that the work of de-
watering was done by the other agency-M/s Simplex Concrete Piles (I)
Ltd., which was carrying out the repair work pertaining to leakage. The
petitioner had argued, from the exhibit it is evident that there was
leakage/seepage in basement connecting portions G to X and A to Z
which was constructed by the respondent. This stand of the petitioner was
refuted by the respondent by relying on certain documents.
29. The learned Arbitrator had concluded that there was definitely a
problem of water logging of the basement. The work of basement has
been done by M/s Simplex Concrete Piles (I) Ltd., which entailed extra
expenditure to the respondent on account of dewatering in order to
complete its work. He referred to various letters, to conclude that the
respondent has been informing the petitioner that labour and machinery is
being deployed for dewatering. This has to be compensated by the
petitioner. The learned Arbitrator was of the view that the claim as made
by the respondent was on the higher side and had awarded an amount of
Rs.3 lacs to the respondent.
Claim No. 18: Balance payment due to escalation embargo imposed
by CEDZ:-
30. It was the case of the respondent that the start of work was March
17, 1991 and the stipulation date of completion was October 16, 1993.
The time period for completion of work was 27 months. The work was
actually completed on March 25, 1997. There was a total delay of 42
months. The respondent has given various reasons for delay, which
included late handing over of the sites, delay in approval of mixed design,
delay in nomination of E/M agency, delay in approval of luxalon, delay in
issue of drawings, delay in issue of Schedule B material.
31. The petitioner relied upon the amended agreement, which according
to the petitioner had a clause of escalation embargo. It was also the case of
the petitioner that in view of the embargo under the contract no escalation
could be given.
32. The learned Arbitrator after examining the documents found that
the petitioner had not incorporated the value of the star rate items in the
respective quarters as submitted by it in the Appendix G and had not
interpreted amendment No.1 correctly. The learned Arbitrator had applied
the reasoning with relation to claim No.1 dealing with escalation under
this claim also. The respondent had made a claim for Rs.77,25,119.07/-
under this claim. According to the respondent the calculation is on the
basis of indices as were applicable at the relevant time without applying
any freeze. The learned Arbitrator was of the view that without
application of freeze an amount of Rs.55,26,544.77/- is payable on this
count. According to the learned Arbitrator, the detailed calculation have
been done by taking the value of work done relevant indices and value of
star rate items from the documents submitted by the petitioner and the
final value of star rate items arrived under claim Nos.34, 35 and 36. He
awarded an amount of Rs.56,26,544.77/- against this claim.
Claim No.20: Payment of item No.238 of Schedule A and other items:-
33. The case of the respondent was that the various items executed by
them have not been considered by the petitioner for payment. An amount
of Rs.28,88,306.80/- was claimed.
34. The stand of the petitioner was that the inclusion of item in BOQ
does not necessarily imply that one party to the contract is under
contractual obligation to pay to the other party to contract on the ground
that those items are the part of the contract. It was the stand of the
petitioner that the claim for item No.238 was not payable since it has not
been recorded in the measurement book therefore, it is conclusive that the
said item was not executed at all. The respondent relied upon document
CU1 & CU2 filed along with the claim.
35. According to the learned Arbitrator, in those documents the
respondent had refuted the contention of the petitioner. It was the case of
the respondent that no floors or wall cladding can be done within 24 hours
of flooring of sub-base or RCC slabs as per the specification. It was their
case that the matter was discussed in the presence of Chief Engineer. The
learned Arbitrator noted that the petitioner had agreed that work had been
executed but denied the payment as per the instruction of the E-in-C
Branch. He was of the view that 3 kg of cement slurry has been used over
concrete/brick surfaces for flooring/dado but payment has not been made.
Rate of flooring/dado do not include cost of 3 kg cement slurry and this is
payable under item 238 of Schedule A. He also found that item 238 of
Schedule A qualifies for payment of escalation as per contract agreement.
The respondent set out the quantity of 179695 sq. meters but quantities for
flooring and dado works 156857/- sq. meters as checked by the Arbitrator
from the final bill which is covered under this item 238 of Schedule A.
The contract rate as stipulated in the contract was Rs.5 per sq. meter.
Accordingly, an amount of Rs.7,84,285/- was made payable and
escalation was also granted on the said amount. In total the learned
Arbitrator granted an amount of Rs.10,37,217/- against this claim.
Claim No. 21: Payment on account of defective pipes of fire fighting:-
36. It was the case of the respondent that the CI pipes for fire fighting
works were supplied by the petitioner under Schedule B of the contract
agreement. The fire fighting lines were tested by them but due to poor
quality these pipes could not withhold the required pressure when put to
testing and had to replace the defective pipes including transportation
from stores, excavation in rocks, laying of pipes, gaskets, nut and bolts,
welding of joints, backfilling etc. The respondent had claimed for
replacement of 54 numbers of pipes at Rs.5,000/- per pipe.
37. It was the case of the petitioner that the respondent after having
signed the indent, USRs, gate passes have taken the pipes and transported
them to site including loading and unloading. These pipes must have got
damaged after taking the possession of the pipes. It relied upon documents
filed by it, numbered as R622 to R626 in support of its stand. Based on
the condition No.46 of the general conditions of contract forming part of
the contract agreement it was the respondent who is liable to rectify all
defects noticed and are not entitled to extra payments.
38. On the other hand, the respondent in its rejoinder had stated that
these pipes got burst while testing and read out the documents wherein
they had informed the petitioner about the defective pipes having been
issued.
39. The learned Arbitrator has accepted the stand of the respondent that
the pipes were defective. He also noted that the respondent had brought to
the notice of the petitioner that money would be charged for the
replacement of the defective pipes. He referred to letter dated March 23,
1998 and also found that the rate of Rs.5000/- as high and assessed the
same as Rs.700/- per pipe as a reasonable rate and granted an amount of
Rs.40,600/- against this claim.
Claim No.23: Refund of Rebate applied beyond the quoted sum of
Rs.22 Crores:-
40. The respondent has claimed a sum of Rs.39,85,001.12/- against this
claim. It was the case of the respondent that it had offered a rebate of 12%
on the total contract sum of Rs.25,00,44,768/-. The learned Arbitrator
referred to letters of the petitioner wherein it was clarified that the
respondent‟s rebate had been considered offered on contract sum and not
on quoted rates but the petitioner had deducted the rebate on the total
value of work done and they are entitled for the refund of rebate recovered
by the petitioner over and above their quoted sum. The respondent
claimed escalation over this amount of work done which has been
recovered as a rebate by the petitioner.
41. The petitioner in its reply has quoted clause 1(n) of general
conditions of contract based on this the rebate shall be applicable on total
costs of work arrived at after including increased quantities shown in
Schedule A. Further they have stated that as per Note 3 and Note 6 on
serial page 14(R) of contract agreement the quantities shown in column 5
are approximate and total amount of column 7 is not firm but will be
treated as contract sum respectively.
42. The respondent in its rejoinder had reiterated that the contract sum
is clearly mentioned on page 199(R) of the contract agreement and rebate
has been offered on the quoted contract sum.
43. The learned Arbitrator was of the view that from the documents
produced the petitioner in its letter dated October 23, 1990 has clarified
that the rebate of 12% is on the quoted sum and not on quoted rates. It was
also his conclusion that on page 199(R) of the contract agreement, the
total contract sum has been mentioned as stated above and rebate of 12%
has been offered on this amount. The contract sum as per IAFW 2249 is
the total cost of work arrived at after including increased quantities shown
in Schedule A. He was of the view that the rebate of 12% is applicable on
the quoted sum as clarified by the petitioner itself. According to him, the
respondent had offered a total rebate of Rs.3,00,05,372.16/- on the
contract sum but the petitioner recovered a total rebate of
Rs.3,22,51,596.13/-, which included extra work beyond the contact sum.
As such the petitioner is bound to return extra rebate recovered from the
contractor. Therefore, he granted an amount of Rs.22,46,224/- against this
claim.
Claim No. 29: Extra payment due to late taking over of building
causing thefts and more watch and ward:-
44. A claim of Rs.42,32,000/- has been made by the respondent. It was
the case of the respondent that they had requested the petitioner for taking
over of the completed work from June, 1995 onwards. It was their case
that due to non-completion of work of service contractors, the user was
not in a position to take over the building, the respondent was forced to
make good the thefts, keep extra watch and ward, maintain the building
for handing over. This resulted in extra expenditure. They further stated
that the petitioner delayed in taking over the buildings because they
wanted to hand over the same directly to the user in order to avoid the
responsibility of the wages, watch and ward and maintenance of the
building.
45. The case of the petitioner was, they could only take over the
building when it is actually certified as completed. They relied upon
clause 16,36,48 & 49 of general conditions of contract agreement.
46. The learned Arbitrator was of the view that there was delay on the
part of the petitioner to take over the blocks which have been completed.
He also noted that the respondent has also placed on record the letters
which established various items that have been mentioned therein have
been stolen. He referred to various letters. He ultimately taking into
account the entire matter in totality awarded a sum of Rs.25,000/- to the
respondent.
Claim No. 33: Payment of pattern flooring instead of normal flooring
in marble floors and odd sized marble:-
47. It was the case of the claimant that in the drawings issued on April
28, 1993 it was shown that tiles to be of size 300mm X 375mm which was
a non-standard size and not available in the market. It was also the stand
of the claimant that it had informed the petitioner regarding the deviation
and the extra cost arising out of the same. The agreement provided tiles to
be square in size from 200mm X 200mm to 400mm X 400mm. In pattern
flooring as indicated in the drawings, the titles had to be cut and this
resulted in extra cost of tiles and labour due to the cutting of tiles and
placing them in patterns which the claimant had claimed at Rs.250 per sq.
meter. The total size of pattern flooring executed by the respondent as per
final bill was 5595.832 sq. meter. The claimant had made a claim for
Rs.13,99,000/- and escalation amount of Rs.10,65,301.23/-.
48. The stand of the petitioner before the learned Arbitrator was that
Note 13 on serial page No.17(R) of Schedule A only a reasonable
extension of time was to be considered under condition 11(A) and no
extra payment is admissible due to change. The respondent disputed the
relevance of note 13 at page 17(R) in this case.
49. It was the respondent‟s case that it had to buy a bigger size of tiles
to cut them to suit the drawing dimensions and they justified the claim.
50. The learned Arbitrator agreeing with the stand of the respondent
and noting that the amount sought @Rs.250/- per sq. meter is on the
higher side, awarded an amount of Rs.160/- per sq. meter and quantified
the pattern flooring which has been executed by the respondent as per the
drawings as 3705.044 sq. meters and granted an amount of Rs.5,92,807/-
to the claimant.
Claim No. 34: Balance payment due to non adoption of labour rates
as per Minimum Wages Act in formation of Star Rates
Claim No. 35: Balance Payment Due to Non Inclusion of T&P,
Electricity Charges, Sundries Etc. in Star Rates
Claim No. 36: Balance Payment Due Arbitratory Deductions in Rates
of Material Incorporated in Star Rates:-
51. It was the case of the respondent that the petitioner while preparing
the Star Rates did not consider the Minimum Wages prevalent at the time
of execution of work which is mandatory requirement for payment of
labour wages as per the Minimum Wages Act, which are decided by the
Government and cost of T&P, electrical charges and sundries in the Star
Rates which are part of the basic parameters in rate analysis of an item. It
was also submitted that the petitioner has not paid any attention to the
rates of materials as per vouchers given by it and also paid in various
secured advance bills. According to the respondent, the petitioner has
arbitrarily considered the material rates of year 2001 and reduced them
with indices. Most of the rates have been prepared by the petitioner in the
year 2001, although the work was completed on March 25, 1997. They
claimed an amount of Rs.36,14,812/-, Rs.36,14,812/- and Rs.84,34,561/-
for claim Nos.34, 35 and 36 respectively. Interest has been included in the
said amount. The respondent sought to revise the amount to
Rs.22,18,121.92/-, Rs.10,42,325.51/- and Rs.95,06,525.80/- respectively.
52. It was the stand of the petitioner that the claim Nos.34 to 36 have
been claimed twice by the respondent and are the same as claim No.17 for
the payment of escalation on star rates. It was also the stand that the star
rates were prepared confirming to condition 62(G) of general conditions
of contract agreement. It was also the stand that it is incorrect that fair
rates of material and cost of T&P, electricity charges and sundries have
not been included by them in preparation of star rates. The petitioner had
taken a stand that star rates could not be finalised due to non-production
of original vouchers and non- signing of the star rates, by the respondent.
53. The respondent had taken a stand in the rejoinder that claim Nos.17
and 34 are completely different. Further it was stated that the wages of the
skilled workers are higher than the prescribed minimum wages due to
shortage of this category of workers. However, the unskilled labours are
paid minimum wages prescribed by the Government.
54. According to the learned Arbitrator, he has found discrepancies in
the rates of the material, wages of labour, tools and plants in the star rates
prepared by the petitioner. According to him, the petitioner had derived
the rates of material in a particular year on the basis of back calculation
with All India Wholesale Price Indices from the rates of material in the
year 2001, which was not agreed to by the learned Arbitrator. According
to him, the petitioner should have enquired the market rates when the
work was being executed. He had also found that there has been mistake
in the wages of labour adopted by the petitioner. He agreed with the
respondent that a component of tools and plants have to be considered in
the analysis of an item. He referred to documents at pages 2587 to 2672
and at page 2691 filed by the claimant, which had the analysis of star rate
items 1 to 68 claimed by the respondent and considered by the petitioner
respectively. He had also found that there is a difference in the rate of
material, labour, tools and plants. The respondent had relied upon the
copies of the voucher. He would state that the rates of skilled labour have
been reflected on the lower side. The learned Arbitrator after
incorporating the correct rates of material, labour, component of tools and
plants had assessed the rate of all star rate items and tabulated them under
Annexure F and in terms of which he granted an amount of
Rs.41,93,711.51/- to the respondent herein.
Claim No. 37: Extra cost due to maintenance of sewerage line after
handing over due to non-maintenance contractor appointed by Union
of India:-
55. The respondent claimed an amount of Rs.4 lacs under this claim. It
was the case of the respondent that the petitioner failed to appoint an
agency for maintenance work after completion and handing/taking over of
the work. They relied upon certain documents. The respondents case was
that the petitioner had forced them to attend the maintenance problem
projecting as defects. It was mainly leakage/seepage in CI Soil Pipes
occurred due to blockage caused by flushing/draining hospital waste
which included cotton bandages, napkins rubber globes, plastic wrappers,
food waste, peeling of food and vegetables. This resulted in extra
expenditure.
56. The case of the petitioner by relying upon document R-75 was that
it was a case of removal of defects.
57. The learned Arbitrator was of the view that non-production of proof
by the Union of India for appointment of maintenance agency in Defect
Liability Period the work of maintenance was to be carried out by the
respondent. He accordingly awarded an amount of Rs.12,000/- per month
during period of defect liability as a reasonable amount for the work and
accordingly granted an amount of Rs.1,44,000/- under the said.
Claim No. 40: Compensation of the Block Payments from claim No.1
to claim No.39 as mentioned above:-
58. It was the case of the respondent that it had suffered heavy financial
losses on account of the amounts from claim Nos.1 to 39 in terms of
interest which was rightly due to it. The respondent claimed an amount of
interest @ 24% per annum compounded quarterly on the above claims
from the date of completion i.e. March 25, 1997 to June 30, 2001 and
claimed an amount of Rs.8,52,869,841.92/-.
59. The learned Arbitrator granted simple interest @ 12% on the
awarded claims (except claim No.2) from October 01, 1997 till the date of
award and against claim No.2 also awarded interest @ 12% but with
effect from October 01, 1998 till the date of award.
Claim No. 41: Future interest @ 24% per annum compounded
quarterly on the above award amounts of claim No.1 to 40 upto the
date of actual payment:-
60. The learned Arbitrator has awarded interest @ 10% per annum on
all the awarded claims including claim No.40 from April 01, 2003
onwards after allowing a reasonable time for the petitioner for making
payment in terms of the award till the date of actual payment.
Counterclaim No.1: Rectification of defects at contractor's risk and
cost:-
61. The case of the petitioner under this claim was that when the work
of the respondent was inspected by the Garrison Engineer on various
occasions, defects were found and notified to the respondent and relied on
Exh.6 of their statement of claim. According to the petitioner, the defects
were not rectified. The petitioner relied upon condition 46 of IAFW 2249.
According to the petitioner, it had constituted the Board of Officers and
the respondent was informed vide letter dated July 07, 1998. The
respondent did not attend the proceedings.
62. The case of the respondent was, in terms of condition 46 the
liability was during the Defect Liability Period. It was also averred by the
respondent that the claim for risk and cost could only be claimed, if the
same had actually been carried out by the petitioner. It was also stated by
the respondent, no defects pointed out had remain unattended. The Defect
Liability Period expired on March 24, 1998. The respondent refuted the
letter dated July 07, 1998 and relied upon the documents annexed along
with claim, stated that no representative of the petitioner was ever present
on the assigned date of July 11 1998 for ascertaining any pending defects.
The date of letter under -Annexure K of Exh.GS8 stated to be a fabricated
one.
63. The petitioner has also produced documents relating to risk and cost
which was refuted by the respondent. According to the respondent, they
have been attending to the defects which were pointed out.
64. The learned Arbitrator has examined the documents on record and
the submissions made by both the parties. A glaring error which has been
rightly pointed by the counsel appearing for the contractor that the
measurement of various items which had to be tendered was admittedly to
be carried out by the Board of Officers which was appointed by UOI for
this purpose. The respondent was informed vide letter dated July 07, 1998
to assemble for carrying out of physical check of the rectification work
which was pending. The counsel for contractor stated that although the
letter dated July 07, 1998 point out that the physical check is to be carried
out on July 11, 1998, yet the proceedings of the Board of Officers clearly
proved that the Board of Officers had already met on July 05, 1998. The
case of the contractor was in fact there was no person on the site on July
11, 1998. The contention of the petitioner that the Board of Officers had
also met "on subsequent days" as stated in its proceedings does not in any
way assist the petitioner since the respondent has rightly pointed out that
no such days or any details with regard to such days has been provided.
When admittedly, the Board of Officers had already met on July 05, 1998
and had by itself made a list of various items, which were to be rectified,
it is proved that no adequate notice was given to the Claimant to
participate in the said proceedings. This non-issuance of a proper
opportunity to contractor is completely proved in the present matter. This
is so since the very claim of petitioner is based on the notings of the Board
of Officers. Moreover, the claimant has also been able to prove that the
tender amount was arbitrarily changed by petitioner from Rs.18 lacs to
Rs.80 lacs and then again to Rs.49.9 lacs. On examination of the tender
items, the learned Arbitrator found that a large number of items were not
attributable to the contractor at all. Contractor demonstrated that various
items which had been tendered were not in the list which was given to it
for rectification at the time of the issuance of the Completion Certificate.
This fact also goes to establish that various items which have been
tendered are items which were never pointed out to contractor for
rectification at the time of completion. Moreover there is also substance in
their contention that the work which is now being tendered in the year
2002 is on account of the various defects, damage, which may have been
caused over the last several years. This fact was not denied by petitioner
during the course of hearing. There is also valid basis that the petitioner
has not been able to show details pertaining to any item which has been
tendered and to demonstrate that the said item which has been tendered
was also defective at the time of completion of the building and/or that the
said defect was brought to the notice of the claimant company Moreover,
he found that the requirements of the clause 46 of the Contract Agreement
had also not been complied with by the petitioner. The claimant has also
shown that there are various tender items which were not part of its work
at all.
65. The learned Arbitrator found that the petitioner has not been able to
establish its claim fully. The petitioner should have gone for defects
rectification during 1998 itself and not during 2001-2002. The petitioner
partly able to establish that the defects that are sought to tendered during
2001-2002 were arising out of the work which had been executed by the
claimant or that the said defects were pending at the time of completion of
the work which had been executed by the respondent. He concluded that
the respondent rectified the said defects during Defect Liability Period.
The procedure required under Clause-46 has also not been fully complied
with. Notice given to the respondent should have been given within the
Defect Liability Period whereas the Board itself met after this period.
Certain defects being got rectified now are part of normal maintenance
(not recoverable from contractor) and part are not covered in Board of
Officers. Details of Board of Officers are also not full proof and mention
of all details. The proceedings of the Board of Officers goes to show that
there was a manipulation of various works which were sought to be
carried out by the petitioner. The learned Arbitrator assessed the loss
which the contractor would have incurred to defect rectification
(mentioned in Completion Certificate or defect likely in liability period) if
done in 1998 itself and partly sustained the claim and awarded
Rs.4,35,000/-.
Counterclaim No.2: Devaluation of work due to bad workmanship
and adoption of inferior quality of material by the contractor:-
66. The petitioner claimed an amount of Rs.8 lacs under this claim. The
case of the petitioner was that certain defects were observed by them and
the rectification would have caused inconvenience to the user of the
hospital. The rectification of these defects of improper slopes, splitting of
floors, grinding marks etc. involved demolition of the areas which would
have led to closure of hospital activity. The petitioner had taken a stand
that rectification/replacement of certain defects were considered to cost
higher to the respondent. Therefore, the petitioner proposed to get it
devalued and claimed the amount which the respondent might have saved
on this account and brought out that a Board of Officers was ordered
which have assessed such items of work to cost Rs.8 lacs.
67. It was the case of the respondent that they have rectified all the
defects pointed to them and the question of devaluation for any alleged
defects does not arise. The respondent had also taken a stand that no such
information or notice had been given to them by the petitioner for the
constitution of Board of Officers and their assembling for assessment for
any such devaluation. It was also the case of the respondent that the entire
work was executed under strict quality control and supervision of the
petitioner and there was no departure from drawings and specifications.
Further the users are using facilities comfortably.
68. The learned Arbitrator agreed with the stand of the respondent.
According to him, the only notice for the assembling of the Board on July
11, 1998 was given by the petitioner vide letter dated July 07, 1998 and
none of the petitioner‟s representative had come on the scheduled date as
informed by the respondent.
69. It was the case of the respondent that the board proceedings were
fabricated. The respondent also pointed out, the defects like edges
chipped of, grinding marks on edges, crack tiles, crack slaps as pointed
out were caused due to heavy traffic and other equipments in the hospital.
They are simply maintenance defects and rectification of these defects
does not called for closure of the hospital activities as stated by the
petitioner and any defects arising out of the misuse/use of the hospital
building cannot be considered to be rectified by the respondent. The
learned Arbitrator finding that certain portion of work was slightly
defective and Union of India made devaluation and partly sustained the
claim by awarding an amount of Rs.3,15,000/-.
Counterclaim No.5: Interest @ 24% past pendent lite and future on
awarded amount:-
70. The learned Arbitrator has not granted the interest during pre-
reference and reference period but has awarded only future interest for
counterclaim Nos.1 and 2 at the same rate as awarded to the respondent.
Submissions:
71. Mr. Darpan Wadhwa, learned counsel appearing for the petitioner
would submit, that the scope of objections under Section 34 of the Act is
well settled. It is his submission that the objections filed by the petitioner
are squarely covered within the parameters of the law laid down by the
Supreme Court in the case reported as 2008 (13) SCC 80 DDA Vs. R.S.
Sharma; 2014 9 SCC 260 Oil & Natural Gas Corporation Ltd. vs.
Western Geco International Ltd. He would also state, that the Award
based on no evidence is an error on the face of the record and liable to be
set aside by placing reliance on the judgment of the Supreme Court
reported as 2009 (10) SCC 259 State of Rajasthan and anr. Vs. Fero
Concrete Construction Pvt. Ltd. He would also state, that, it was
obligatory on the part of the Arbitrator to record reasons in support of the
Award, which according to him has not been given by the learned
Arbitrator and would rely upon the following judgments:-
(i) Som Datt Builders Ltd. vs. State of Kerala (2009 )10SCC 259;
(ii) Jajodia (Overseas) Pvt. Ltd. vs. Industrial Development
Corporation of Orissa Ltd. (1993 )2SCC 106;
(iii) Ajay Construction Co. vs. Delhi Development Authority
64(1996)DLT 590;
(iv) M/s. Ansal Properties and Industries Ltd. V. Himachal Pradesh
State Electricity Board 1997(3) ShimLC 176;
72. Mr. Darpan Wadhwa would also submit, that the claims beyond
what was sought in final bill i.e claim Nos.2 to 39 were not maintainable
in view of clause 65 of the General Conditions of Contract. He would
state, that after the submission of final bill on March 29, 1997, the
respondent sought to raise additional claims i.e claim Nos. 2 to 39 for the
first time vide notice dated September 29, 1998 as an afterthought.
According to him the respondent had waived or extinguished its right to
additional claims after the submission of final bill as per Contract and
additional claims beyond what has been sought in the final bill are
expressly barred by the Contract in view of Clause 65 of GCC. He would
rely upon the judgment of this Court reported as 2004 (3) Arb.Lr 225
Delhi Vaish Brothers vs. Union of India. He would state, even if clause
65 was not pleaded before the learned Arbitrator, the learned Arbitrator
being a creature of the Contract is bound to act within the four corners of
the Contract as held by the Supreme Court in the case reported as 1999 (9)
SCC 283 Rajasthan State Mines & Minerals Ltd. vs. Eastern
Engineering Enterprises; 2007 (4) SCC 697, FCI vs. Chandu
Constructoin. He would state, section 28 (3) of the Act casts a statutory
duty upon the Arbitrator to observe all the terms of the Contract while
adjudicating the disputes between the parties, irrespective of pleadings.
The Arbitrator has no jurisdiction to grant any claim which is barred by
the Contract itself and in cases of arbitration, question, whether a
particular claim is barred or against an express term of the Contract is a
question of law and can be raised at any stage. An Arbitral Award
contrary to the terms of the Contract or statutory enactment is patently
illegal and is against the public policy of India in terms of judgment of the
Supreme Court reported as 2003 (5) SCC 705 ONGC Vs. Saw Pipes;
2011 (5) SCC 758 J.G Engineers Pvt. Ltd Vs Union of India.
Alternatively, he would state, that as Section 34 (2) (b) begins with if "the
Court find that" the Arbitral Award is in conflict with public policy,
implying that a duty is cast on the Court to find out if the Award is in
conflict with public policy i.e contrary to express terms of the Contract.
Even in the absence of specific pleadings, Court while exercising power
under Section 34 (2) of the Act can consider whether claim Nos.2 to 39
are barred by clause 65 of GCC. He would rely upon the judgment of the
Supreme Court in the case reported as 2009 (17) SCC 796 Fiza
Developers & Inter Trade (P) Ltd; AIR 2003 Kerala 61 Government of
Kerala Vs. Som Datt Builders. He would make the submission in view of
huge claims of Rs.122 Crores approximately made by the respondent after
submission of the final bill, which is precisely, the Contract seeks to stop
and this ought to be applied in full force to prevent raising of barred
claims. In the end, it is his submission that reading of clause 65 and 66
makes it amply clear that final bill submitted by the respondent is in
respect of both undisputed as well as disputed items. Submission of final
bill is a bar from raising claims not included in the final bill and for the
purpose of clause 65, not signing No Claim Certificate is of no purpose.
73. On the other hand, Mr. Nidhesh Gupta, as a preliminary submission
would state, that it is a settled law that in an arbitration proceedings if two
views are possible either on interpretation of contract or application of
provisions thereof on the given set of facts and Arbitrator has taken one of
the possible view, the Court would not interfere in exercise of jurisdiction
under Section 34 of the Act. He would rely upon the following
judgments:-
(i) Associated Constructions v. Pawanhans helicopters ltd. (2008)16
SCC128;
(ii) G. Ramchandra Reddy v. Union of India (2009)6 SCC 414;
(iii) Numaligarh Refinery Ltd. V. Daelim Industrial Co. Ltd (2007)8
SCC 466;
(iv) Housing and Urban Development Corporation Ltd. V. Leela
Hotels Ltd. FAO (OS) 59/2003
74. He would also rely upon the judgment of the Bombay High Court
in Municipal Corporation of Greater Bombay v. Press Tress Product
India 2003 (2) ArbLR Bombay that specially in cases where the
Arbitrator is a technical person, the interference should be minimal and it
is not expected of such a person like Engineer to record detailed reasoning
of its finding and no interference is warranted by the Courts if the basis of
the finding is indicated in the Award. He also relied upon the judgment of
the Supreme Court in 2006 (11) SCC 181 Mcdermott International Inc
vs. Burn Standard Co. Ltd to contend that if the Award is as per Contract
between the parties and a detailed and speaking one having no perversity
whatsoever, no interference is called for as there is no re-appreciation of
the evidence. It is also the submission of Mr. Nidhesh Gupta, learned
Senior Counsel for the respondent that the argument of petitioner that
clause 65 of the General Conditions of Contract (GCC) prohibits any
claim after/beyond final bill is inter-alia, not sustainable. The arguments
now being taken by the petitioner in its written submissions were never
raised in its pleadings or argument before the learned Arbitrator or even in
the pleadings before this Court. It is a trite law that one cannot argue
beyond their pleadings and such argument cannot even be entertained. He
has relied upon the following judgments in support of his contention:-
(i) Siddu Venkappa Devadiga v. Smt. Rangu S. Devadiga (1977)3
SCC 532;
(ii) Samir Chandra Das v. Bibhas Chandra Das (2010)6 SCC 432;
(iii) State of Maharashtra v. Hindustan Construction Co. Ltd.
(2010) 4 SCC 518;
(iv) Transmission Corp. of A.P. Ltd. V. P. Surya Bhagavan
(2003)6 SCC 353;
(v) Vimal Chandra Grover v. Bank of India (2000)5SCC 122;
(vi) MSK projects India (JV) Ltd. V. State of Rajasthan (2011)10
SCC 573;
(vii) Union of India v. Dinesh Prasad (2012)12 SCC 63;
(viii) Ranbir Singh v. executive engineer (2011)15 SCC 453;
75. He would state, if it had been raised on an earlier occasion, the
respondent would have produced the correspondence between the parties
showing that final bill was only qua undisputed items of bill and other
claims were raised separately even before invoking arbitration vide letter
dated September 29, 1998 and also with the notice invoking arbitration
dated October 24, 1998 which is a question of fact and cannot be gone
into by this Court for the first time at the stage of Section 34. It is
submitted that there may be other letters/correspondence of the parties on
this issue. However, since the said argument has been raised for the first
time before this Court during argument, the other letters/correspondence
are not on record and could not be relied upon. It is for this reason that no
new argument can be raised for the first time in a petition under Section
34 of the Act. The argument of petitioner that the respondent had to show
whether it had submitted the final bill in a manner to get out of rigors of
prohibitory language of Clause 65 of GCC itself indicates that it is a
mixed question of law and fact, if not a pure disputed question of fact.
Even in such a case, the Supreme Court has categorically held that such
issue cannot be gone into if not raised before the forum below.
[Reference: Mohd. Shahabuddin v. State of Bihbar (2010) 4 SCC 653;
and Vishwasrao Madhavrao Chiplunkar v. Kamlabai Vishwasrao
Chiplunkar (2004) 18 AIC 768 of Bombay High Court that even a
question of law not pleaded cannot be argued.]
76. It is his submission that the petitioner was well aware of this factual
position even before commencement of arbitration proceedings as the
respondent has placed above referred letters dated September 29, 1998
and October 24, 1998 with its Arbitration Application No.417/1998 and it
was because of this reason they have not raised any plea of clause 65 of
GCC before the Arbitrator and/or before this court. Thus, the argument of
the petitioner that claims have been added as an afterthought during
arbitration has no basis since the said claims have been raised even prior
to invoking the arbitration. It is submitted that the respondent had
submitted the bill of undisputed items in March 1997 which was finalized
by petitioner only in April, 1998 and respondent has signed the final bill
„under protest‟ back in April 1998 itself as soon as it is received by
respondent. The letter of respondent followed on September 29, 1998
raising all its disputed claims. It is further his submission that while
submitting its bill in March 1997, the respondent had never presumed that
illegal deductions and recoveries would be made from its earlier unpaid
bill i.e 105th RAR. The respondent thus could not have raised claims
relating to recoveries made in 105th RAR, payment of which was not
released when it submitted the bill in March, 1997.
77. It is further submitted that respondent has submitted its bill only on
undisputed amounts and also not signed the column-4 of the bill which
pertains to Clause 65 of GCC to undertake that there is no further claim
(i.e disputed amount) beyond the bill. The respondent has also thereafter
received the final bill certified by Assistant Garrison Engineer (AGE) of
petitioner of about Rs.93 Lakh under protest in April 1998. Even the
"No-Claim Certificate" was signed „under protest‟. It is evident from the
correspondence between the parties that the respondent has consistently
raised its claims throughout the currency of contract, after conclusion of
contract, before invoking arbitration and during the arbitration. It is trite
law that documents signed under compulsion do not bind a party. He has
relied upon the following judgments in support of its case:-
(i) Chairman and M.D., N.T.P.C. Ltd. V. Reshmi Constructions,
Builders and Contractors (2004) 2SCC 663;
(ii) National Insurance Co. Ltd. vs. Boghara Polyfab Pvt. Ltd. (2009
)1SCC 267;
(iii) Ambica Construction vs. Union of India (UOI) (2006 )13SCC
475;
(iv) Associated Constructions v. pawanhans helicopters ltd. (2008)16
SCC128;
(v) General Manager Northern Railways and Anr. vs. Sarvesh
Chopra (2002 )4SCC 45
78. It is further his submission that the petitioner had even continuously
paid the respondent in respect of several of its claims in the RAR running
bills before 105th RAR, but with dishonest intention has illegally deducted
earlier payments made in 93rd - 104th RAR in the 105th RAR Bill. The
105th RAR bill was submitted a day prior to completion of work. It is his
submission that a positive bill of about 93 lakh certified by their own
AGE, the petitioner dishonestly modified it into a negative bill of about
Rs.1.15 Crore during pendency of arbitration proceedings and that too
after 5 years of submission of final bill. The said action of the petitioner
is nothing but an afterthought to negate genuine claims of respondent.
79. It is further his submission that even „submission, acceptance or
payment of final bill‟ does not bar a contractor from raising other genuine
claims subsequently, unless he has issued No Claim Certificate willingly
which the respondent has signed „under protest‟; thus, even clause 65 of
GCC shall have no application on claims of petitioner. He has relied upon
following judgments in support of his contention:-
(i) Durga Charan Rautray vs. State of Orissa and Anr. (2012 )12SCC
513;
(ii) R.L. Kalathia and Co. vs. State of Gujarat (2011 )2SCC 400;
(iii) Bharat Coking Coal Ltd. vs. Annapurna Construction (2003
)8SCC 154.
Claim No.1
80. As stated above, the claim No. 1 has five parts. On schedule A
items, wherein the respondent claimed an amount of Rs, 23,66,296,78.87,
the same was checked and verified by the respondent to be
2,36,51,15,588.50/-. It was the case of the petitioner that the respondent
has not pointed out any disagreement with the changes carried out in the
schedule A of the final bill. The learned Arbitrator has accepted the
amount as verified by the petitioner. Even the learned counsel for the
petitioner has accepted the aforesaid position as noted by the Arbitrator.
81. On deviation orders, as noted above, the learned Arbitrator has
awarded amount against four deviation orders in para 59, 67-68, 74 and
108. Insofar as the award against the deviation orders are concerned, the
learned counsel for the petitioner would accept the same. Similarly,
recovery for schedule B items and recovery due to site examination are
concerned, the same were not pressed by learned counsel for the
petitioner. I note, from the petition, as well as the written submission
filed by the petitioner, the primary challenge to the claim No.1 was the
award of Rs.38,74,466.85/- to the respondent on the ground (a)
amendment to Contract carried out between the parties (b) escalation
formula has been applied incorrectly and minus amount, wherever marked
out has not been deducted. According to Mr. Wadhwa, the Arbitrator‟s
calculation of escalation on material works out to Rs.3,60,26,192.05/-. As
per petitioner‟s calculation, escalation on material works out to
Rs.3,31,83,229.88/-. There is a difference of 28,42,962.17/- on account of
Arbitrator incorrectly applying escalation formulae as provided for in
clause 24 of the Special Conditions of Contract. According to him, the
error is;
(i) in freezing W1 rates for the quarter 25.03.94 to 25.6.94. As per the
formulae, W1 is the whole sale price index prevailing on the date of
commencement of the period of reckoning i.e beginning of the quarter. In
determining W1, Arbitrator has incorrectly applied June indices i.e 258.3
instead of March indices i.e 252.10;
(ii) Arbitrator instead of deducting the minus amount in S.No.3, 17, 18
and 19 has considered it as "nil". The difference in the calculation on this
account would be Rs.14,06,124.79/-.
82. On the other hand, Mr. Nidhesh Gupta, learned senior counsel
appearing for the respondent, would submit, that the petitioner
deliberately tried to intermingle the escalation payable before the
amendment came into force (Claim-1) and that for period after
amendment (Claim 18). He would state, that escalation under claim No.1
was for undisputed items payable in terms of the final bill before the
amendment came into effect and in fact some of it had been paid but
recovered later by the petitioner on the ground of application of incorrect
index. He would state, even assuming, without admitting, that the
amendment freezed all indices, the escalation under claim No.1 was not
affected inasmuch as the freeze on escalation on material is to be applied
on April 30, 1994, yet the amount of Award given under head of
escalation in claim No.1 is correct. According to him, this is so because
the relevant index for the period March 25, 1994 to June 24, 1994 was
258.30, whereas it was 252.10 only for December 25, 1993 to March 24,
1994. Therefore, the index of 258.30 is applied correctly because, even as
per the case of the petitioner, the amendment bars payment of escalation
only after April 30, 1994. He would refer to appendix H at page 27 of
letter dated June 10, 2002 of the petitioner, wherein, according to him, the
petitioner itself had mentioned that for quarter beginning March 25, 1994
to June 24, 1994, the index was 258.30. Arbitrator has applied the index
of 258.30 for calculating escalation, which is the only correct method.
The learned Arbitrator has worked out as per annexure C of the Award
Rs.3,60,26,192.05 for material, Rs.23,67,247.08/- for POL work,
Rs.3,72,71,735.63 for labour. He states, that after deducting payments
already made, the final payable amount under this head to
Rs.7,56,65,174.76. After deducting the amount paid by the petitioner in
the final bill, the Arbitrator concluded that only Rs.38,74,466.85/- is
payable under claim No.1, which he would justify. He had also stated that
for quarters mentioned at Sl. Nos. 3 and 17-19 of appendix H, given the
escalation as „zero‟, which is not correct as it is clearly seen from indices
for those respective quarters that they were consistently on increase and
higher than the base index, therefore, there cannot be any de-escalation as
contended by the petitioner or nil escalation as awarded by the Arbitrator.
Claim No.1B Security Deposit along with interest @ 24% p.a.:-
83. Insofar as the award to claim 1B is concerned, which relates to
security deposit, it is the submission of Mr. Darpan Wadhwa that as per
clause 68 of the Contract, the security deposit can only be refunded when
the respondent issues a No-Demand Certificate. Whereas, Mr. Nidhesh
Gupta, learned senior counsel would submit, that security deposit of
respondent was forfeited by the petitioner on the ground that the final bill
is of negative amount and security is adjusted against the same. He would
state, that on the basis of the contentions made above, the final bill has to
be positive as awarded by the learned Arbitrator, hence security deposit
has to be refunded by the petitioner/Union of India.
Claim No. 2-Costs due to time over run:-
84. Insofar as the award of claim No.2 i.e costs due to time overrun, it
is the submission of Mr. Darpan Wadhwa that such a claim was not made
in the final bill dated March 29, 1997 and extension of time under clause
11(A) and 11(B) of the GCC and the extension letters jointly signed by
the petitioner and the respondent categorically stating that the financial
effect would be nil. He would also state that such a claim is barred by
clause 11(C) of the GCC. He would rely upon the judgment of the
Supreme Court reported as 2007 (2) SCC 453 Ramnath International
Construction (P) Ltd Vs Union of India, wherein the Supreme Court
dealt with clauses 11(A), 11(B) and 11(C) on which reliance has been
placed by the parties herein. According to him in the said judgment the
Supreme Court has held that clause 11(A) and clause 11(C) are attracted
even if delay is on the part of the employer. He states that the finding of
the Learned Arbitration at para 154 is erroneous. He states the judgment
in Ramnath International (supra) has been followed by this Court, which
also dealt with the effect of signing of the letters stating "Nil" financial
liability by referring to the judgment reported as 2008 ILR Supp. Delhi
128 Union of India Vs. Bahl Builders and Public Works Department Vs.
Navayuga Engineering Co. Ltd and Anr. decided on March 31, 2014 in
O.M.P No. 420 of 2012. He states, that the arbitrator in addition to over
head costs has awarded Rs.32,00,000/- as compensation towards under-
utilization of plants and machinery due to its deployment at the site in the
extended period. He would state, that it is a settled law that loss of
earning capacity is an indirect or remote loss and cannot be granted in the
light of Section 73 of the Indian Contract Act. Mr. Nidhesh Gupta,
learned senior counsel for the respondent would submit, that it was never
the case of Union of India either before the learned Arbitrator or before
this Court, that the delay was not attributable to them. He states, that the
escalation is only payable in respect of material, labour and POL (Power,
Oil and Lubricants) in terms of the Special conditions of Contract. The
claim of the respondent under the said head does not include escalation
paid by Union of India but for the administrative overhead, hire charges
for plant and machinery and for its own plant and machinery. This was
the clear observation of learned Arbitrator also that clause 24-25 of SCC
covers only Material, Labour and POL. He would state, that the
applicability of clause 11(A) and 11(C) of General Conditions of Contract
has already been decided in favour of the respondents by this Court in
Arbitration Application No. 417 of 1998 dated March 28, 2001 between
the parties herein, categorically holding that the present case is not
governed by clauses 11(A) read with 11(C) which deals with extension,
whereas, present case is for damages for late providing of site, designs
and non-utilization of machinery employed. The said order has now
attained finality as it was never been challenged by the petitioner and as
such operates as res-judicata between the parties. He would state,
assuming there was an error in the said judgment, for the sake of
argument, it is trite law that even an incorrect/ erroneous decision binds
the parties to it once it had attained finality. He relied upon the following
judgments in this regard:-
(i) Mohanlal Goenka Benoy Kishna Mukherjee AIR 1953 SC 65;
(ii) Satyadhyan Ghsal v. Deorajin Debi AIR 1960 SC 941;
(iii) Swamy Atmananda v. Sri Ramakrishna Tapovanam (2005) 10
SCC 51;
(iv) State of Karnataka v. All India Manufacturers Organisation
(2006) 4 SCC 683;
(v) Supreme Court Employee's Welfare Association v. Union of
India (1989) 4 SCC 187;
(vi) B.L. Sreedhar V. K.M. Munireddy (2003) 2 SCC 355;
(vii) Jaswanti Singh Mathurasingh vs. Ahmedabad Municipal Corpn.
1992 Supp (1) SCC 5
85. He would state that the above contentions were also raised before
the learned Arbitrator who had clearly observed that the above judgment
dated March 28, 2001 of this Court between the present parties, relied on
an earlier judgment of this Court in Simplex Concrete Piles India Ltd Vs.
Engineer-In-Chief, Army Headquarters and applicability of that
judgment was admitted by the petitioner by submitting that it is binding
on them and as such, the claim of the petitioner that the respondent herein
is bound by its acceptance of extension letters issued on condition that
financial affect shall be nil cannot be sustained. He would also state, that
the faults of the petitioner are not covered under clause 11(B), was never
pleaded by the petitioner. He stated, that in terms of appendix A of the
letter dated June 10, 2002 submitted by the petitioner before the Arbitrator
contains the reason for various extensions and the Arbitrator has perused
all the reasons given by the petitioner itself to arrive at such a conclusion
that period of 32 months is not covered under any of pre-conditions for
invoking 11(A) and 11(C) of Contract. In some cases, the respondent has
finished its work within time and on instructions of proposed users of the
respective blocks, the petitioner has directed the respondent to bring down
the whole construction and re-construct it as per the wish of the proposed
user and had issued fresh instructions and drawings even in the extended
period while in other cases, despite several requests of the respondent, the
petitioner failed to appoint E/M Agencies within the Contract period to
allow the respondent to complete its work in time. For this conduct of the
petitioner, the respondent cannot be penalised. He would also, on the
basis of an appendix B and appendix C of letter dated June 10, 2002 of the
petitioner, contend that along with tender, only 154 drawings were issued
and approximately 1100 drawings were issued thereafter. That apart, till
the original period of Contract, only 177 instructions were issued and 162
decisions/instructions were issued thereafter for fresh and extra work,
most of the time, on the instructions of the users after completion of the
original work. Insofar as the submission made on behalf of the petitioner
that the rates of plants, tools and machinery by the respondent for
completing the work is not payable is concerned, it is his submission that
the expenses for such items are calculated limited for the contract period
in an item rate Contract. However, the charges/expenses for these items
for any extended period cannot be presumed and calculated in advance
while quoting rates even for an item rate Contract. Therefore, damages
suffered by the respondent in respect of extra hiring charges of machinery,
tools and plants are liable to be awarded if the delay is attributable to the
employer i.e the petitioner herein. He would state, that the extension
letters were on fixed printed format, which the respondent was forced to
sign. According to him, it is a settled law, merely signing on a dotted line
under compulsion does not bind the party. He would rely upon the
following judgments in this regard:-
(i) Chairman & MD, NTPC Ltd. v. Reshmi Constructions, Builders
& Contractors (2004) 2 SCC 663;
(ii) National Insurance Co. Ltd. v Boghara Polyfab (2009) SCC 267;
(iii) Ambica Construction v. Union of India (2006) 13 SCC 475;
(iv) Associated Constructoin v. Pawanhans Helicopters Ltd. (2008) 16
SCC 128
86. It is also his submission, that the respondent has been continuously
writing letters to the petitioner intimating them that they shall be claiming
damages on all heads of cost overrun and the petitioner, has, in spite of
such letters, allowed the respondent to carry on the work, therefore the
petitioner could not have turned around and say that they are not liable to
pay anything for cost overrun suffered by the respondent. Non denial of
claims of respondent is deemed acceptance of the same in view of (i) the
respondents‟ letters asserting claim for cost overrun during currency of
work (ii) in view of the judgment of the Supreme Court in the case
reported as 2002 (4) SCC 45 General Manager Northern Railway Vs.
Sarvesh Chopra, 2008 (16) SCC 128 Associates Construction vs.
Pawanhans Helicopters Ltd. He would justify the total sum of
Rs.2,30,00,000/- awarded by the learned Arbitrator. He would submit, the
reliance placed by the petitioner on Ramnath International case (supra)
is misplaced in view of the admitted binding nature of the judgment of
this Court between the parties regarding clauses 11(A) and 11(C). The
above case is distinguishable in facts as the delay in the above case was
contributory by both the parties, whereas, in the present case, the delay is
attributable to the petitioner and not covered under clause 11(A). He
would also state, that in a subsequent judgment in the case of Asia Tech
Ltd. (supra) the Supreme Court has rendered interpretation of clauses 7,
11(C) and 62(G) of IAFW 2249 which is the same as the present case,
wherein the Supreme Court referred to the various letters from the
contractor to the Union of India regarding reasons of delay and all of
which showed that the delay was solely caused by the Union of India
which is identical to the facts of the present case and with a clear finding
of the learned Arbitrator to that effect. He would also submit, that, in the
case in hand, there was an assurance by the petitioner, that the rates would
be revived and for that reason, the work was not stopped by the
respondent. In any case, it is his submission, that clause 11 only prohibits
the department from entertaining the claim but it did not prohibit the
Arbitrator from entertaining it. He, in the last, states, if the Arbitrator had
favoured one of the interpretation to clause 11(A) and 11(C) of the
Contract, it is a settled law that where two views are possible and
Arbitrator has taken one view, the Court shall not interfere.
Claim No.3 Payment due to increase in DO limit upto 30%:-
87. With regard to claim No.3, it is the submission of Mr. Darpan
Wadhwa, that under this claim the respondent had claimed market rate in
respect of schedule A items for work done beyond 10% deviation limit.
He states, that such a claim was not submitted in the final bill dated March
29, 1997. The respondent has been paid as per condition 62 for deviation
beyond 10%. Clauses 62(E) and 62(G) provides for valuation of
deviation. In absence of any specific agreement to the contrary,
respondent is not entitled to revision of "Schedule A" rates. He would
further states, no evidence was led in support of market rate. Learned
Arbitrator in para 172 of the Award notes that no analysis of market rates
and supporting vouchers have been supplied by the respondent.
According to him, the award is perverse and liable to be set aside. That
apart, the Arbitrator could not have awarded a hypothetical amount of
blanket rise of 60% over the Contract rate in respect of all schedule A
items. Mr. Nidhesh Gupta, learned senior counsel would submit, that the
only objection of the petitioner is, that the calculation of the amount
awarded was arbitrary and having no reason. Before the learned
Arbitrator, the petitioner had argued, no written instructions have been
submitted for deviation and therefore, no amount was payable. He states,
that the instructions were submitted by the petitioner in the form of
modified construction drawings from time to time which amounted to
instructions under clause 6-A of General Conditions of Contract and that
excess work was admittedly carried out by the respondent. Since the
respondent was obliged under the contract only to fulfil upto 10% of the
deviation as per condition 7 of IAFW 2249, any work beyond that was
chargeable as per revised rates. He states, that the respondent, in fact had
written a letter dated August 1, 1995 intimating the petitioner that the
permissible DO limit has reached and it will not carry on further work.
The petitioner replied requesting the respondent to carry out excess work
stating it to be closely connected with main work vide letters dated
September 21, 1995 and September 27, 1995. He states, the petitioner
had even asked the respondent to submit its revised rates vide its letter
dated September 27, 1995 and September 30, 1995 for this work which
the respondent submitted vide its letter dated October 4, 1995 and October
26, 1995. The petitioner had not objected to the revised rates submitted
by the respondent and had allowed them to carry out the work. Therefore,
they are deemed to have admitted the revised rates submitted by the
respondent in respect of extra work beyond 10% permissible DO limit.
According to him, the respondent was partly compensated by the
petitioner in that respect by non-deduction of rebate beyond 10% DO limit
in subsequent RAR bills, but eventually with mala fide intention, the same
has been recovered by the petitioner in 105th RAR. According to him,
even a Board of Officers was constituted for finalizing rate of work
beyond 10% DO limit and as such, the petitioner was well aware of
excess work beyond DO limit but the Board never finalized it and
eventually the Arbitrator had to adjudicate on the same. He refers to the
observation of learned Arbitrator that the petitioner had instructed the
respondent to carry out work without which, the facility could not
function and stated that the rates have been paid without deducting rebate
of 12% and escalation was paid without freezing indices. The petitioner
has claimed the payment of amount of Rs.92,82,800/- as escalation paid
beyond the 10% DO limit. He justifies the amount payable under the said
claim, by stating that the learned Arbitrator had perused the work done
from appendix H submitted by the petitioner itself and observed that in
March 1996, the limit of executing 10% DO was reached which the
respondent was obliged to perform under the Contract and till then the
value of the work done was found to be Rs.24.11 Crore. Thereafter, the
value of the work done till completion of work in March 1997 was found
to be Rs.27.67 Crores and as such it was held that work done beyond 10%
DO limit was approximately Rs.356 lakhs. He then adopted a formula of
10% inflation per year for six years on the said Rs.356 lakhs and
calculated the payable amount as 356x60/100 = 214 lakhs and deducted
therefrom an amount of 93 lakhs, already paid by the petitioner to arrive
at a final figure of Rs. 1.21 Crore for this claim, which according to him is
not unreasonable. He would also state, that the learned Arbitrator ought
to have granted escalation for 6.5 years and not 6 years. He would state,
that the whole price indices issued by Government of India was 77%,
hence the inflation of 60% granted by the learned Arbitrator cannot be
termed as arbitrary. According to him, rather the respondent is aggrieved
by the Award of the learned Arbitrator.
Claim No.7 Claim due to double recovery of rock:-
88. Against claim No.7, which relates to claim due to double recovery
of rock, against which an amount 1,42,280/- was awarded by the learned
Arbitrator, it is the submission of Mr. Darpan Wadhwa that such a claim
was not submitted in the final bill dated March 29, 1997. The Arbitrator
has also ignored clause 4 of GCC, clause 3.1.4 of SCC and preamble on
page 352 of SSR Part II.
89. On the other hand, Mr. Nidhesh Gupta, would state that the
petitioner did not press its objection to the award during the arguments.
He would also state, that the learned Arbitrator clearly held that as per
clause 3.1.4 of the Contract Agreement, the mode of measurement for
payment of quantity of hard rock excavated is by reducing 50% of stack
measurement for voids. He further held that modes of measurement
cannot be different for that of recovery than that for payment and shall
remain the same. Therefore, the award is justified.
Claim No.8 Balance payment in excavation of hard rock and soft
rock:-
90. According to Mr. Darpan Wadhwa, the nature of claim was due to
rocky terrain, excavation was not carried out as per drawings. Contractor
seeking payment for „actual width‟ instead of „authorized width‟. It is his
submission that this claim was not part of the final bill dated March 29,
1997. He states, that in terms of clause 4 of GCC, the respondent is
deemed to have satisfied himself "as to the nature of site, local facilities
of access and all matters affecting the execution and completion of
works". According to him, the clause provides that contractor would not
be entitled to any extra charges consequent on misunderstanding or
otherwise. He states, Arbitrator ignored clauses 3.2.1 and 3.2.3 of the
SSR which provide that the contractor would be entitled for payment for
„authorized width‟ only and not „actual width‟. Arbitrator has erroneously
relied on clause 3.1.4 of SCC which has no relevance to the present claim
as it deals with the depth of excavation and not width. On the other hand,
Mr. Nidhesh Gupta, states that the only contention raised by the petitioner
in the present petition, is that the learned Arbitrator has awarded claim
No.8 ignoring preamble of SSR without mentioning the relevant
provisions and it was also not raised before the learned Arbitrator.
However, according to him, clause 3.2.3 of SSR is a general clause for
authorized width for the purpose of excavation and the presence of the
words "unless otherwise provided for" which means any specific
clause/condition of Contract, GCC etc exist that would prevail.
According to him, clause 3.1 of SSR is the specific clause for
measurement of excavation and clause 3.1.4 thereof is a particular clause
for excavation in hard rock and soft rock which was the claim in issue.
He states, that the learned Arbitrator has given his reasoning in para 209
of the Award and based on clause 3.1.4 of SSR 1988 Part II of MES, by
holding that in present case, clause 3.1.4 is applicable where hard and soft
rock has been excavated and the petitioner has not made full payment for
that quantity. He would also state, that while calculating the amount
payable, the learned Arbitrator has taken the rates prescribed for hard rock
and soft rock under schedule A to the Contract on which rates the
petitioner had itself paid to the respondent under head of Claim No.7.
Therefore, the amount of Rs.5,71,890/- on the basis of clause 3.1.4 of SSR
is justified and the escalation granted as the same pertains to schedule A
items of Rs.1,71,000/- totalling to 7,42,890/- is also justified. Mr. Darpan
Wadhwa in his rejoinder would state, that the submission made by Mr.
Nidhesh Gupta is without any merit. According to him, clause 3.1.4 has
no connection with the width of the excavation. Even the learned
Arbitrator has not dealt with the argument. Such a submission of Mr.
Gupta is contrary to the submission made before learned Arbitrator as
noted in para 204 of the Award, where it was argued that the Contract is
silent regarding width of hard rock and provides for extra depth only
whereas, the claim of the respondent before the learned Arbitrator was for
actual width of excavation done over authorized width. Dispute is not
with respect to measurement of authorized width. He states, that the
learned Arbitrator has not given any reasoning in this regard.
Claim No.9- Payment due to circuit wiring:-
91. In so far as claim No.9, with regard to payment of circuit wiring for
which an amount of Rs.1,18,30,000/- was awarded, is concerned, it is the
submission of Mr. Darpan Wadhwa, that under this claim, the respondent
had claimed amount for wiring done from distribution board to switch
board under item no. "568K" instead of item no. "482". It is his
submission that such a claim was not made in the final bill. The item 482
provides for point wiring. Point wiring is specifically defined in Section
19-Internal Work, SSR. As per the definition, rates for point wiring
includes "circuit of any length from the distribution board or iron clad
switch upto ceiling...", therefore, rightly included in item No.482. He
states, that learned Arbitrator came to a wrong conclusion that description
of point wiring in item No. 482 does not tally with the description of point
wiring in SSR. Description of point wiring in item 482 nowhere mentions
that it is from light point to switch point only. It reads "....including
necessary cutting, chases and making good for one light point or one fan
point controlled by one switch...". He would state, that the respondent‟s
attempt is to read this part to confine item no. 482 to only light point to
switch point. In any case the definition is inclusive and not exhaustive.
Further, the Arbitrator completely ignored note 4 and note 9 of schedule A
items, which expressly provide the description of schedule A items has to
be read in conjunction with MES SSR. It also states, that in case of
deficiency in the description of items in schedule A, it shall be
supplemented by the description contained in SSR. According to him, the
learned Arbitrator failed to appreciate that under the tender approximate
requirement of 568k item was only of 500 meters. Arbitrator awarded
payment under the head for 1,13,742.90 meters. If the intention was to
pay under item 568k then the said figure would be exponentially high. He
would state, if the quantity under item 568k had to increase from 500
meter to 1,13,742.90 meters, deviation order had to be issued under clause
7 of GCC. No such deviation order was issued. The claim was an
afterthought and it precisely what the barring in clause 65 of the Contract
seeks to avoid as a matter of contractual policy. The claim made was of 3
Crores approximately, which is more than 12% of overall contract value
itself for just point wiring/circuit wiring which is untenable.
92. On the other hand, Mr. Nidhesh Gupta states, that point wiring
charges have been paid by the petitioner but circuit wiring charges from
switch board to main distribution board were not paid. He states, that the
case of the petitioner that point wiring includes circuit wiring as per
preamble to SSR and further contention was that drawings and vouchers
of the claimed length of circuit wiring was not produced. He would state,
that in terms of description given in schedule A, clauses 482 and 568k
reads as under and the preamble for point wiring also reads as under:-
―482: Point wiring with stranded copper conductor 2.5 sq.
mm (Nominal area) PVC insulated unsheathed cable in and
including concealed stove enamelled rigid steel conduit for
one light point or one fan point controlled by one switch
including 16 gauge copper continuous earth wire (switch
measured separately) including necessary cutting chases and
making good".
―568-K: Wiring with 2-2.5 mm 2 stranded copper
conductors PVC insulated with unsheathe cable laid in MS
Conduit system (Surface/concealed)"
Preamble to SSR (General Specification) for point wiring
"(1) The rates for point wiring include
(a) Supplying and fixing/drawing of cables for carrying out
wiring of a circuit of any length from the distribution
board or iron clad switch up to ceiling rose or connector,
socket, outlet, lamp holder, switch or fan regular
including additional length from connector to lamp
holder (in case of stiff pendents points and water tight
bracket points) and back-plate to lamp holder (in case of
plain bracket points)."
93. It is his submission, that the perusal of the above provisions
indicate that the term circuit and distribution board are conspicuous by
their absence from description to schedule A item No. 482 which is the
description of point wiring agreed upon by the parties. Further it is
provided, for one light/fan, point with one switch, cannot by stretch of
imagination include circuit wiring. He states, that the learned Arbitrator
has observed the discrepancy and has held that as per the condition 6A of
GCC, in case of discrepancies in the description of an item, the
description of the same under schedule A shall prevail. He relied upon
clause 6A of GCC, which reads as under:-
"6A. Discrepancies and Adjustment of Errors (Applicable
generally to Measurement and Lump Sum Contracts)-
The several documents forming the contract are to be
taken as mutually explanatory of one another, detailed
drawings being followed in preference to small scale
drawings and figured dimensions in preference to scale.
In the case of discrepancy between Schedule "A", the Bills
of Quantities, the Specifications and/or the Drawings, the
following order of precedence shall be observed:-
(a) Description of Schedule "A" / Bills of Quantities.
(b) Particular Specification.
(c) Drawings.
(d) General Specification.
94. It is his submission that learned Arbitrator has clearly observed that
under schedule A point wiring was specified as item 482 and another item
of circuit wiring was separately specified as item 568k. As per the above
description and as per the definitions of point and circuit given in IS 732
of 1989 and similar other government specifications, the learned
Arbitrator observed that under schedule A of the Contract between the
parties, point wiring and circuit wiring are separate items. Therefore, as
per clause 6A of the GCC, the specification under schedule A will take
precedence over any general specification under the SSR. It was also
observed that if point wiring was to include everything then there was no
occasion to provide another item 568k in schedule A. He also relied upon
the observation of learned Arbitrator that if the petitioner had understood
point wiring to include whole circuit wiring the rate quoted by respondent
at Rs.103/- per point would have to be categorized as an item having
freakishly low rate, which was not the case. He would state, that even as
per the petitioner, in terms of their letter dated June 10, 2002 and
appendix D to the said letter, the item 482 was not included in the list
having freakishly low or freakishly high rate, thereby signifying that the
petitioner had understood, from the very beginning that separate payments
are to be made for circuit wiring. He also submit, that as soon as the
wiring work first stated in 1992, the respondent wrote a letter dated
January 10, 1992 that as per the contract condition, item 482 is of point
wiring and item 568k is of circuit wiring and respondent is going ahead
with the work with this understanding. He states similar letter was written
on October 28, 1993 before starting wiring work in the basement. On
June 28, 1994, when the petitioner raised dispute for the first time, the
respondent wrote letter dated June 28, 1994 clearly mentioning that wiring
work has been done throughout on understanding that circuit wiring will
be paid as per 568k and its increase in quantity has also been intimated to
concerned Engineer. He highlights, that the respondent had taken the
ground of clause 6A in the said letter. He would justify the total length
of wire used in circuit based on the detailed drawings provided by the
petitioner. He states, that the learned Arbitrator has only accepted the
total length of the cable with respect to drawings which were supplied by
the petitioner and not the additional drawings provided by the respondent
before the Arbitrator. He also states, that the learned Arbitrator has not
accepted the rate at Rs.140/- per meter but had granted at Rs.104/- per
meter. Mr. Wadhwa, learned counsel for the petitioner, in rejoinder
would submit, that there is no definition of circuit wiring, therefore clause
6A is not applicable. There is no concept of freakishly low items in the
tender. He states, the Award on this claim need to be set aside.
Claim No.11 Cost due to damage and demolitions done by E/M
Agency:-
95. Insofar as claim No.11 relating to cost due to damage and
demolition done by E/M Agencies are concerned, Mr. Wadhwa would
submit, that such a claim was not submitted in final bill dated March 29,
1997. According to him, the claim is contrary to plain reading of clause
18 and clause 16 of SCC. Clause 18 of GCC provides that outside
agencies appointed for executing work mentioned in item No.618-"prime
cost sum" like fire detection, external electrification, MATV system and
Acoustic treatment etc act as a sub-contractor. The role of the employer is
limited to nominating/selecting them. Thereafter, the contractor enters
into a separate Contract with them and as per clause 5 GCC payment to
them is also made directly by the contractor. Further under clause 18 of
GCC, respondent is responsible for the work carrying out by the sub-
contractor and is liable to make good the loss or damage caused on this
account and condition 16 of SCC requires the contractor to work in close
co-ordination with the outside agencies/sub-contractors for completing the
works. He states, that the Award suffers from non application of mind nor
any reason has been given by the learned Arbitrator.
96. On the other hand, Mr. Nidhesh Gupta would submit that the
delayed employment of E/M agencies by the petitioner and extra cost
incurred by respondent because of same is not denied by Union of India.
Only argument raised, was that since, clause 16 of SCC prescribes that
respondent is required to work in close co-ordination with other agencies,
respondent cannot claim for the damages suffered. He states, the new
plea raised before this Court, by the petitioner without any pleadings that
as per clause 18 of GCC, the petitioner is not liable for payment of any
damage. The argument is of no consequence as clause 18 deals with sub-
contractors appointed by the contractor, whereas, in the present case, the
agencies for electrical/mechanical work such as air-conditioning, gas
pipes etc have been appointed by the petitioner without any say of the
respondent and each one of them were having independent Contract with
the petitioner. According to him, the respondent had written several
letters to the petitioner complaining damages being done by E/M agencies
to its already constructed work and the fact that these agencies are not
rectifying the damages caused by them. He states, even the petitioner had
written to these agencies confirming this fact that damage is being caused
by agencies appointed by the petitioner to already constructed work of
respondent and requesting them to rectify the same which has never been
done and ultimately the respondent had to rectify all the damages. He
would refer to appendix A to letter dated June 10, 2002 submitted by the
petitioner before learned Arbitrator wherein the petitioner admitted the
damages, caused by E/M agencies appointed by it to already constructed
work of respondent and respondent had to rectify it, causing delay in
completion of work of respondent. It was held, that this expenditure was
incurred by the respondent only because of delayed appointment of such
agencies by the petitioner. Eventually, the learned Arbitrator has granted
an amount of Rs.10,75,000/- and Rs.3,00,000/- for damage to the false
ceiling and damages to doors, floorings etc.
97. Mr. Darpan Wadhwa, would state, that there is no letter to suggest
that the petitioner had admitted responsibility. The responsibility under
the Contract to make good the loss or damage caused by the outside
agencies was upon the respondent alone.
Claim No.12 Payment on account of deficient water supply and
refund of water charges:-
98. Insofar as claim No.12 with regard to payment on account of
deficient water supply and refund of water charges are concerned, the
learned Arbitrator has awarded an amount of Rs.7,81,343/- here again the
submission of Mr. Darpan Wadhwa was that it was not the part of the
final bill dated March 29 1997. He states, that the claim and finding of
learned Arbitrator is contrary to clause 31 of GCC and clause 22 of SCC.
He states, that the learned Arbitrator has wrongly held in para 242 of the
Award, that the primary responsibility for supply of the water was on the
petitioner. Mr. Nidhesh Gupta, on the other hand, would state, that in the
light of clause 22.1 of the Contract, the primary responsibility of water
supply under the Contract was on the petitioner. But on failure to do so,
the Contractor will augment its own supply. The deficiency in water
supply admitted by the petitioner in their letters dated August 16, 1994
and April 19, 1995. He states, the learned Arbitrator had only allowed the
refund of excess water charged collected by the petitioner for water which
it had not supplied and not for tankers bought by respondent. He states,
that the learned Arbitrator had observed that petitioner has recovered an
amount of Rs.12,92,343/- from respondent as water charges, whereas, it
had actually supplied water only worth 5,11,000/- as such a refund of
Rs.7,81,343/- collected in excess by the petitioner directed to be refunded.
Claim No.14 Cost of damage due to excessive water logging in
basement:-
99. Insofar as claim No.14 is concerned, the learned Arbitrator has
awarded an amount of Rs.3,00,000/- under this claim. Mr. Wadhwa
would submit, that this was not submitted in the final bill dated March 29,
1997. If the water logging was due to excessive rain/monsoon, then the
petitioner can‟t be liable for it. Under clause 36 and 48 of GCC, it is the
sole responsibility of contractor to take all precautionary steps to ensure
no damage or loss is caused to the works/building. Further, the contractor
is liable to make good the loss caused at its own cost. He states that the
learned Arbitrator has failed to deal with clause 36 and 48 of GCC and the
petitioner has never ordered or gave direction to respondent to carry out
such purported work. There was no evidence to substantiate that (i) the
water logging in the basement has affected the work of the respondent; (ii)
work of water logging was actually carried out by respondent and (iii)
actual cost incurred in carrying out such work. Mr. Nidhesh Gupta, on the
other hand would submit, that the contention of the petitioner that water
logging was because of respondent and dewatering was done by third
party employed by the petitioner was rejected the learned Arbitrator in-
toto being contrary to evidence on record and finding that case is
converse. He states, the plea of lack of evidence is also liable to be
rejected on the ground that the learned Arbitrator has given a clear finding
that letters of party on record show that labour and machinery was
employed by respondent for long period of time for dewatering.
However, against a claim of Rs.1.22 Crores, the learned Arbitrator has
given a meagre amount of Rs.3,00,000/- for which the aggrieved person is
the respondent herein.
Claim 18 Balance payment due to escalation embargo imposed by
CEDZ:-
100. Mr. Darpan Wadhwa states, that the nature of claim of the
respondent under this head was escalation of material without the
amendment dated January 6, 1994. He would state, that this claim was
not part of the final bill dated March 29, 1997. Amendment dated Jan. 6.
1994 was signed by both the parties expressly prohibiting reimbursement
due to variation in prices of material beyond April 30, 1994. The
wholesale price index was agreed to be frozen as of April 30, 1994 prices.
He states, that learned Arbitrator has erred in concluding that there is no
bar whatsoever under the amendment and the respondent is entitled to
reimbursement in respect of all material. The interpretation at para 134 of
the Award in interpreting the amendment dated January 6, 1994 is
implausible, perverse, unreasonable and illegal for the reasons (i) if the
reimbursement due to variation in prices for all materials was permissible,
even after the amendment then there is no need for the party to execute a
separate amendment as the original tender already provided for escalation;
(ii) it completely renders the first para of the amendment otiose and
nugatory, this is against the principle construction of the terms of the
Contract; (iii) Arbitrator completely overlooked the correspondence
exchanged between the parties prior to and subsequent to the amendment
which clearly evidence that both the parties understood the amendment to
mean freezing of rates. He placed reliance on letters day March 25, 1993,
March 22, 1995 and May 15, 1996.
101. He also states, that the learned Arbitrator failed to appreciate that
the second para of the amendment is limited only to door, shutter and
luxalon that can be the only plausible interpretation. No reason has been
given by the learned Arbitrator who simply quotes the amendment and
concludes that there is no freezing of rates by saying the amendment is
clear.
102. On the other hand, Mr. Nidhesh Gupta, learned counsel for the
respondent, would state that plain language of the amendment shows, that
there was no freeze on escalation on new materials ordered after the
amendment. He relied upon amendment No.1 which reads as under:
"Reimbursement due to variation in prices for any new
materials ordered now onwards and luxalon and door shutter
shall remain admissible provided further that contractor
places firm orders for procurement of luxalon and door
shutters by 10/01/1994 failing which, no reimbursement due to
variation in prices of material for luxalon and door shutters
shall be admissible beyond April 30, 1994."
103. He states, a plain reading of above clause gives only one meaning
that reimbursement due to variation in prices for any new materials
ordered now onwards shall remain admissible. According to him, the
Supreme Court has time and again reiterated that while interpreting a
Contract, its plain and simple meaning is to be taken into consideration to
arrive at the intention of the parties and Courts cannot supplement or
supplant words to it. According to him, it has also been held that,
howsoever, the Court might dislike the result it is the plain and simple
meaning which is to be given effect to. He relied upon the following
judgments:-
(i) Central Bank of India Ltd. Amritsar v. Hartford Fire Insurance
Co, Ltd. AIR 1965 SC 1288
(ii) Delhi Development Authority v. Jitender Pal Bhardwaj (2010) 1
SCC 146
(iii) Mysore State Road Transport Corporation, Bangalore v. S.K.
Athani (1973) 2 SCC 540
(iv) H.M. Kamaluddin Ansari v. Union of India (1983) 4 SCC 417
104. According to him, it is also a settled law that a possible
interpretation given by an Arbitrator should not be interfered with by a
Court while exercising jurisdiction under Section 34 of the Act. He states,
that if amendment No.1 is interpreted in a manner as argued by the
petitioner that if a material is not ordered by January 10, 1994, no
escalation would be payable on the same, will result in absurd
consequences and impossibility of performance. According to him, no
order for materials can be placed by the contractor till the work
order/decision is placed by the petitioner. Thus, it is the interpretation
placed by the petitioner which is leading to absurd consequences. He
relied on the appendix B and appendix C to letter dated June 10, 2002
from where it can be seen clearly that 154 drawings were issued by
petitioner with tender document whereas more than 1100 drawings were
issued thereafter. The petitioner had issued only 177 decisions by the
original stipulated date of completion and 162 decisions after the said
date. Some of the deviation order even include dismantling and bringing
down already completed/constructed portion and reconstructing the same
as per demands made by the users. It is impossible for the respondent to
order in advance the material for decisions communicated to the
respondent after amendment. To say, that in terms of amendment No.1,
all the materials be ordered by January 10, 1994 otherwise escalation will
not be paid, is absurd. He states that doctrine of impossibility is a valid
excuse to legal obligation. In this regard he relied on the following
judgments:-
(i) State of M.P. v. Narmada Bachao Andolan (2011) 7 SCC 639;
(ii) State of Rajasthan v. Shamsher Singh 1985 (supp.) SCC 416;
(iii) Standard Chartered Bank v. Directorate of Enforcement (2005) 4
SCC 530;
(iv) Industrial Finance Corpn. Of India Ltd v. Cannanore Spg. And
Wvg. Mills Ltd. (2202) 5 SCC 54;
(v) Hira Tikkoo v. Union Territory, Chandigarh (2004) 6 SCC 765
(vi) Special Reference No.1 of 2002, in re (Gujarat Assembly Election
matter), (2002) 8 SCC 237
105. He states because of this reason, the amendment has permitted
payment of escalation on „any new material ordered now onwards‟ after
stating that the variation of price on „material‟ will not be admissible after
April 30, 1994. It has been clearly indicated that there will not be any
freeze on escalation on new material even after April 30, 1994. Even
otherwise, the amendment is not binding on the respondent as it has been
signed under coercion, duress and undue influence and therefore, voidable
at the option of respondent as there was no free consent. He relied upon
following judgments in this regard:-
(i) Chairman & MD, NTPC Ltd. v. Reshmi Constructions, Builders
& Contractors (2004) 2 SCC 663;
(ii) National Insurance Co. Ltd. v Boghara Polyfab (2009) SCC 267;
(iii) Ambica Construction v. Union of India (2006) 13 SCC 475;
(iv) Associated Constructoin v. Pawanhans Helicopters Ltd. (2008) 16
SCC 128;
106. He takes support from the conclusion of the learned Arbitrator that
amendment has been signed by the respondent under coercion and threat
of non-grant of extension by the petitioner. The petitioner had written a
letter dated November 25, 1993 to the respondent asking the latter to give
an undertaking inter-alia stating that the respondent shall not be claiming
any escalation in future and accordingly there shall be an amendment to
the Contract and then only the final extension will be granted. The
respondent had immediately responded to the said letter vide its reply
dated November 29, 1993 stating that it will not give an undertaking.
This clearly shows that the amendment dated January 6, 1994 has
coincided with the grant of extension. Thus, the letter of the petitioner
itself shows the lack of free consent. No oral evidence is required in a
case where the petitioner‟s own documents show the lack of free consent.
It is his submission that even thereafter, the respondent had written several
letters to the petitioner stating that it has signed the amendment under
threat and coercion and therefore it is not applicable and binding on it and
demanded payment of escalation exercising its option to avoid the
amendment signed without free consent. He justified the calculation of
payable escalation from appendix H of letter of the petitioner dated June
10, 2002. He has also stated, the Arbitrator has, for quarters mentioned at
Sl. No. 3 & 17-19 of appendix H given the escalation as „zero‟ which is
not correct as it is clearly seen from indices for those respective quarters
that they were consistently on increase and higher than the base index,
therefore, there cannot be any de-escalation or nil escalation. He states,
that the learned Arbitrator has also found that even in calculation of
escalation in appendix H, the petitioner deliberately made another
mischief and deducted payments of star rate items by showing all star rate
items in only last four quarters when the indices were highest and
respondent was entitled for maximum escalation. The learned Arbitrator
also found that the petitioner, contrary to their calculation in appendix H
of letter dated June 10, 2002, has mentioned in appendix G that payment
of star rate items have also been made in several previous RAR bills
before last four quarters. Learned Arbitrator has found such mischief in
calculation by the petitioner unacceptable and contrary to their own
document, and as such allowed deduction star rate items only as they have
actually been paid for in previous relevant quarters as per appendix G
submitted by the petitioner itself. The learned Arbitrator has clarified that
calculation is made by him on basis of value of work done provided by
petitioner applying the index of 258.30 as per appendix H submitted by
the petitioner and deducting the value of work done under star items taken
from appendix G submitted by the petitioner. He thus, calculated the
escalation permissible in claim no. 18 in annexure E to the award as
55,26,544.77/- which according to him is justified. Mr. Darpan Wadhwa,
on the other hand, would submit that interpretation adopted by the
Arbitrator is implausible and can be interfered with under Section 34 in
view of the judgment of the Supreme Court in the case reported as (2007)
13 SCC 236 Security Printing and Mining Corporation of India Ltd and
anr. v. Gandhi International Corporation. He would state, if the literal
interpretation of second para as suggested by the respondent remains then
the same would render the first para otiose and defeats the purpose of
amendment. According to him, in case, the meaning of the term of the
Contract is ambiguous, Court can look into the subsequent conduct of the
parties to gather the true intention of the parties, in view of the judgment
of the Supreme Court reported as AIR 1975 SC 31 The Godhra
Electricity Co. Ltd v. State of Gujarat and anr. In the present case,
correspondences clearly reflect that respondent also understood the
amendment to mean "freezing of rates". The final bill submitted by the
respondent as well as RAR bills were prepared after freezing the rates at
April 1994 indices. The argument of coercion cuts through the
respondent‟s argument of literal interpretation of the amendment. These
two arguments are contradictory. He would state that the respondent
completely misunderstood the interpretation suggested by the petitioner.
According to him, the petitioner never suggested that order for all
materials need to be placed before January 10, 1994. According to him,
the only plausible interpretation of the amendment would be to confine
second para to door shutters and luxalon. He would also state, particulars
of coercion were not pleaded. No oral evidence led. The respondent
failed to substantiate the allegation of coercion as defined under Section
15 of the India Contract Act keeping in view of the ratio of the judgment
of the SC reported as AIR (38) 1951 SC 280 Bishundeo Narain & Anr. v.
Seogenui Rai & Ors. At the most, the respondent has argued that it was
coerced to sign the amendment on threat of petitioner not granting
extension under the Contract. According to him, in a commercial
Contract, commercial Pressure put by one party on the other cannot be
categorized as "coercion". Respondent always had the option to opt out.
He further states, that without prejudice to the above, even on the basis of
documentary evidence no case is made out and it is clear that allegation of
coercion is an afterthought because of following reasons:-
(i) Amendment was executed on January 6, 1994. The first letter
produced by the respondent alleging coercion after execution of
amendment is dated December 11, 1995. No letter of protest sent
immediately post execution of amendment.
(ii) In the letter dated March 22, 1995, the respondent had stated "we
request you to kindly lift the embargo of no escalation on materials
beyond April 30, 1994". Therefore even the respondent, considered the
amendment to be valid.
(iii) In the letter dated May 25, 1993, petitioner had requested the
respondent to give an undertaking that respondent would claim no amount
towards escalation in prices of materials, fuel and labour. However,
eventually amendment was restricted to only materials. This clearly
shows that the terms of the amendment were equally negotiated and that
respondent was not arm twisted much less coerced to enter into the same.
In any case, in the last it is his submission that the learned Arbitrator has
given no reasons for arriving at the finding of coercion.
Claim No.20 Payment of item no. 238 of Schedule A and other items:-
107. According to Mr. Darpan Wadhwa, the claim relates to payment of
3kg cement slurry used for flooring not made as per rates mentioned in
item no. 238 of Schedule A, was not part of the final bill dated March 29,
1997. The learned Arbitrator also failed to appreciate that as per section
13 of SSR, rates for marble flooring is inclusive of cement slurry used for
joining and setting the tiles. Hence, claiming it again under item No.238
amounts to double payment. In any case, escalation could not have been
granted as cement is procured from the Government at a fixed rate as per
schedule B. Mr. Nidhesh Gupta, learned senior counsel for the respondent
would submit that the objection against award to this claim was not
pressed by the petitioner during arguments. He states, in their reply to
claim, the petitioner had admitted that work pertaining to schedule A item
no. 238 had actually been executed but payment has not been made on
instructions of Engineer-in-chief. He refers to the conclusion of the
learned Arbitrator that admittedly item 238 of schedule A has been used
on site but not paid for as agreed by the petitioner and therefore, it has to
be paid. He also states, that the learned Arbitrator has also held that since
said item is of schedule A, it also qualifies for escalation and has awarded
a sum of Rs.10,37,217/- which included the escalation.
Claim No.21 Payment on account of defective CI Pipes for fire
fighting system:-
108. This claim relates to extra cost incurred by the respondent in
replacing the defective pipes supplied by the petitioner under "schedule B
item". Mr. Darpan Wadhwa, would make the common submission, as
was made with regard to other claims, that it was not part of the final bill
dated March 29, 1997. According to him, the petitioner was to supply
these pipes under Sl. No. 7 and 8 under "schedule B items". Note "r" of
schedule B provides that respondent is solely liable in case the pipes are
damaged or lost while in his custody. Under clause 10(B) of GCC, the
respondent was liable to bear the cost of transportation, loading,
unloading, storing etc of schedule B items. Similarly, under clause 46 of
GCC, the respondent was liable to cure, repair any defect till the expiry of
the Defect Liability Period. If the pipes supplied by the petitioner were
defective, the respondent would ask the petitioner to replace them. The
fact that respondent got them repaired at its own cost shows the pipes
were damaged during transportation. He states, no evidence whatsoever
was placed to substantiate that (i) the pipes were defective when supplied
by the petitioner; (ii) the pipes were not damaged while in custody of the
contractor, including during transportation; (iii) replacement
order/voucher in support of actual cost incurred in replacing the pipe. He
states, the award suffers from non-application of mind as the Arbitrator
has not dealt with the submission of the parties nor the award is a
reasoned one. On the other hand, Mr. Nidhesh Gupta learned senior
counsel would submit, that supply of defective pipes and difference in
issue and actual measurement established by respondent by documentary
evidence including the reconciliation statement prepared by the petitioner
admitting difference in issue and measured quantities of CI pipes. The
contention of the petitioner that the pipes must have got damaged during
transportation was found to be false on the above referred evidence by the
Arbitrator. It was found that total 58 extra pipes have been issued and
used. He referred to letters dated August 26, 1997 and March 23, 1998 of
the petitioners. However, actual rate mentioned by respondent @
Rs.5000/- per pipe was not accepted by Arbitrator who awarded @
Rs.700/- per pipe, which was too low and it is the respondent who is
aggrieved and not the petitioner. In rebuttal, Mr. Wadhwa would submit,
that there was no admission on behalf of the petitioner and there is no
document to suggest so. In the last, it is his submission that the learned
Arbitrator has not dealt with the plea of the petitioner that it was damaged
while in custody of respondent.
Claim No.23 Refund of rebate over and above quoted sum:-
109. This claim relates to refund of rebate applied beyond quoted sum.
Mr. Wadhwa would state that this is not part of the final bill dated March
29, 1997. He states, that the learned Arbitrator has failed to observe that
the respondent had offered 12% rebate on the quoted rates to be calculated
on the basis of final bill. Arbitrator completely overlooked the letter dated
September 28, 1990 sent by the respondent forming part of the Contract
agreement. In the said letter, the respondent had stated that rebate is only
on the quoted rates. Mr. Nidhesh Gupta, on the other hand, would submit
that the petitioner has not referred to any provision of the agreement
which has been violated. It has been established by documentary
evidence before the learned Arbitrator, that rebate was offered by the
respondent only on quoted sum and not on quoted rate. The Arbitrator has
categorically held that the petitioner itself clarified vide its letter dated
October 23, 1990 that rebate of 12% is on the quoted sum and not on the
quoted rates and that letter has become part of the agreement. Moreover,
at page 199-R of the Contract, the total contract sum has been mentioned
as Rs.25,00,44,768/- which is the sum on which rebate is applicable.
Therefore, refund of excess rebate collected by the petitioner was ordered
by the learned Arbitrator. He states, learned Arbitrator had calculated
12% of rebate on Contract sum of Rs.25,00,44,768/- comes to
Rs.3,00,05,372.16/- but the petitioner had recovered an amount of
Rs.3,22,51,596.13/-. Accordingly, the learned Arbitrator had refunded a
sum of Rs.22,46,224/- collected in excess by the petitioner.
Claim No.29 Extra payment due to late taking over of building
causing thefts and more watch and ward:-
110. This claim relates to extra payment incurred as a result of damage,
theft etc caused due to late handing over of the works. He states, that this
claim was not part of the final bill dated March 29, 1997. Site was to be
handed over only after it was certified to be completed. Completion
Certificate was issued on March 31, 1997. The Arbitrator overlooked
clause 36 and 48 of GCC under which, it is the respondent‟s liability to
provide watchman necessary for the protection of the site. Further, the
respondent was responsible for safekeeping of all the materials provided
on the site and is liable to make good all damage/loss occasioned thereto
at its own cost. No evidence whatsoever to substantiate the claim. The
Arbitrator has relied upon inventory prepared in 1995 when the work was
not even completed i.e during the execution of the Contract. On the other
hand, Mr. Nidhesh Gupta learned senior counsel would submit, no ground
raised by the petitioner for contesting the award under this claim except
for saying that the award is erroneous and without any reason. He states,
there was sufficient documentary evidence before the Arbitrator that
possession of completed blocks were not timely taken by the petitioner,
which were to be taken phase wise, causing extra expense to respondent
regarding theft, watch and guard. He states, that delay in issuance of
Completion Certificate was because of the delay in completion of work by
E/M Agencies employed by the petitioner and several thefts had occurred
during that period. However, even after observing that several items were
stolen and were to be replaced by the respondent, he had refused to
actually consider the inventory of stolen items submitted by respondent
and received by the petitioner and had awarded a paltry sum of Rs.25000/-
for all expenses incurred in extra watch and ward and compensation for
stolen items.
Claim No. 33 Payment of Pattern Flooring instead of Normal
Flooring in marble floors and odd sized marble:-
111. The case of the respondent under this claim was that as per the
drawings, the petitioner had sought tiles of 300 mm x 375 dimension.
There being a purported deviation, the respondent was entitled to
revised/extra rates. Mr. Darpan Wadhaw would submit that such a claim
was not part of the final bill dated March 29, 1997. He states, that the
conclusion of the learned Arbitrator that there is a deviation is contrary to
express terms of the Contract. Inasmuch as;
(i) In the prescription of items in schedule A (item no. 243 to 247-floor
tiles) only thickness of tiles mentioned, no mention of dimension or
shape;
(ii) Note 4 and 9 of the preamble to schedule A provides that description
of items in the schedule must be read in conjunction with the particular
specification;
(iii) Clause 11.11.1 of particular specification provides that sizes of tiles
shall not exceed 400 mm x 400 mm and not less than 200 mm x 200 mm
as ordered. This obviously means that any tile within these dimensions
can be ordered. The contractor cannot charge for cutting etc of the tiles
ordered within these dimensions;
(iv) There is no requirement of only square tiles being ordered by the
petitioner.
112. It was also his submission, the learned Arbitrator has not given any
reasons for arriving at the finding that there is a deviation. Without
prejudice, he states there was no evidence for substantiating the rate. On
the other hand, Mr. Nidhesh Gupta, learned counsel for the respondent
would submit, that it was held by the learned Arbitrator that specification
in the Agreement clause 11.11.1 of the Contract was of tiling of
prescribed specification but the drawings provided by the petitioner were
for pattern flooring and usage was of odd sized tiles not manufactured by
any company. Therefore, the learned Arbitrator considered this as a
deviation and awarded cost incurred for cutting of large sized marble tiles.
He justifies the award inasmuch as the respondent in its final bill had
specified that 5595.832 sq. meter of pattern flooring has been done by it
and claimed a rate of 250 per sq. meter amounting to Rs.13.99 Lakhs and
then 10.65 Lakhs as escalation on the same as flooring is a schedule A
item. However, the Arbitrator has held that as per drawings submitted
with the final bill and accepted by the petitioner the pattern flooring was
3705.044 sq. meter and has awarded the rate at Rs.160 per sq. meter only
without any escalation whatsoever. Therefore, the grant of only
Rs.5,92,807/- against a claim of Rs.24,64,301/- is justified.
Claim No. 34: Balance payment due to non adoption of labour rates
as per Minimum Wages Act in formation of Star Rates
Claim No. 35: Balance Payment Due to Non Inclusion of T&P,
Electricity Charges, Sundries Etc. in Star Rates
Claim No. 36: Balance Payment Due Arbitrary Deductions in Rates of
Material Incorporated in Star Rates:-
113. It is the submission of Mr. Darpan Wadhwa, that these claims were
not part of the final bill dated March 29, 1997. The star rates were
calculated by the petitioner as per clause 62(G) of GCC and being an
excepted matter, the decision of CWE is final and binding. Arbitrator did
not deal with the submission of the petitioner despite the fact that the
same was raised before the learned Arbitrator by the petitioner in his
statement of defence. He would also state, that the Arbitrator has not
judicially determined the claim between the parties by weighing the
evidence on record and keeping in mind the contractual provisions.
Rather, he acted as an expert himself, computing the star rate items. On
the other hand, Mr. Nidhesh Gupta, would state, that the Arbitrator has
found that there were discrepancies in labour wages in star rates prepared
by the petitioner and though, the rates of unskilled labour have been found
to be correctly adopted but rates of skilled labour were on lower side. He
would also state, that the petitioner has taken the rate of a particular year
2001 and has reduced it by back calculation applying All India Whole
Sale Price Index and not taking correctly the rates of the time when the
work was done. The method of calculation was not accepted by the
Arbitrator particularly when the actual market rates were available with
the petitioner of relevant point of time during which the work was carried
out. He relied upon the judgment of the Supreme Court in Asian Tech
(supra), wherein, the Supreme Court held that clause 62(G) read with
clause 7 make it clear that the finality provided under clause 62(G) applies
only to cases of deviation and not in a case when there is a material
alteration and addition in the work done, which is the case here also and
as such, the star rates finalized by the Arbitrator requires no interference.
He also submit, that the learned Arbitrator has observed that both the
parties considered same basis and components in analysis of items but
there is a definite difference in rates of material, labour, tools and plants.
It has been held by the Arbitrator that vouchers and secured advance bills
paid by none other than petitioner for same items was produced by the
respondent for the relevant period. On the basis of the rates provided by
the petitioner and the respondent for 68 star items covered under claims
34, 35 and 36, the learned Arbitrator has allowed increase only in respect
of 33 star items and had not increased anything for 30 star items from the
rate given by the petitioner. He would state, that insofar as three star
items are concerned, the learned Arbitrator has decreased the rates granted
by the petitioner without having jurisdiction to do so. He refers to
annexure F to the award wherein the calculation has been made by the
learned Arbitrator.
Claim No. 37 Extra cost due to maintenance of sewerage line after
handing over due to non-maintenance, contractor appointed by UOI:-
114. The submission of Mr. Darpan Wadhwa, on this claim, was that this
claim was not part of the final bill. Under clause 46 of GCC, contractor is
solely liable to remedy any defect/damage caused during the Defect
Liability Period of one year after handing over of the works. The
employer i.e the petitioner is not bound under the Contract to appoint a
maintenance agency. Arbitrator has erroneously shifted the burden of
proof on the petitioner. The Award is perverse as there is no evidence at
all to substantiate the claim. Hypothetical rates of Rs.12,000/- per month
had been awarded. No reasons have been given by the Arbitrator. On the
other hand, Mr. Nidhesh Gupta would submit, that the responsibility of
the respondent was limited to rectification of defects in construction
within the contractual Defect Liability Period. Respondent, however, was
forced to attempt regular maintenance activities in the name of defects
such as maintenance of sewage lines and CI pipes, which the petitioner
denied stating that it had not directed anything to be done beyond defects.
He states, that the petitioner has failed to appoint maintenance agency in
Defect Liability Period and maintenance work had to be attended by the
respondent. Hence, Rs.12,000/- per month as maintenance charges
awarded. He states, that the maintenance charges of Rs.12,000/- per
month awarded by the Arbitrator is much less than what has been spent by
the respondent on maintenance of sewerage lines, CI pipe and other
miscellaneous items. Therefore, it is the respondent who is aggrieved by
the award under this claim and not the petitioner.
Claim No. 40: Compensation of the Block Payment from claim Nos.1
to 39 as mentioned above:-
115. The submission of Mr. Darpan Wadhwa is, that the contractor does
not provide for any rate of interest. It is settled law that in the absence of
contractual rate of interest, interest to be awarded from the date of demand
notice. The demand notice was sent by the respondent on September 29,
1998. The Arbitrator without giving any reason has awarded interest on
all claims except claim No.2 from 1.10.1997 instead 1.10.1998. Award of
the learned Arbitrator is against public policy. The reduction of past and
pendentelite interest from 12% to 9% considering that after economic
reforms interest rates had substantially reduced at the concerned time. He
would rely upon the judgment of the Supreme Court reported as 2007 (2)
SCC 720 Krishna Bhagya Jal Nigam Ltd. v. G. Harish Chandra Reddy
and anr. Mr. Nidhesh Gupta, would submit that the rate of interest as
awarded by the learned Arbitrator is wholly reasonable. He would state,
that the petitioner in this case has charged an interest of 17% p.a from the
respondent on mobilization advance, released in favour of respondent as
per 29 of the SCC. This shows, the rate of interest awarded is on the
lower side.
Claim No.41 Future interest @ 24% per annum compounded
quarterly on the above award amounts of claim Nos.1 to 40 upto the
date of actual payment:-
116. Mr. Darpan Wadhwa would submit, reduction of future interest
from 10% to 6% considering the fact that approximately 14 to15 years
have already elapsed from the date of the award, in view of the judgment
of the Supreme Court in the case reported as 2006 (7) SCC 700 Rajasthan
State Road Transport Corporation vs. Indag Rubber Ltd, whereas, on the
other hand, Mr. Nidhesh Gupta would submit, that the future interest has
been awarded at 10% with effect from April 1, 2003 till date of actual
payment. It is a settled law, if pendentelite interest is claimed in the claim
petition itself, future interest is to be awarded on whole claim including
pre-reference and pendentelite interest by referring to the judgment of the
Supreme Court in the case of Hither Consulting (U.K) Ltd V. Governor,
State of Orissa Civil Appeal No. 3147 of 2012 decided on November 25,
2014. Moreover, the rate of interest of 10% is less than awarded in
arbitration proceeding involving commercial transaction and construction
activities. Moreover, longer the delay, more should be the interest
awarded at the rate of 12-18% by relying upon the following judgments:-
(i) Sayeed Ahmed & Co. v. State of U.P (2009) 12 SCC 26;
(ii) Manalal Prabhudayal v. Oreintal Insurance Co. Ltd. (2009) 17
SCC 296;
(iii) Bhagwati Oxygen Ltd v. Hindusthan Copper Ltd. (2005) 6 SCC
462;
(iv) Central Bank of India v. Ravindra & Ors (2002) 1 SCC 367;
(v) M.D.J & K Handicrafts Jammu v. Good Luck Carpets (1990) 4
SCC 740;
(vi) Numaligarh Refinery Ltd v. Daelim Industrial Co. Ltd (2007) 8
SCC 466;
(vii) Housing and Urban Development Corporation Ltd. v. Leela
Hotels Ltd [FAO (OS) 59/2013]
117. In the last, it is his submission that the award under each and every
claim granted by the learned Arbitrator is based on sound and plausible
reasoning and the calculations are based on the figures provided by the
petitioner itself and the material on record. It is the petitioner, which has
deliberately misled the learned Arbitrator whether in providing erroneous
star rates, making deductions in the 105th RAR bill after having made the
payments in the earlier bills, converting a positive balance in favour of
Rs.93 lakh into a negative balance of Rs.1.15 Crore etc. He would
submit, that against the total work of about Rs.35 Crores, an award of
little over Rs.6.5 Crores has been made. He would submit that the
objections filed by the petitioner deserve outright rejection and do not
warrant any interference by this Court.
Counterclaim No.1: Rectification of defects at contractor's risk and
cost:-
118. The nature of counter claim No.1 was with regard to rectification of
defects at contractor‟s own cost. Mr. Darpan Wadhwa would state, that
under clause 46 of GCC, in case the contractor fails to remedy or rectify
the defects caused before the expiry of Defect Liability Period i.e
24.3.1998, the petitioner herein is entitled to get the same done by other
means at the risk and cost of the contractor. According to him, the
counter claim was raised on the basis of Board of Officer‟s meeting held
on July 5, 1998 and subsequent days. The Completion Certificate was
issued by the Garrison Engineer on March 31, 1997, which mentioned the
list of defects. Due to failure on the part of the respondent to remedy the
defects, petitioner was compelled to float various tenders for getting the
same repaired through outside agencies. Petitioner relied on these tenders
to substantiate the quantification of claim. He would submit, that the
learned Arbitrator‟s finding that Board of Officer‟s meeting dated July 5
1998 is fabricated is based on no evidence. He would also submit, that
the learned Arbitrator had ignored the fact that Completion Certificate
dated March 31, 1997 was issued subject to rectification of defects.
Therefore, contractor was duly notified but surprisingly the learned
Arbitrator failed to observe that the respondent had failed to rectify the
defects during the Defect Liability Period.
119. Mr. Nidhesh Gupta, learned senior counsel would make the
following submissions:-
(i) Learned Arbitrator had observed that tender notice of alleged defect
rectification issued 3 times. Initially for Rs.18 lakh, revised to Rs.80 lakh
and lastly revised to Rs.49.9 lakh without any reason;
(ii) It was also found that tender items showed that large number of
works were not attributable to contractor at all. It was the categorical
observation of the learned Arbitrator that the work which is being
tendered now by the petitioner in 2002 is on account of damages by use
for several years, i.e 5 years use of a big public hospital with large
footfall and this fact was not denied by the petitioner. It was also
recorded by the learned Arbitrator that no evidence was produced on
record by the petitioner to show that these defects are in works executed
by the respondent.
(iii) It was observed by the learned Arbitrator that measurement of
various items to be tendered and pointing out defects for rectification was
to be considered by Board of Officers in accordance with Clause 46 of
General Terms & Conditions, i.e after inspection and after giving
opportunity to contractor to explain which was not done. Moreover,
Board of Officers already met and decided on 05.07.98 and then informed
contractor of an inspection on 11.7.1998 which was never done.
(iv) It was an observation of the learned Arbitrator that as per the
contract, the petitioner should have gone for defect rectification in 1998
itself and not during 2001-02. It was observed by the learned Arbitrator
that certain defects being got rectified are part of normal maintenance not
recoverable from contractor.
(v) Therefore, it was held that regular maintenance work after contract
liability period cannot be taken from respondent at latter‟s cost. Still,
however, Rs.4.35 lakh awarded in favour of the petitioner.
Counter Claim No.2 Devaluation of work done to bad workmanship
and adoption of inferior quality of material by the Contractor:-
120. It is the submission of Mr. Darpan Wadhwa, that the finding of the
Arbitrator at para 414 of the Award that Board of Officer‟s meeting is
fabricated is perverse and based on no reasoning or evidence. At para 414
of the Award, Arbitrator relied on finding given in counter claim No.1.
He would submit that Arbitrator failed to appreciate that the finding given
in counter claim No.1 in respect of Board of Officer‟s meeting has no
bearing as the petitioner is relying on some other Board of Officer‟s
meeting in support of counter claim No.2. There were two separate Board
of Officer‟s meeting which shows clear non-application of mind and
mechanically accepting the submission of the respondent without giving
any reasons. On the other hand, Mr. Nidhesh Gupta would submit that
most of the defects are maintenance defects caused due to heavy traffic
and equipments of hospital. Only some are due to defective work for
which Rs.3,15,000/- was awarded in favour of the petitioner.
Counterclaim No.5: Interest @ 24% passed pendent lite and future
on awarded amount:-
121. It is the submission of Mr. Darpan Wadhwa that the learned
Arbitrator after recording the submission of the petitioner has given no
reason or finding on past or pendentelite interest on the sum awarded in
favour of the petitioner. On the other hand, Mr. Nidhesh Gupta, learned
senior counsel would submit, that only future interest is payable on claim
No. 1 & 2 @ 10% till actual payment.
CONCLUSION:
122. Having heard the learned counsel for the parties, before I deal with
the submissions made by the learned counsel for the parties on the claims,
the scope of judicial review in a petition under Section 34 of the Act is
well settled in terms of the judgment of the Supreme Court in the case
reported as ONGC Vs. Saw Pipes (supra). Even though, both the learned
counsel for the parties have relied upon the judgments of the Supreme
Court in DDA Vs. R.S. Sharma (supra), Associated Construction (supra),
G. Ramchandra Reddy (supra), Numaligarh Refinery Ltd (supra) and
Housing & Urban Development Corporation Ltd (supra) on the scope of
jurisdiction of a Court in a petition, in the nature of objection, under
Section 34 of the Act, I note as recently as November 25, 2014, the
Supreme Court in the case reported as (2015) 3 SCC 49 Associate
Builders vs. Delhi Development Authority after referring to the various
judgments of the Supreme Court including Saw Pipes Ltd. (supra) and a
further recent judgment of the Supreme Court reported as (2014) 9 SCC
263 ONGC Ltd. vs. Western Geco International Ltd, has held as under:-
Grounds on which arbitral award may be assailed
Section 34 in conjunction with Section 5 of the Arbitration and
Conciliation Act, 1996 (1996 Act) makes it clear that an arbitral award
that is governed by Part I of the 1996 Act can be set aside only on the
grounds mentioned under Sections 34(2) and (3), and not otherwise. It is
important to note that the 1996 Act was enacted to replace the 1940
Arbitration Act in order to provide for an arbitral procedure which is fair,
efficient and capable of meeting the needs of arbitration; also to provide
that the Tribunal gives reasons for an arbitral award; to ensure that the
Tribunal remains within the limits of its jurisdiction; and to minimise the
supervisory roles of courts in the arbitral process.
Merits of arbitral award can be assailed only when it is in conflict with
"public policy of India"
None of the grounds contained in Section 34(2)(a) of the A&C Act,
1996 deal with the merits of the decision rendered by an arbitral award. It
is only when the award is in conflict with the public policy of India as
prescribed in Section 34(2)(b)(ii) of the A&C Act, 1996 that the merits of
an arbitral award are to be looked into under certain specified
circumstances.
Heads Of ―PUBLIC POLICY OF INDIA‖
I. Fundamental Policy of Indian Law
(i) Compliance with statutes and judicial precedents
Violation of Indian statutes i.e the award which is, on the face of it,
patently in violation of statutory provisions cannot be said to be in public
interest. Such award/judgment/decision is likely to adversely affect the
administration of justice and would be regarded as being contrary to the
fundamental policy of Indian law. Furthermore, the binding effect of the
judgment of a superior court being disregarded would be equally violative
of the fundamental policy of Indian law.
(ii) Need for judicial approach
In every determination whether by a court or other authority that
affects the rights of a citizen or leads to any civil consequences, the court
or authority concerned is bound to adopt what is in legal parlance called a
"judicial approach" in the matter. The duty to adopt a judicial approach
arises from the very nature of the power exercised by the court or the
authority does not have to be separately or addionally enjoined upon the
fora concerned. What must be remembered is that the importance of a
judicial approach in judicial and quasi-judicial determination lies in the
fact that so long as the court, tribunal, or the authority exercising powers
that affect the rights or obligations of the parties before them shows
fidelity to judicial approach, they cannot act in an arbitrary, capricious or
whimsical manner. Judicial approach ensures that the authority acts bona
fide and deals with the subject in a fair, reasonable and objective manner
and that its decision is not actuated by any extraneous consideration.
Judicial approach in that sense acts as a check against flaws and faults that
can render the decision of a court, tribunal or authority vulnerable to
challenge.
The juristic principle of a "judicial approach" demands that a
decision be fair, reasonable and objective. On the obverse side, anything
arbitrary and whimsical would obviously not be a determination which
would either be fair, reasonable or objective.
(iii) Natural justice compliance
Equally important and indeed fundamental to the policy of Indian
law is the principle that a court and so also a quasi-judicial authority must,
while determining the rights and obligations of parties before it, do so in
accordance with the principles of natural justice. Besides the celebrated
audi alteram partem rule one of the facets of the principles of natural
justice is that the court/authority deciding the matter must apply its mind
to the attendant facts and circumstances while taking a view one way or
the other. Non-application of mind is a defect that is fatal to any
adjudication. Application of mind is best demonstrated by disclosure of
the mind and disclosure of mind is best done by recording reasons in
support of the decision which the court or authority is taking. The
requirement that an adjudicatory authority must apply its mind is, in that
view, so deeply embedded in our jurisprudence that it can be described as
a fundamental policy of Indian law. The audi alteram partem principle
which undoubtedly is a fundamental juristic principle in Indian law is also
contained in Sections 18 and 34(2)(a)(iii) of the Arbitration and
Conciliation Act.
(iv) Wednesbury reasonableness
No less important is the principle now recognised as a salutary
juristic fundamental in administrative law that a decision which is
perverse or so irrational that no reasonable person would have arrived at
the same will not be sustained in a court of law. Perversity or irrationality
of decisions is tested on the touchstone of Wednesbury principle of
reasonableness. Decisions that fall short of the standards of
reasonableness are open to challenge in a court of law often in writ
jurisdiction of the superior courts but no less in statutory processes
wherever the same are available.
The juristic principle of Wednesbury reasonableness is that a
decision which is perverse or so irrational that no reasonable person
would have arrived at the same is important and requires some degree of
explanation.
It is settled law that where:
(i) a finding is based on no evidence, or
(ii) an Arbitral Tribunal takes into account something irrelevant to the
decision which it arrives at; or
(iii) ignores vital evidence in arriving at its decision, such decision
would necessarily be perverse.
II. Interest of India
The next ground on which an award maybe set aside is that it is
contrary to the interest of India. Obviously, this concerns itself with India
as a member of the world community in its relations with foreign powers.
III. Justice or Morality
The third ground of public policy is, if an award is against justice or
morality. These are two different concepts in-law.
(i) Justice
An award can be said to be against justice only when it shocks the
conscience of the court. An illustration of this can be given. A claimant
is content with restricting his claim, say to Rs. 30 lakhs in a statement of
claim before the arbitrator and at no point does he seek to claim anything
more. The arbitral award ultimately awards him Rs. 45 laks without any
acceptable reason or justification. Obviously, this would shock the
conscience of the court and the arbitral award would be liable to be set
aside on the ground that it is contrary to "justice".
(ii) Morality
The other ground is of "morality". Just as the expression "public
policy" also occurs in Section 23 of the Contract Act, 1872 so does the
expression "morality". The Supreme Court has confined morality to
sexual morality so far as Section 23 of the Contract Act, 1872 is
concerned, which in the context of an arbitral award would mean the
enforcement of an award say for specific performance of a contract
involving prostitution. "Morality", would, if it is to go beyond sexual
morality necessarily cover such agreements as are not illegal but would
not be enforced given the prevailing mores of the day. However,
interference on this ground would also be only if something shocks the
court‟s conscience.
IV. Patent Illegality
The fourth head of public policy, namely, is patent illegality. It
must be remembered that under the Explanation to Section 34(2)(ii) of the
1996 Act, an award is said to be in conflict with the public policy of India
if the making of the award was induced or affected by fraud or corruption.
This ground is perhaps the earliest ground in which courts in England set
aside awards under English law. Added to this ground (in 1802) is the
ground that an arbitral award would be set aside if there were an error of
law by the arbitrator.
In the 1996 Act, the principle stands as the "Patent illegality"
principle which, in turn, contains three sub-heads:-
(i) Contravention of substantive law of India
A contravention of the substantive law of India would result in the
death knell of an arbitral award. Violation of Indian statutes i.e the award
which is, on the fact of it, patently in violation of statutory provisions
cannot be said to be in public interest. Such award/judgement/decision is
likely to adversely affect the administration of justice and would be
regarded as being contrary to the fundamental policy of Indian law.
Furthermore, the binding effect of the judgment of a superior court being
disregarded would be equally violative of the fundamental policy of
Indian law. This must be understood in the sense that such illegality must
go to root of the matter and cannot be of a trivial nature. This again in a
really a contravention of Section 28(1)(a) of the 1996 Act.
(ii) Contravention of A&C Act, 1996
A contravention of the Arbitration Act itself would be regarded as a
patent illegality-for example if an arbitrator gives no reasons for an award
in contravention of Section 31(3) of the 1996 Act, such award will be
liable to be set aside.
(iii) Contravention of the terms of the contract
In all cases, the Arbitral Tribunal shall decide in accordance with
the terms of the contract and shall take into account the usages of the trade
applicable to the transaction. Thus, the third sub-head of patent illegality
is really a contravention of Section 28(3) of the Arbitration Act. This
contravention must be understood with a caveat. An Arbitral Tribunal
must decide in accordance with the terms of contract, but if an arbitrator
construes a term of the contract in a reasonable manner, it will not mean
that the award can be set aside on this ground. Construction of the terms
of a contract is primarily for an arbitrator to decide unless the arbitrator
construes the contract in such a way that it could be said to be something
that no fair-minded or reasonable person could do.
Caution in applying all the above Heads/Sub-heads of Public Policy
Test
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. Once it
is found that the arbitrators approach is not arbitrary or capricious, then he
is the last word on facts.
Submission with regard to claim Nos. 2 to 39, in view of clause 65 of
GCC:-
123. The first and foremost question that needs to be decided is whether
the respondent could have at all raised claim Nos. 2 to 39 for the first time
on September 29, 1998 in view of clause 65 of the GCC. There is no
dispute that such a stand was taken by the petitioner for the first time
during the argument before this Court. In the absence of any plea, there
was no occasion for the learned Arbitrator to decide such an issue.
124. The point would be, whether the learned Arbitrator, even if such a
submission/stand was not taken in the pleadings or argued, was required
to look into the Contract himself in view of Section 28(3) of the Act.
Section 28 (3) of the Act reads as under:-
"28 (3) In all cases, the arbitral tribunal shall decide in
accordance with the terms of the contract and shall take into
account the usages of the trade applicable to the
transaction."
125. There is also no dispute on the position of law that an Arbitrator
being creature of a Contract, has to confine himself to the provisions of
the Contract while deciding the dispute. First of all, I deal with the
judgments relied upon by Mr. Nidhesh Gupta. In the case of Siddu
Venkappa Devadiga (supra), the Supreme Court while considering an
appeal by certificate against the judgment of the High Court of Bombay,
has held that the appellate court cannot go outside the pleadings and make
out a new case, wherein, the High Court had reversed the trial court‟s
judgment on a finding of benami which was never pleaded. In Samir
Chandra Dass (supra), the Supreme Court held that issue, not pleaded in
the written statement nor argued before trial court nor raised in the Memo
of Appeal before the High Court, held, First Appeal was not maintainable.
In State of Maharashtra Vs. Hindustan Construction Ltd, wherein, the
Supreme Court was concerned with facts, wherein, the respondent
company and the appellant had entered into a Contract for some
construction work. After completion of the work, dispute arose between
them in relation to payment/rates of payment under five different heads.
Those were referred to Arbitral Tribunal. The Arbitral Tribunal passed an
Award for certain amount in favour of the respondent. The
Appellant/State made an application for setting aside of the Award and
relied upon section 28, 33 and 16 of the Act to assail the Award and set up
the grounds of waiver, acquiescence, delay and laches and res-judicata.
The court, at the first instance, rejected the first application. In an appeal
under Section 36 (Sic.) of the Act about one year and four and a half
months thereafter, the appellant made an application before the High
Court seeking amendment to the memorandum of arbitration appeal by
adding additional grounds that the Arbitral Tribunal has exceeded its
jurisdiction in granting claim Nos. 1 and 3; that it had acted beyond the
scope of arbitration with regard to claim No.2 and; that it had mis-
conducted itself in granting the other two claims. Dismissing the said
application, the High Court held, that the grounds not initially raised in
the petition for setting aside the Arbitral Award could not be permitted to
be raised beyond the period of limitation prescribed in Section 34(3). It
further observed that the proposed amendments that were sought to be
effected were not even the grounds contained in the application under
Section 34 of the Act. The question before the Supreme Court was
whether in an appeal under Section 37 of the Act, from an order refusing
to set aside the Award, a memorandum of appeal to raise additional/new
grounds could be permitted. The Supreme Court held that the application
for setting aside an Arbitral Award under Section 34 of the Act has to be
made within time prescribed under Section 34 (3). If incorporation of
additional grounds, by way of amendment in the application under Section
34 is treated to be tantamount to filing fresh application, in all situations
and circumstances, it would follow that no amendment in the application
for setting aside the Award, howsoever material or relevant it may be for
consideration by the Court, can be added nor existing ground amended
after the prescribed period of limitation has expired, although the
application for setting aside the Arbitral Award has been made in time.
That could not be the intention of the Legislature while enacting section
34 of the Act.
126. In Transmission Corporation of A.P Ltd case (supra), the
Supreme Court was of the view that a question as to whether the
respondent was overage for entry into the service was neither raised in his
written statement nor it was argued before the High Court. Under such
circumstances, the Supreme Court held that the appellant cannot be
permitted to raise the point for the first time in that Court. In Vimal
Chandra Grover case (supra), the Supreme Court had not permitted the
respondent to raise a plea, which had no foundation either in the pleadings
or in the evidence before the National Commission i.e the Court below.
Similarly, in MSK Projects India (JV) Ltd, the Supreme Court was
concerned with facts of a case wherein the respondent/Public Works
Department of the State of Rajasthan decided in September 1997 to
construct the Bharatpur Bypass for the road from Bharatpur to Mathura.
For the aforesaid work, tenders were invited with the stipulation that the
work would be executed on the basis of Build Operate and Transfer. The
total extent of the road had been 10.850 km out of which 9.6 km was new
construction and 1.25 km was improvement i.e widening and
strengthening of the existing portion of Bharatpur Deeg road. The bypass
project was completed on April 10, 2004 and it also started collecting toll
fee as provided in the Agreement w.e.f April 28, 2001. There was some
problem in collecting the toll because of agitation of local people. The
State issued notification dated September 1, 2000 under the provisions of
the Tolls Act, 1851 and Rajasthan Motor Vehicles Taxation (Amendment)
Act, 1994, preventing the entry of vehicles into Bharatpur city stipulating
its operation w.e.f October 1, 2000. The petitioner invoked arbitration
clause raising the dispute. The learned Arbitrator made an Award in
favour of the petitioner. The State of Rajasthan being aggrieved with the
Award, filed objection under Section 34 of the Act and while deciding the
same, District Judge vide order dated January 17, 2006 set aside the
Arbitral Award on the ground, there was no clause in the agreement to
issue notification barring the entry of vehicles in the city of Bharatpur. It
held that the petitioner was not entitled to any compensation. The
petitioner filed an appeal before the High Court, wherein the High Court,
vide the impugned judgment dated April 24, 2007 held that Bharatpur
Deeg Section was part of the project and the contractor could collect the
toll fee from the users of this part of the road also. Clause 10 of the
Concession Agreement was not attracted in the facts of the case. There
was no agreement for the issuance of notification by the State barring the
use of the old route and directing the vehicles to use the new route alone.
The Supreme Court after noting that the State of Rajasthan had not taken
the defence that it was not agreed between the parties to issue the
notification barring the trafficking through the market of Bharatpur city,
was of the view the only issue remained as to whether, there was a delay
in issuance of notification and implementation thereof. In such a fact
situation and considering the settled legal proposition it was held that the
District Judge and the High Court fell in error considering the issue which
was not taken by the State before the Tribunal during the arbitration
proceedings.
127. In Union of India Vs. Dinesh Prasad, the Supreme Court noting
that during the course of arguments before the learned Single Judge, a
submission was made on behalf of the petitioner that the very
Commandant of the Battalion who signed and issued the charge sheet to
him convened and presided over the Summary Court Martial and then
conclusion of which, the punishment of dismissal from service was
imposed, which vitiated the court martial proceedings as he was denied
the fair trial. The Supreme Court was of the view that the learned Single
Judge had clearly erred in allowing such argument. Firstly, the argument
was raised without any foundation in the writ petition. No plea of actual
or likelihood of bias was raised in the writ petition. There was no plea
taken in the writ petition that he was denied fair trial in the course of
Summary Court Martial. Similarly, in Ranbir Singh Vs. Executive
Engineer, the Supreme Court while considering the case, where, the
challenge in a writ petition was limited only to the back wages and not to
the Award in toto. The High Court set aside the Award in toto. The
Supreme Court held that the High Court was well beyond the scope of the
prayers in the writ petition. If the State was aggrieved by the Award in
toto, there was no impediment in its way to challenge it in its entirety.
The party must be bound by its pleadings. A prayer clause cannot be
construed or dubbed as technicality.
128. On the other hand, the judgments relied upon by Mr. Darpan
Wadhwa are concerned, in Vaish Brothers (supra), this Court was
concerned with a petition under Section 20 of the old Arbitration Act,
1940, under which an application was filed by the plaintiff in that case for
appointment of an Arbitrator on the failure of the respondent to refer the
same. The plaintiff relied upon clause 70 of the General Conditions of
Contract IAFW 2249. The said petition was resisted by the respondent
by placing reliance on clause 65 of the GCC with which, we are also
concerned here. This Court held, since the petition proceeded on an
admission by the learned counsel for the petitioner that final bill was
submitted and clause 65 providing for excepted matters and barring
raising of any claim after submission of the final bills, clearly comes into
play and held that the petitioner was not entitled to seek reference of the
dispute and even the issue of existence of a dispute cannot be referred to.
In Rajasthan State Mines & Minerals Ltd. (supra), the Supreme Court
has held that the Arbitrator, being a creature of the Contract between the
parties and hence, if he ignores the specific terms of the Contract, it would
be a question of jurisdictional error which could be corrected by the Court
and for that limited purpose, the Agreement is required to be considered.
An Arbitrator cannot Award an amount which is ruled out or not
prescribed by the terms of the Agreement. Because of a specific bar
stipulated in the Agreement, that claim could not be raised. Even, if it is
raised, and referred to arbitration because of wider arbitration clause, such
claim amount cannot be awarded as the agreement is binding between the
parties and the Arbitrator has to adjudicate as per the Agreement.
129. In F.C.I Corporation vs. M/s Chandu Construction & Anr, the
Supreme Court held that an Arbitrator being a creature of the agreement
between the parties has to operate within the four corners of the
agreement and if he ignores the specific terms of the Contract, it would be
a question of jurisdictional error on the face of the Award falling within
the ambit of legal misconduct, which could be corrected by the Court.
However, it must be clarified that if the Arbitrator commits an error in the
construction of Contract, that is an error within his jurisdiction but if he
wanders outside the Contract and deals with the matter not allotted to him,
he commits a jurisdictional error. The Supreme Court also held that the
Arbitrator derives his authority from the Contract and if he acts in
disregard of the Contract, he acts without jurisdiction. A deliberate
departure from the Contract amounts to not only manifest disregard of his
authority or a misconduct on his part but it may tantamount to mala fide
action. Similarly, in ONGC Vs. Saw Pipes Ltd (supra), the Supreme
Court held that an Arbitral Award contrary to the terms of
Contract/statutory enactment is patently illegal and against the public
policy of India. Similarly in J.G Engineers Pvt. Ltd (supra), the Supreme
Court held that where the Contract is clear and unambiguous terms, bars
or prohibits a particular claim, any Award made in violation of the terms
of the Contract would violate section 28 (3) of the Act and would be
considered to be patently illegal and therefore, liable to be set aside under
Section 34 (2) (b) of the Act. In Fiza Developers & Inter Trade (P) Ltd,
the Supreme Court was considering a case wherein certain disputes
between the respondent and the petitioner were referred to arbitration. An
Award was made on September 14, 2005. The petitioner filed an
application under Section 34 of the Act before the city Civil Court
(Bangalore) for setting aside the Award. The petitioner made an
application under Order 14 R 1 & 3 of the CPC r/w rule 4(b) of the High
Court of Karnataka Arbitration (Proceedings before the Courts) Rules
2001, requesting the Court to frame issues in the matter. The said
application was rejected vide order dated September 12, 2006. The writ
petition challenging the said order was dismissed. The learned Single
Judge was of the view that application under Section 34 was not
necessarily in the nature of adversarial proceedings where a dispute
between the parties requires adjudication by the Court; that there is a legal
presumption in favour of the Award being valid and that whether the
opposite party joins issue or not, the person challenging the Award has to
make out one of the grounds enumerated under Section 34(2) of the Act
and there is no need for the Court to frame issues as is contained in a Civil
Suit. The Supreme Court, rejecting the contention of the petitioner for
framing of the issues in the given background. The Supreme Court, in
para 28 of the judgment has held that in a regular Civil Suit, in the event
of failure to file a defence, it will be lawful for the Court to pronounce the
judgment on the basis of facts contained in the plaint but in an application
under Section 34, even if there is no contest, the Court cannot, on the
basis of the averments contained in the application, set aside the Award.
Whether there is contest or not, the applicant has to prove one of the
grounds set out in sections 34 (2) (a) and (b). Even if the applicant does
not rely upon the grounds under clause (b), the Court on its own initiative
may examine the Award to find out whether it is liable to be set aside on
either of the two grounds mentioned in Section 34(2)(b).
130. Similarly, in the case of Government of Kerala Vs. Som Datt
Builders (supra), the High Court, after noting the plea of the Government
pleader that though, such a contention was not raised before the Court
below, the first appellate Court has a duty to examine whether Award is in
any way tainted by fraud or corruption or making of the Award is induced
by fact of fraud or corruption. The Government pleader laid stress on the
words "the Court finds that" unlike section 34(2)(a) where the party has
to furnish proof so as to establish the grounds under Section 34(2)(a) (i)
(ii) (iv). The counsel submitted, as far as section 34(2)(b) r/w explanation
is concerned, a duty is also cast on the Court to find out, on material
available before it, whether the Award is in conflict with public policy or
the making of the Award is induced or affected by fraud or corruption.
The High Court held, even though, it had indicated, there was no such
allegation or argument raised before the Arbitrator or before the Court
below, the Award was induced or affected by fraud or corruption, all the
same, in a given case, if the Court finds that the Award, is, in any way
induced or affected by fraud or corruption, the Court has a duty to
interfere.
131. No doubt, a reading of the judgment of the Division Bench of the
High Court, it is seen that the Court was of the view that if the Court
finds that the Award, is, in any way induced or affected by fraud or
corruption, the Court has a duty to interfere. A duty is also cast on the
Court to find out, on material available before it, whether the Award is in
conflict with public policy or the making of the Award is induced or
affected by fraud or corruption. In the present case, at the highest, the
case set up by the petitioner is that, in view of clause 65, which bars the
additional claims and the Award being contrary to the terms of the
Contract, the same is illegal and against public policy of India (not a case
that the Award is affected by fraud or corruption). The reliance placed by
learned counsel for the respondent in the case of MSK Projects India (JV)
Ltd. (supra) would be relevant for the purpose of deciding this issue
inasmuch as the Supreme Court, in the said case in para 23, was of the
following view:-
"23 The Tribunal considered the relevant agreement
provisions as well as land lease deed, total packet
documents, minutes of pre-bid meetings and the deed
authorizing collection of toll fee etc and proceeded with the
arbitration proceedings. The State of Rajasthan had not
taken the defence that it was not agreed between the parties
to issue the notification barring the traffic through the
markets of Bharatpur city. The only issue remained, as to
whether, there was delay in issuance of notification and
implementation thereof. In such a fact situation and
considering the settled legal proposition it was held that the
District Judge and the High Court fell in error considering
the issue which was not taken by the State before the
Tribunal during the arbitration proceedings".
132. From the above, it is clear that the Supreme Court had reiterated the
settled legal proposition that an issue, which was not taken by the party
before the Arbitral Tribunal during the arbitration proceedings, the
authorities above i.e the District Judge or High Court in that case and this
Court in the present case, cannot consider the issue and decide the same.
The judgment of the Supreme Court in State of Maharashtra Vs.
Hindustan Construction Company Ltd, would also be relevant while
deciding the issue under consideration inasmuch as the Supreme Court has
upheld the decision of the High Court rejecting the State of Maharashtra‟s
application for adding new grounds in the Memorandum of Arbitration
Appeal on the ground that they were absolutely new grounds for which
there is no foundation in the application for setting aside the Award. The
Supreme Court was also of the view that no new grounds containing new
material/facts could have been introduced for the first time in an appeal
when admittedly these grounds were not originally raised in the arbitration
petition for setting aside the Award. The Supreme Court had also
observed that no prayer was made by the appellant i.e State of
Maharashtra for amendment in the petition under Section 34, before the
Court concerned or at the appellate stage. In the present case, the issue
based on clause 65 was not raised nor pleaded before the learned
Arbitrator. Even in the objections, no such ground has been taken. Such
a submission was taken only at the time of the argument and the brief
submissions filed by learned counsel for the petitioner after the
culmination of the argument. Even, no application seeking amendment of
the objections has been filed. The submission of the learned counsel for
the respondent, in the absence of any plea by the petitioner, there was no
occasion for the respondent to justify the additional claims, is appealing.
No doubt, this Court had held in the case of Vaish Brothers, that in view
of clause 65, additional claims would be barred. Regretably such a plea
having not advanced at the relevant time, cannot be urged now. Some
justification has been given by the respondent to show that such an issue
is a mixed question of law and fact and those claims were raised
separately before invoking arbitration vide letter dated September 29,
1998 and also the notice invoking arbitration dated October 24, 1998. The
reliance placed by learned counsel for the respondent, in the case of
Vishwas Rao Madhav Rao Chiplunkar vs. Kamla Bai Vishwas Rao
Chiplunkar 2004 (18) AIC 768 (n) Bombay, that even a question of law,
not pleaded, cannot be argued would also be of some relevance. In any
case on a reading of two judgments of the Supreme Court in MSK
Projects India (JV) Ltd (supra) and State of Maharashtra vs. Hindustan
Construction Company Ltd (supra), this issue needs to be decided in
favour of the respondent and the plea now taken by leaned counsel for the
petitioner based on clause 65 of the GCC needs to be rejected having not
taken before the learned Arbitrator and even in the objections. A plea has
been advanced by Mr. Nidhesh Gupta that, documents signed under
compulsion do not bind a party. The said submission was in relation to
signing of the final bill and the No Claim Certificate. A perusal of the
document show the representative of the respondent did write on the said
documents signed under protest letter follows; which is an enough
indication, that, the contents of the said documents are not acceptable.
Although, Mr. Gupta has referred to the judgment in the case of Reshmi
Construction (supra), National Insurance Co. Ltd Vs. Boghara Polyfab
Pvt. Ltd. (supra), Ambica Construction (supra), Associated Construction
(supra) and General Manager Northern Railways (supra), Durga Charan
Routray (supra), R.L. Kalathia and Co. (supra), Bharat Coking Coal Ltd.
(supra), the same are not dealt with, as I have already rejected the
objection taken by Mr. Wadhwa on the arbitrability of claim No.2 to 39
based on clause 65 of GCC. Similarly, the issue of applicability of clause
65 of the GCC cannot be gone into now in view of my conclusion above,
the judgments referred to by Mr. Gupta are not dealt with.
Conclusion on each of the claims:-
Claim 1
133. Claim No. 1 has five parts.
(i) Schedule ‗A' items:-
As noted above, the respondent had, in the final bill against schedule A
items, claimed an amount of Rs.23,66,29,678.87/-. The petitioner verified
the bill with regard to schedule A items to be Rs.23,65,11,558.50/-. The
respondent did not point out any disagreement with the changes carried
out in the final bill relating to schedule A items. The learned Arbitrator,
has noted that the respondent has not objected to the amount as granted by
the petitioner. The amount checked and verified by the petitioner for
schedule A items is correct, that apart, the objections in the present
petition, against claim No.1 is with regard to escalation bill, so is the
position at the time of the arguments. I note, in the absence of objection,
the conclusion of the learned Arbitrator with respect to the final bill
relating to schedule A items is justified.
(ii) Deviation Orders:-
The learned Arbitrator has awarded the amount against four deviation
orders. There is no challenge to the conclusion of the learned Arbitrator
with regard to the award against deviation orders i.e DO No.59(P) at para
59; DO No.30(P) at para 67-68; DO No.70(P) at para 74 and DO No.6(P-
1) at para 108, as such the award is upheld.
(iii) Recovery of Schedule ‗B' items:-
I note, that there is no objection to this head of claim No.1. Even during
the course of the arguments, there was no challenge by learned counsel for
the petitioner. The conclusion is upheld.
(iv) Recovery due to Site examination:-
Similar is the position of this head under claim No.1, there is no objection
by the petitioner. Even during the course of the proceedings, there was no
attempt to challenge the same. Hence, to that extent, the Award is upheld.
(v) Escalation bill:-
The claim of the respondent was for escalation against material. The final
bill of the respondent was worked out to minus Rs.1,15,47,711.93 by the
petitioner. As noted above, the twofold argument of the petitioner is that
the Arbitrator‟s calculation of escalation on material works out to
Rs.3,60,26,192.05/-. As per petitioner‟s calculation, escalation on
material works out to Rs.3,31,83,229.88/-. There is a difference of
28,42,962.17/- on account of Arbitrator incorrectly applying escalation
formulae as provided for in clause 24 of the Special Conditions of
Contract. Clause 24 of the Special Conditions of Contract reads as
under:-
W1 Whole sale price index for all commodities (base 81-
82 = 100) published by Economic Advisor to the
Government of India as on the date of commencement of the
period of reckoning.
134. As noted above, the contention of learned counsel for the petitioner
was, in freezing W1 rates for the quarter March 25, 1994 to June 25, 1994,
as per the formula W1 is the whole sale price index prevailing on the date
of commencement of the period of reckoning i.e beginning of the quarter,
which would be March 25, 1994 (as per petitioner) which means, the
previous quarter ended on March 24, 1994. The contention of Mr.
Nidhesh Gupta that on March 25, 1994, the indices was 258.3, has not
been denied. So, till April 30, 1994, the indices of 258.3 would hold good
which is also clear from appendix H to letter dated June 10, 2002, the W1
for the period March 25, 1994 to June 24, 1994 has been shown as 258.3.
The grant of the claim on the basis of W1 as 258.3 is justified till April 30,
1994. [The applicability of escalation per se after April 30, 1994 i.e w.e.f
May 1, 1994 shall be considered in claim 18]. Insofar as the objection
that the learned Arbitrator instead of deducting the minus amount in
S.No.3, 17, 18 and 19 has considered it as "nil". Suffice to state, even, if
the escalation of material is in minus, it only signified, there was no
escalation during that period or for that matter, the prices have gone down.
That would not mean that there is de-escalation and the petitioner is
entitled to the benefit of such de-escalation. The Arbitrator has rightly
treated the relevant quarters as „Zero‟ to mean the benefit of escalation
would not be given to the respondent. I do not see any reason to interfere.
Claim 1B Security Deposit along with interest @ 24% p.a.:-
135. Insofar as this claim is concerned, in terms of condition 68 of
IAFW 2249, the security deposit of Rs.1,50,000/- should have been
released after the period of defect liability of one year. The only plea of
the petitioner is that the same can only be refunded when the respondent
issues a No Demand Certificate. The stand of the petitioner is that the
final bill was in the negative amount, the security is adjusted against the
same.
136. On the other hand, the case of the respondent being that the final
bill has to be in positive, as awarded by the learned Arbitrator, the security
amount has to be refunded by the petitioner/Union of India. Surely, going
by the award of the learned Arbitrator, the final bill, being in the positive,
he has directed the refund of the same. Ultimately, the refund of the same
would depend upon the outcome of the objections filed by the petitioner,
which are being considered by this order and as I have already upheld the
award qua claim No.1, the release of the security deposit in terms of the
award needs to be upheld.
Claim No. 2-Cost due to time over run:-
137. Insofar as claim No.2 is concerned, there is no dispute that it was
not part of the final bill dated March 29, 1997. As I have already
concluded that this submission of Mr. Wadhwa, based on clause 65 at this
stage is not sustainable, the objection on the non-arbitrability of this claim
needs to be rejected. Insofar as the submission of Mr. Wadhwa that the
extension of time granted under clauses 11(A) and 11(B) of the GCC and
claim for extra expenditure towards administrative expenses, hiring
charges of equipment, plant & machinery is barred by clause 11(C) of
GCC is concerned, suffice to state, when this claim was initially not
referred to arbitration by the petitioner on the ground that it was an
excepted matter as it does not fall in arbitration clause, the issue was
considered while adjudicating the Arbitration Application No.417/1998,
wherein, the petitioner herein, in support of its stand that the claim is an
excepted matter relied upon clause 11A and 11C of GCC, which stipulates
as under:-
"11. Time, Delay and Extension-
(A) Time is of the essence of the Contract and is
specified in the contract documents or in each individual
Works Order.
As soon as possible after the Contract is let or any
substantial Works Order is placed and before Work under it
is begun, the G.E. and the Contractor shall agree upon a
Time and Progress Chart. The Chart shall be prepared in
direct relation to the time stated in the contract documents
or the Works Order for completion of the individual items
thereof and/or the Contract or Works Order as a whole. It
shall indicate the forecast of the dates for commencement
and completion of the various trade processes or sections of
the work, and shall be amended as may be required by
agreement between the G.E. and the Contractor within the
limitation of time imposed in the contract documents or
Works Order. If the Works be delayed:-
(i) By force majeure, or
(ii) By reason of abnormally bad weather, or
(iii) By reason of serious loss or damage by fire, or
(iv) By reason of civil commotion, local combination of
workmen, strike or lockout, affecting any of the trades
employed on the work, or
(v) By reason of delay on part of nominated sub-contractors, or
nominated suppliers which the Contractor has, in the
opinion of G.E. taken all practicable steps to avoid, or
reduce, or
(vi) By reason of delay on the part of Contractors or tradesmen
engaged by Government in executing works not forming part
of the contract, or
(vii) By reason of any other cause, which in the absolute
discretion of the Accepting Officer is beyond the
Contractor‟s contol
then, in any such case the Officer hereinafter mentioned
may make fair and reasonable extension in the completion
dates of individual items or groups of items of Work for
which separate periods of completion are mentioned in the
contract documents or Works Orders, as applicable.
Upon the happening of any such event causing delay, the
Contractor shall immediately, but not later than 30 days of
the happening of the event, give notice thereof in writing to
the G.E. but shall nevertheless use constantly his best
endeavour to prevent or make good the delay and shall do
all that may reasonably be required to the satisfaction of the
G.E. to proceed with the works. Extension of time shall be
granted as under:-
(a) by G.E. for all Term Contracts;
(b) by Accepting Officer of the contract for all other Contracts.
In case the Contractor fails to notify the G.E. of happening
of an event(s) causing delay within the period of 30 days
stipulated in sub-para 3 above, he shall forfeit his right to
claim extension of time for the delay caused due to such
event(s).
Extension of time, as granted above, shall be
communicated to the Contractor by G.E. in writing and shall
be final and binding. PROVIDED THAT in the case of
contracts (other than Term Contracts) accepted by the G.E.,
in the even of the Contractor not agreeing to the extension
granted by the G.E., the matter shall be referred to the
C.W.E. whose decision shall be final and binding.
11(C) No claim in respect of compensation or otherwise,
howsoever arising, as a result of extensions granted under
Conditions (A) and (B) above shall be admitted."
138. This Court while deciding the issue on March 28, 2001, has held
the aforesaid clauses deal with extension of time, whereas the claim for
damages i.e claim No.2 is on account of non availability of site and
designs by referring to a judgment of this Court in the case of M/s.
Simplex Concrete Piles India Ltd. Vs. Engineer-in-Chief, Army
Headquarters (Suit No. 2543/1995), wherein the same clauses have been
interpreted by holding that the dispute raised was not covered under
clauses 11(A) and (C) of the Contract. So, the conclusion of this Court on
the non applicability of clauses 11(A) and (C) is final between the parties.
Nothing has been brought to my notice that the order dated March 28,
2001 has been varied or set aside. The reliance placed by Mr. Wadhwa on
the judgment of the Supreme Court in the year 2007, in the case of
Ramnath International Construction (P) Ltd (supra), wherein the
Supreme Court held that clause 11(C) would be attracted even if the delay
is attributable to the employer is misplaced in view of the finality of order
dated March 28, 2001 of the Court in Arbitration Application
No.417/1998.
139. In view of my aforesaid conclusion on clause 11(C) of GCC, the
reliance placed by Mr. Nidhesh Gupta, learned Senior Counsel for the
respondent on the case of Mohanlal Goenka vs. Benoy Krishna
Mukherjee case (supra), Satyadhyan Ghosal case (supra), Swamy
Atmananda case (supra), State of Karnataka and Anr. vs. All India
Manufacturers Organization case (supra), Supreme Court Employees'
Welfare Association case (supra), B.L. Sreedhar case (supra) and
Jaswantsingh Mathurasingh case (supra, may not be required to be gone
into. But that would still, not, preclude the learned Arbitrator to consider
the nature of extension letters, the conduct of the parties while deciding
the claim on its merit without considering the effect of clauses 11(A) and
11(C) of the GCC. In the case in hand, the extension letters issued on
June 1, 1994, August 16, 1995, October 23, 1996 did stipulate that the
financial affect as „Nil‟ and the said letters have been duly signed by the
representative of the respondent without demur or protest. The
implication thereof, was, the respondent had accepted the terms of
extension not once but on three occasions, each in a gap of more than one
year and could not have claimed any amount towards the cost overrun
because of the extension of time. The learned Arbitrator had only referred
to the factum of various letters written by the respondent detailing reasons
for the delay. He also referred to the extension letters being on the printed
format/proforma and the respondent had no option but to sign the letters is
not tenable in the facts. No letters have been referred to by the learned
Arbitrator to show that the respondent had protested for being coerced to
sign the letters. The learned Arbitrator could not have allowed the claim
contrary to the stipulation in the extension letters that the financial affect
shall be „Nil‟. I must note, that Mr. Gupta, has during the submission has
relied upon certain communications dated November 29, 1992, January
22, 1992, May 19, 1992, December 9,1992, December 3, 1992, February
26, 1996, March 27,1996 and September 21, 1996 sent by the respondent
to the petitioner, wherein they have highlighted the reasons for the delay.
In two communications dated March 27, 1996 and September 21, 1996,
the respondent has sought extension of time without prejudice to their
rights. That would still not improve the case of the respondent, when in
fact the extension letters were issued they were with „Nil‟ financial
liability. I note for benefit, the following observation of this Court in the
case of Union of India Vs. Bahl Builders (P) Ltd (supra), as an alternate
reasoning, to set aside the Award being without application of mind,
wherein, a similar claim was made.
"17. Even otherwise, the court is of the opinion that the
award betrays non application of mind to the facts; the
petitioner's letter of extension dated 12-8-1997 had clearly
posited that it was subject to "Nil" financial implication.
This meant that the contractor could not have claimed any
amount, towards the head which was ultimately awarded.
Nothing was shown from the correspondence or the record
to support the contractor's disclaimer or protest against this
conditional extension of time. In the circumstances, the
arbitrator could not have awarded the sum that he did."
140. I agree with the submission of Mr. Wadhwa that the respondent had
the option to terminate the Contract if the stipulation in the extension
letters did not suit it. The reliance placed by Mr. Nidhesh Gupta on the
judgment of Asian Tech (supra), is liable to be rejected in the facts of this
case, inasmuch as the Supreme Court in the said case was dealing with the
same stipulations with which this Court is concerned in the present case
by noting a fact that when the petitioner in that case vide its letter dated
November 24, 1988 made it clear that it was not ready to carry out the
work beyond the contracted period, otherwise on a separate work order
and the subsequent letter of the respondent in that case dated October 11,
1989, wherein, specific assurance was given by the respondent to the
petitioner to continue the work and the rates would be decided across the
table, the appellant went ahead with the work. The Supreme Court was of
the view that when such an assurance was given, it was not open to the
respondent to contend that no claim for further amount can be made due
to clause 11(C) and the Arbitrator would have no jurisdiction to award the
claim. Such is not the case here. The respondent has not placed any letter
to show that an assurance was given by the petitioner to the respondent
that rates pursuant to the extension of time shall be worked out. Insofar as
the reliance placed by Mr. Gupta on para 21 of the judgment in Asian
Tech (supra) that clause 11 only prohibits the department from
entertaining the claim but it did not prohibit the Arbitrator from
entertaining it is concerned, even if the Arbitrator was within its right to
consider the claim in the given facts, he could not have awarded the claim
in view of the clear stipulation in the extension letter, which has been
accepted by the respondent without any demur or protest except stating, as
noted by the learned Arbitrator that it would claim damages including
interest, which according to this Court is of no consequence, having
accepted the extension of time with „Nil‟ financial effect.
141. Insofar as reference made to appendix A to the letter submitted by
the petitioner dated June 10, 2002, which incorporates reasons for various
extensions is concerned, the same would have no effect on the claim made
by the respondent when for those very reasons extension was granted with
„NIL‟ financial liability. The reliance placed by the respondent on the
case of Chairman & MD, NTPC Ltd. v. Reshmi Constructions (supra),
has no applicablity. In the said case, the Court was concerned with
payment of final bill and not letter relating to extension of time. Be that
as it may, in the said case, the Supreme Court noted a letter written by the
contractor on December 20, 1990, detailing the circumstances under
which they were compelled to sign the said printed letter. It was under
those circumstances, the Supreme Court has said that the assertion of the
contractor of undue influence or coercion cannot be said to be an
afterthought. In the case in hand, no such letter written by the respondent
asserting undue influence or coercion has been noted by the learned
Arbitrator. The only plea of the respondent, that it has been writing letters
to the petitioner, claiming damages and interest, is not same as to contend
undue influence or coercion.
142. Similarly, in the case of National Insurance Company Ltd (supra),
the Supreme Court was concerned with the settlement vouchers/full and
final discharge obtained from the contractors by the Government
Departments. The Court held that when a Contract is fully performed,
there is a discharge of the Contract by performance and where both the
parties to a Contract, confirmed in writing, that the Contract has been fully
and finally discharged by performance of all obligations and there are no
outstanding claims of disputes, Courts will not refer any subsequent claim
or dispute to arbitration. Similarly, where one of the parties to the
Contract issues full and final discharge after confirming that he has
received the payment in full and final satisfaction of all claims and he has
no outstanding claim, that amounts to discharge of the Contract by
acceptance of performance and the party issuing the Discharge Voucher
Certificate cannot, thereafter, make a fresh claim or revive any settled
claim. The Supreme Court also held that the receipt that has been taken in
that case by the appellant/insurer was undated and was in proforma
furnished by the appellant containing irrelevant and inappropriate
statement. There was no mention of assignment of certain rights in
respect of theft of property nor was the claim being settled in respect of a
theft claim, the Court held, that shows how the claims were required to be
signed on the dotted line and how such vouchers were insisted upon and
taken mechanically without application of mind. The Court also noted, on
the date when the above discharge voucher was signed and given by the
respondent, the payment of about Rs.2.3 Crores made and it was made
after receiving the voucher. In the case in hand, as noted from the
extension letters, the same pertained to the Contract in question. All the
details were duly typed and signed by the parties i.e the petitioner and the
respondent herein. The extension letters also suggest and reveal minute
details like date of completion; date of completion in previous order;
extended date of completion, financial effect, reasons for extension.
Hence, the plea that the respondent was made to sign on the dotted lines
cannot be accepted. Similarly, in the case of Ambika Consutrction
(supra), the said judgment would also not be applicable inasmuch as the
Court, therein, had noted that clause 43(2) of the General Conditions of
Contract indicates that a No Claim Certificate is required to be submitted
by the Contractor, once the works are finally measured up. The Court
also noted that the work was yet to be completed and there is nothing to
indicate that the works as undertaken by the contractor has been finally
measured and on the basis of the same, No Claim Certificate has been
issued by the appellant in that case. There was a finding by the first
Arbitrator that the No Claim Certificate has been given under coercion
and duress. The Court also found that unless a Discharge Certificate is
given in advance, payment of bills are generally delayed. The Court also
concluded that clause 43 (2) has been included in the General Conditions
of Contract as a safeguard against claims after final measurement. The
Court held that such a clause in the Contract would not be an absolute bar
to a contractor raising claims which are genuine even after the submission
of such a No Claim Certificate. The case in hand is not such a case, as
noted above, on three consecutive occasions with a gap of one year each,
the last one being in the month of October 1996, just six months before
the completion of work, extension of time was sought and granted with a
clear stipulation of „NIL‟ financial affect. Hence, it can‟t be said that in
the given facts, the respondent could have still raised the claim for cost
overrun etc. In Associated Construction (supra), the No Due Certificate
issued under duress by the contractor, held not binding on him. In the
present claim, this Court is not concerned with No Due Certificate but
with the letters relating to extension of time with a clear stipulation of
„NIL‟ financial liability which was not objected to, even was not part of
the final bill dated March 29, 1997 of the respondent. The judgments
have no application in the facts of this case. Insofar, as the judgment of
the Supreme Court in the case of General Manager Northern Railway vs.
Sarvesh Chopra (supra), on which reliance was placed by Mr. Gupta,
more specifically, para 15, wherein the Supreme Court, referring to the
position under the Indian Law, inspite of there being a Contract between
the parties where under the Contractor has undertaken not to make any
claim for delay in performance of the Contract occasioned by an act of the
employer still claim would be entertainable in one of the following
situations; (i) if the contractor repudiates the Contract exercising his right
to do so under Section 55 of the Act; (ii) the employer gives an extension
of time either by entering into supplementary agreement or by making it
clear that escalation of rates or compensation for delay would be
permissible; (iii) if the contractor makes it clear that escalation of rates or
compensation for delay shall have to be made by the employer and the
employer accepts performance by the Contractor inspite of delay and such
notice by the contractor putting the employer on terms. None of the
situations exist/applicable in this case. Situation No. 1 does not exist.
Situation No.2 is not applicable as there is a clear stipulation in the
extension letters, that the financial effect is „NIL‟. Situation No.3
presupposes no extension letters with a stipulation of „NIL‟ financial
effect. Rather it contemplates, a situation where the contractor seeking
extension of time demands compensation, and the employer accepts the
delay and the terms. The award, to this claim needs to be set aside. I
order so.
Claim No.3 Payment due to increase in DO limit upto 30%:-
143. Having heard the learned counsel for the parties, the plea of Mr.
Wadhwa that the claim was not part of the final bill dated March 29, 1997
needs to be rejected in view of my conclusion on the plea with regard to
clause 65 of the GCC. Insofar as the submission of Mr. Wadhwa that in
the absence of any specific agreement to the contrary, the respondent was
not entitled to revision of schedule A rates also needs to be rejected in
view of the letters dated September 27, 1995 and September 30, 1995,
which I reproduce as under:-
" 27 Sep. 95
M/s S.A Builders Ltd.
610-612, Chiranjiv Tower,
43-A, Nehru Place,
New Delhi-110019
CA NO : CEDZ 6/91-92 : PROVN OF ACCN FOR
ARMY HOSPITAL (R&R) AT DELHI CANTT
Dear Sir (s),
1. Reference this office letter No.8406/CEDZ-6/6152/E8
dated 26 Sept 95.
2. As the Deviation limit of contract is likely to increase
beyond 10% permissible limit of CA. It is well known
to you that additional work is closely connected with
the original work.
3. In view of reason explained above you are requested to
do the work at the same rate in the interest of work as a
good gesture for this prestigious work. Your agreement
may please be forwarded at the earliest. Please
intimate the items trade wise, for which the rates are to
be revised with supporting details of revised rates and
quantity (revised).
Yours faithfully,
(Anand Srivastava, IDSE)
EE
Garrison Engineer"
" 30 Sep 95
M/s S.A Builders Ltd.
610-612, Chiranjiv Tower,
43-A, Nehru Place,
New Delhi-110019
CA NO : CEDZ 6/91-92 : PROVN OF ACCN FOR
ARMY HOSPITAL (R&R) AT DELHI CANTT-110010
Dear Sir (s),
1. Reference your letter No.MES/SAB/01/95/1106 dt.
09.08.95.
2. Please submit your revised rates with supporting details
in the performa attached.
Yours faithfully,
(Anand Srivastava, IDSE)
EE
Garrison Engineer
PERFORMA
Sr Description CA Qty Amount Revised Final Amount
No of item Rate Rate Qty Final
144. In response to the above letters, the respondent had given the
revised rates vide its letter dated October 4, 1995. When the petitioner
itself had sought the revised rates from the respondent, it cannot contend
that the Contract bars the revision of schedule A rates. That apart, I note
that the petitioner had constituted a Board of Officers for ascertaining the
market rates for all schedule A items of the agreement and the Board
proceedings were to be complete by May 15, 1996, which was not done
and this aspect has been conceded by the petitioner before the learned
Arbitrator. That apart, it is also noted that the respondent was partially
compensated temporarily by way of non deduction of the rebate beyond
the Deviation Limit, which was later recovered by the petitioner in the
105th RAR. The aforesaid also proves that the petitioner itself proceeded
on a premise that the respondent is entitled to the revision of rates for the
work beyond Deviation Limit of 10%.
145. Insofar as the submission of Mr. Wadhwa that there was no
evidence led in support of the market rates nor any analysis of market
rates produced nor supporting vouchers have been supplied by the
respondent, the learned Arbitrator could not have awarded the claim as he
has done against this claim is concerned; it is seen from the Award that
the learned Arbitrator in the hearing dated July 24, 2001, had asked the
petitioner to check the calculations of the claim. The petitioner was to
inform the rates, if any, finalized by the Board of Officers appointed by
them. The petitioner was to give details of the calculations considering
the rates as arrived at by the Board of Officers/Independent Assessment.
Both the parties were to sit together and sort out the difference in
quantities. The petitioner‟s stand, that the respondent had not submitted
the details in support of the rates claimed by them with proof of cost of
material. It is also petitioner‟s stand, that the respondent had not submitted
the analysis in support of the rates claimed by them, therefore the claim
may be rejected. The stand of the respondent was that the Contract being
an Item Rate Contract, the petitioner should have ascertained the market
rates. The petitioner having failed to do so, the rates asked by the
respondent need to be granted. The learned Arbitrator was of the view
that Board of Officers was constituted by the petitioner for fixing the rates
to be applied beyond 10% Deviation Limit. No such rates were prepared
by the petitioner as clarified by the petitioner in its letter dated January 31,
2002. The learned Arbitrator has observed, the petitioner ought to have
finalized the rates but it failed to do so. I agree with the conclusion of the
learned Arbitrator. The petitioner having failed to finalize the rates, is
precluded to contend that the respondent has not supplied the market rates
and supporting vouchers. In other words, the petitioner was within its
right to independently ascertain the market rates and make an analysis
thereof to come to a conclusion. The petitioner having lost the
opportunity of determining the rates, the Arbitrator was within its right on
a reasonable basis to compute the rates, which he has done in the present
case.
146. Insofar as the plea that the Arbitrator has arrived at a hypothetical
amount while awarding an amount of Rs.121 Lacs is concerned, I note, on
a reading of the award and perusing the submissions made by the parties,
the learned Arbitrator has taken into consideration the work beyond 10%
Deviation to be of Rs.356 Lacs approx on the rates quoted in the year
1990. This aspect has not been disputed by the petitioner in their
objections or in the arguments. The learned Arbitrator adopted a formula
of 10% inflation per year for six years to arrive at the figure of Rs.214
Lacs and further deducting the amount already paid to the respondent to
arrive at a figure of Rs.121 Lacs. I note, the methodology adopted by the
learned Arbitrator is a reasonable one. It is not the case of the petitioner
that there was a better methodology in computing the revised rates. The
only objection that it is a hypothetical figure need to be rejected. This
Court is of the view that the award of the amount under this claim need
not be interfered.
Claim No.7 Claim due to double recovery of rock:-
147. The submission of Mr. Darpan Wadhwa, that this claim was not
part of the final bill dated March 29, 1997 needs to be rejected in view of
my conclusion above on clause 65 of GCC. The only ground of objection
with regard to this claim is that the learned Arbitrator has ignored clause 4
of GCC, clause 3.1.4 of SCC and preamble of SSR Part II while granting
this claim. The said clauses are reproduced as under:-
GCC
"4. Works to be carried out (Applicable generally to
Measurement and Lump Sum Contracts)- The Contract
shall, except as provided under Schedules „B‟, „C‟ and/or
„D‟ include all labour, materials, tools, plant, equipment
and transport which may be required in preparation for, and
for and in the full and entire execution and completion of the
Works. The descriptions given in Schedule „A‟ and the Bills
of Quantities shall, unless otherwise stated, be held to
include waste on materials, carriage and cartage, carrying
in, return of empties, hoisting, setting, fitting and fixing in
position and all other labours necessary in and for the full
and entire execution and completion aforesaid in
accordance with good practice and recognised principles.
The Contractor shall be deemed to have satisfied himself as
to the nature of the Site, local facilities of access and all
matters affecting the execution and completion of the Works.
No extra charges consequent on misunderstanding or
otherwise will be allowed."
SCC
"3.1.4 Where soft disintegrated rock and hard rock are
mixed, the measurement for the total quantity shall be made
by methods described in paras 3.1.2 and/or 3.1.3 above.
The hard rock excavated shall be stacked and measured in
stack. The quantity of hard rock excavated shall be reduced
by 50% to allow for voids. From the total quantity of the
mixture the quantity of hard rock excavated thus arrived at,
shall be deducted to work out the quantity of the
soft/disintegrated rock excavated."
148. On a perusal of the conclusion of the learned Arbitrator, it is
revealed that quantity of hard rock excavated and recovered shall remain
the same. The stack measurements have to be reduced to 50% to account
of the voids or solid measurements are to be taken as per the
drawings/trench dimensions. The learned Arbitrator has directed the
refund of excess amount recovered by the petitioner. During the course of
arguments Mr. Wadhwa has not pressed the objections to this claim. In
view of this, I uphold the Award to claim No.7.
Claim No.8-Balance payment in excavation of hard rock and soft
rock:-
149. Insofar as the objection of Mr. Wadhwa, that this claim was not part
of the final bill dated March 29, 1997 is rejected. The claim of the
respondent was premised on the ground that that the actual width of the
excavation was more than, what has been considered by the petitioner.
The respondent‟s stand before the Arbitrator was also that the Contract is
silent regarding the width of the hard rock and it provides for extra depth
only. On the other hand, the petitioner relied upon clause 3.2.1 and clause
3.2.3 of the SSR, which provided that the contractor would be entitled to
payment for authorized width only and not actual width. The said clauses
are reproduced as under:-
"3.2.1 Authorised quantities or those actually excavated,
whichever are less shall be allowed.
3.2.3 Authorised widths - Unless otherwise provided
for, authorised widths shall be as under:-
(a) Upto 1 m depth, the width of the trench for the
purpose of measurements of excavations, shall be arrived at
by adding 40 cm to the external diameter of the pipe (not the
sockets), cable, conduit, etc. Where a pie is laid on concrete
bed/cushioning layer the authorised width shall be the
external diameter of the pipe plus 40 cm or the width of
concrete bed/cushioning layer, whichever is more.
(b) For depths exc. 1m an allowance of 5 cm per metre of
depth for each side of the trench shall be added to the
authorised width (i.e external dia of pie plus 40 cm) except
where battering or benching has been ordered. This
allowance shall apply to the entire depth of the trench. The
authorised width in such case shall, therefore, be equal to
depth of trench plus external dia of pipe plus 40 cm or the
width of concrete bed/cushioning layer, whichever is more.
(c) Where more than one pipe, cable, conduit, etc. are
laid, the diameter shall be reckoned as the horizontal
distance from outside to outside of the outermost pipes, cable
conduits, etc.
150. The respondent had primarily placed reliance on the expression
„unless otherwise provided for‟ in clause 3.2.3 to mean, any specific
clause agreed upon by the parties and clause 3.1.4 of SCC is the particular
clause for excavation in hard rock and soft rock, which was the claim in
issue. The conclusion of the learned Arbitrator in favour of the
respondent is not tenable, which was primarily relying upon clause 3.1.4
which I reproduce below, overlooking the clause 3.2.3 contrary to the case
set up by the respondent that the Contract is silent regarding the width of
the hard rock and provided for extra depth only, and also clause 3.2.1,
which is part of section 3 relating to earth work, stipulates authorized
quantities or those actually excavated, whichever are less shall be
allowed.
SCC
"3.1.4 Where soft disintegrated rock and hard rock are
mixed, the measurement for the total quantity shall be made
by methods described in paras 3.1.2 and/or 3.1.3 above.
The hard rock excavated shall be stacked and measured in
stack. The quantity of hard rock excavated shall be reduced
by 50% to allow for voids. From the total quantity of the
mixture the quantity of hard rock excavated thus arrived at,
shall be deducted to work out the quantity of the
soft/disintegrated rock excavated."
The Arbitrator has erred in relying upon clause 3.1.4, which is not
applicable and the claim with regard to this claim need to be set aside
being contrary to the contractual provision.
Claim No.9- Payment due to circuit wiring:-
151. The submission of Mr. Darpan Wadhwa, that this claim was not
part of the final bill needs to be rejected in view of my conclusion above.
The claim of the respondent was, that it has not been paid for circuit
wiring done in the construction of the hospital. It was the case that
besides the point wiring, they were supposed to be paid separately for the
circuit wiring. The Arbitrator referred to item 482 and 568k of Schedule
A. The same are reproduced as under:-
"482: Point wiring with stranded copper conductor 2.5 sq.
mm (Nominal area) PVC insulated unsheathed cable in and
including concealed stove enamelled rigid steel conduit for
one light point or one fan point controlled by one switch
including 16 gauge copper continuous earth wire (switch
measured separately) including necessary cutting chases and
making good".
"568-K: Wiring with 2-2.5 mm 2 stranded copper
conductors PVC insulated with unsheathe cable laid in MS
Conduit system (Surface/concealed)"
152. The case of the petitioner was, item 482 provided for point wiring
and point wiring is specifically defined in section 19-Internal Work, SSR,
which reads as under:-
"Preamble to SSR (General Specification) for Point
Wiring
(1) the rates of Point Wiring include supplying and
fixing/drawing of cables for carrying out wiring of a
circuit of any length from the distribution board or iron
clad switch up to ceiling rose or connector, socket, outlet,
lamp holder, switch or fan regular including additional
length from connector to lamp holder (in case of stiff
pendents points and water tight bracket points) and back-
plate to lamp holder (in case of plain bracket points)."
153. The petitioner also relied upon Note 4 and Note 9 of Schedule A
items which are also reproduced as under:-
"4. The description of items given in column 2 shall be
read in conjunction with these General Notes, Preambles to
MES Schedule 1988, Specifications, Drawings and conditions
of contract and these documents are deemed to be jointly
explanatory of the work included against individual item. In
case of any discrepancy between the provisions of various
documents of the Contract, the Order of Precedence shall be
as laid down in Condition 6A of IAFW -2249.
9. For full description of material and workmanship,
reference shall be made to the specifications contained in
MES Standard Schedule of rates- 1988 Part I, so far as
applicable to each item of work and supplemented and
amended by particular specifications and drawings. In case
sufficient details for fixing arrangements, method of laying of
any item included in schedule A is not given in
specifications/drawings, the same shall be supplemented by
the manufacturers‟ instructions and executed in accordance
with good engineering practice and recognised principles
and nothing extra over the tendered rates shall be paid to the
contractor on this account."
154. Reading of the provisions reproduced above would reveal that there
is no dispute that the point wiring has to be done with stranded copper
conductor 2.5 sq. mm (Nominal area) PVC insulated unsheathed cable
and including concealed stove enamelled rigid steel conduit for one light
point or one fan point controlled by one switch including 16 gauge copper
continuous earth wire (switch measured separately) including necessary
cutting chases. Item 568k also shows wiring with 2-2.5 mm 2 stranded
copper conductors PVC insulated with unsheathe cable laid in MS
Conduit system (Surface/concealed). The items 482 and 568k stipulate
identical specification of the cable. The Note 4 of Schedule A, inter-alia
stipulate that the description of items given in column 2 has to be read in
conjunction with the Notes, Preamble to MES Schedule 1988,
Specifications, Drawings and Conditions of Contract and these documents
are deemed to be jointly explanatory of the work included against
individual items. In case of discrepancy, the Order of Precedence shall be
as laid down in Condition 6A of IAFW 2249. Similarly, a reading of
Note 9, also makes it clear that the full description of material and
workmanship, reference shall be made to the specifications contained in
MES Standard Schedule of rates- 1988 Part I, so far as applicable to each
item of work and supplemented and amended by particular specifications
and drawings. In case sufficient details for fixing arrangements, method
of laying of any item included in schedule A is not given in
specifications/drawings, the same shall be supplemented by the
manufacturers‟ instructions and executed in accordance with good
engineering practice. I may point out here, the case of the respondent was
primarily based on clause 6A of GCC which reads as under:-
"6A. Discrepancies and Adjustment of Errors (Applicable
generally to Measurement and Lump Sum Contracts)-
The several documents forming the contract are to be taken
as mutually explanatory of one another, detailed drawings
being followed in preference to small scale drawings and
figured dimensions in preference to scale.
In the case of discrepancy between Schedule "A", the Bills of
Quantities, the Specifications and/or the Drawings, the
following order of precedence shall be observed:-
(a) Description of Schedule "A" / Bills of Quantities.
(b) Particular Specification.
(c) Drawings.
(d) General Specification.
155. From the perusal of 6A, the Order of Precedence is what has been
laid down therein. First, the question would arise, whether there was any
discrepancy in description of item. If, yes whether the Arbitrator was
right in relying upon the Order of Precedence to hold that the Item No.482
shall prevail. It may be clarified here that the approximate requirement of
568k was 500 meters. The respondent was paid 213.20 meters for wiring
under item 568k as the same was raised in the final bill. The Arbitrator
had paid the respondent under this head for 1,13,742.90 meters. Sub
clause (1) of Section 19, which relates to rates for point wiring states that
it would include supplying and fixing/drawings of cables for carrying out
wiring of a circuit of any length from the distribution board or iron clad
switch upto ceiling rose or connector, socket outlet, lamp holder, switch
or fan regulator including additional length from connector to lamp
holder. In fact, the list runs from A to Q. The question also would be,
whether section 19 would need to be relied upon in construing item
No.482. There is no dispute that Section 19 relates to rates for point
wiring and item 482 relates to point wiring and are similar. The
conclusion of the learned Arbitrator, that item 482 of Schedule A, does
not have the same nomenclature as SSR item is not correct. A perusal of
both the provisions, shows item 482 specify the specification of cable
with a point each, of light, fan controlled by one switch. Item no.482A to
482D specify the number of points and the manner of operation whereas
section 19(1)(a) is an inclusive description of the rates of point wiring
which contemplates carrying of a circuit wiring of any length from
distribution board till the end point like lamp holder, switch of fan
regulator. To say they are different would make Section 19 more
specifically Clause 1(a) meaningless. Moreover, the specification of cable
in item 568k and 482 is also identical and under 568k, the total quantity of
wiring is 500 running meter. If the intent of the contractor was to pay
separately for circuit wiring then the figure would be more than 500
meters for which a deviation order need to be issued, which has not been
done in this case. In other words, the total quantity of wiring with
identical specification could not have exceeded 500 meters and the
respondent was paid for 213.20 meters of wiring under 568k, the quantity
as claimed in the final bill. So, the conclusion of the learned Arbitrator
that the Preamble is not applicable is not correct and further reliance on
instruction 6A of IAFW 2249 is also misplaced when section 19 (1) (a) of
the SSR is applicable and further the reliance placed on the definition of
„Point‟ and „Circuit‟ as given in IS 732 of 1989 and other Government
specifications is not tenable being beyond the Contract-Agreement. The
claim for 1,13,742.90 meters is clearly an afterthought and the Award to
claim 9 needs to be set aside being contrary to contractual terms. I order
accordingly.
Claim No.11 Cost due to damage and demolition done by E/M
Agency:-
156. The plea of Mr. Wadhwa, that this claim was not part of the final
bill needs to be rejected. The reliance has been placed by the petitioner
primarily on clauses 5 and 8 of GCC and 16 of SCC. As per the said
clauses, the payment of the Sub-Contractor for Fire Detection, Extra
Electrification, MATV system and Acoustic treatment etc is to be made
directly by the respondent who is responsible to the work carried out by
the Sub-Contractor and is liable to make good the loss or damage caused
on their account; the Contractor shall permit free access and reasonable
facilities to other agencies or departmental workman, if any, engaged by
Government to carry out their part of work in the area. No extra payment,
shall, however be made to the contractor on this account whatsoever. In
view of the aforesaid provisions, it is clear that the Sub-Contractors, who
have been identified by the petitioner are engaged by the respondent, any
act or omission of the Sub-Contractor resulting in loss has to be made
good by the respondent. Per contra, any damage caused by the sub-
contractor not engaged by the respondent would not be the liability of the
respondent. For the work related to Fire Detection, Extra Electrification,
MATV system and Acoustic treatment etc., the sub-contractors were
engaged by the respondent. The case of the respondent was that the
agencies doing the work of air conditioning and gas pipes were appointed
by the petitioner. The various correspondence filed by the respondent
during the course of the submission, reveals the damage caused by the
agencies carrying out the Acoustic Treatment, Air Conditioning work,
Fire Fighting, Extra Electrification, Medical Gases etc. It is noted from
the correspondence that the false-ceiling has been damaged by Fire
Fighting Agency and Air Conditioning Contractor, Extra Electrification
Contractor. The letters also reveal breaking of window panes etc by
Acoustic Agency, the Lift Agency. In view of the contractual provision,
the Agencies with which the petitioners had Contract, the damage caused
by those sub-contractors i.e the Air Conditioning Agency and Medical
Gases Agency needs to be borne by the petitioner. At the same time, the
letters also reveal that the false-ceiling was not only damaged by the Air
Conditioning Agency but by other Sub-Contractors of the respondent.
The Arbitrator should have demarcated the proportion of damage to each
of the agencies and fasten the liability accordingly. It is noted that the
Arbitrator has awarded an amount of Rs.10,75,000/- on account of false-
ceiling against a claim of Rs.12,00,000/-. The Arbitrator has not given
any basis for awarding an amount of Rs.10,75,000/-. Awarding such an
amount gives an impression, as if, the whole of the false-ceiling was
damaged by the Air Conditioning/Medical Gas Agencies. That is not the
case, at least on the reading of the letters. The amount of Rs.10,75,000/-
as compared to the total claimed, appears to be on higher side. I am of the
view, that the agencies appointed by the petitioner, being also equally
responsible to the damage caused to the false-ceiling, which had to be
repaired by the respondent, an amount of 50% of the total claimed amount
i.e Rs.6,00,000/- would suffice the claim. Insofar as the award of
3,00,000/- against replacement of door, windows, repair of flooring, brick
work, the Arbitrator has not given any finding as to which sub-contractor
was responsible for the damage. The letters reveal window shutters along
with glass pane were broken by M/s Pan Enterprises, doing acoustic work.
There is also correspondence to suggest that flooring was damaged
because of dismantling of the partition walls by the Air Conditioning
Agency appointed by the petitioner. As the amount awarded is
Rs.3,00,000/-, in the given facts, I do not think, this part of the award
needs to be interfered with. The objections to this extent are rejected.
Claim No.12 Payment on account of deficient water supply and
refund of water charges:-
157. This claim relates to the payment on account of deficient water
supply and refund of water charges. The plea of Mr. Wadhwa, that it was
not part of the final bill needs to be rejected. The petitioner has placed
reliance on clause 31 of GCC and 22 of SCC. The same are reproduced
as under:-
"31 Water- The Contractor shall allow in his
tender and provide at his cost all water required for the
use of Works or his employees on the Works, together with
all pipes and fittings or other means that may be necessary
or required to ensure a proper and ample supply of water
for all purposes for the Works.
In the event of a provision existing in the tender
documents for M.E.S Supply of water on payment and the
contractor desiring to buy it from M.E.S., he will be
permitted to draw it from M.E.S. Water Supply System or
other M.E.S. sources at such point or points as may be
decided by the Garrison Engineer on his sole discretion
and the contractor shall make necessary arrangements at
his own cost for lifting, pumping, carrying or conveying
water to the site of works as required.
Normally in all cases of water supplied from M.E. S.
Piped system, the supply shall be metered and paid for by
Contractor at the All India Flat Rate per 1,000 gallons
which includes hire charges for meter to be provided by
M.E.S. In exceptional cases where metering is not
feasible, i.e water from M.E.S. wells or static tanks, or in
the case of Term Contracts where the Contractor draws
water not from any ONE source, the Contractor shall pay
Rs.3.75 per every Rs.1,000 worth of work done priced at
Contract rates. In the event of breakdown of M.E.S.
Supply of water or in the event of the said supply of M.E.S.
water becoming intermittent, the Contractor shall have no
claim whatsoever on this account.
The water used for any or all requirements shall be
subject to the prior written approval of the Engineer-in-
Charge."
"22. Water
22.1 Water will be supplied to the contractor for the work
and for use of his workmen at the points shown on site
plant or as decided by the GE for which recovery will be
effected @ Rs.3.75 for every Rs.1,000/- worth of work done
priced at the contract rates.
22.2 In the event of break down of MES Supply of water
or in the event of said supply of MES, water supply
becoming intermittent, the contract may be required to
make his own alternative arrangements. The contractor
shall have no claim whatsoever from the Government on
any such account.
22.3 The contractor shall make his own arrangements for
the storage of water to ensure adequate supply at all times
during execution of work.
22.4 The contractor if so desires, will be allowed to
augment the department‟s water supply by boring wells at
his own cost at site (s) approved by the GE. On
completion of work, the contractor shall remove pipe etc
installed and make good the site as directed by the
Engineer-in-Charge with out any extra cost to Govt. No
rebate shall be given for augmentation of water by the
Contractor and charges for water shall be recovered at the
rate mentioned here in before. The contractor shall,
however, ensure that water drawn from such sources is
clear and free from all impurities and as suitable for
mixing concrete, mortar, washing aggregate and curing of
concrete as specified in IS 456".
158. It is clear from the provisions of the Contract, the prime
responsibility for providing water to the Contractor for the work as well as
to its employees was that of the petitioner. The water which was to be
supplied by the MES, the respondent was to pay Rs.3.75/- per rupees
thousand worth of work done. There is a finding by the learned Arbitrator
that the respondent was augmenting the supply. The petitioner supplied
part of the water. The respondent also placed on record, the letter that
shows, the water is being purchased by it from the tankers, which had to
be brought at its own cost. The only ground for challenge is that the
Arbitrator in para 242 of the Award, wrongly holds that the primary
responsibility for supply of water was of the petitioner. The said finding,
even if not correct, may not have any bearing on the ultimate outcome of
this claim. The Arbitrator has noted, recovery of Rs.12,92,343/- has been
effected by the petitioner from the final bill. The Arbitrator, noting that
the water was also supplied by the petitioner, allowed the petitioner to
recover an amount of Rs.5,11,0000/- and directed refund of Rs.7,81,843/-.
In the Award, the Arbitrator has given a finding that since large part of the
water was not supplied by the petitioner itself, it cannot recover money
against the same. In view of such a finding that the recovery in the final
bill was wrong, he has granted the aforesaid amount with which no fault
can be found. The award to this claim is upheld.
Claim No.14 Cost of damage due to excessive water logging in
basement:-
159. Insofar as claim No.14, which relates to cost of damage due to
excessive water logging in the basement against which the learned
Arbitrator has granted an amount of Rs.3,00,000/- is concerned, the
submission of Mr. Wadhwa that this claim was not part of the final bill is
concerned, the same needs to be rejected in view of the conclusion already
given above. The petitioner relied upon clauses 36 and 48 of GCC, which
relates to precautions against risk to be taken by the contractor and
damage and loss. The same are reproduced as under:-
"36. Precautions against Risks- The Contractor shall be
responsible at his own expense, for precautions to prevent
loss or damage from any and all risks other than for
Accepted Risks and to minimise the amount of any such
loss or damage and for the provision of all protective
works, casings, coverings, etc, required for the purpose,
until the Works have been handed over complete to the
Engineer-in-Charge."
"48. Damage and Loss- (a) All plant, temporary building,
equipment, and things on the Site provided by or on behalf
of the Contractor for the construction of, but not for
incorporation in the Works shall stand at the risk and be in
the sole charge of the Contractor and the Contractor shall
be responsible for, and with all possible speed make good,
any loss or damage thereto arising from any cause
whatsoever, including the accepted risk.
(c) Save as above, the Works and all materials and things
whatsoever including such as may have been provided by
Government on the Site in connection with and for the
purpose of the Contract shall stand at the risk and be in
the sole charge of the Contractor and the Contractor shall
be responsible for, and with all possible speed make good,
any loss or damage thereto arising from any cause
whatsoever, other than the accepted risks and shall deliver
up all the Works to the Engineer-in-Charge in a clean
state, complete in every particular.
In the event of any loss or damage to Works and materials
on the Site from any of the accepted risks, or loss or
damage from accepted risk and fire to Government
buildings handed over to contractor for execution of works
referred to in Condition 47, the following provision shall
have effect:-
(i) The Contractor shall, as may be directed in writing by the
Engineer-in-Charge, remove from the Site any debris and
so much of the Works as shall have been damaged, taking
to the E.E‟s store such articles and/or materials as may be
directed;
(ii) the Contractor shall, as may be directed in writing by the
Engineer-in-Charge, proceed with the erection and
completion of the Works under and in accordance with the
provisions and conditions of the Contract; and
(iii) There shall be added to the Contract Sum the net amount
due, ascertained in the same manner as for deviations, or
as prescribed for payment, in respect of the re-execution of
the Work lost or damaged, the replacement of any
materials and things lost or damaged but not incorporated
in the Works at the date when the loss or damage
occurred, and the removal by the Contractor as provided
above the debris and damaged Work referred to therein.
Provided always that the Contractor shall not be entitled
to payment under this Condition in respect of so much loss
or damage as has been occasioned by any failure on his
part to perform his obligations under the Contract.
(c) Save as provided above, the Contractor shall at his
own expense reinstate and make good to the satisfaction of
the G.E. or make compensation for any injury, loss or
damage occasioned to any property or right whatever
including property and rights of Government (or agents,
servants, or employees of Government) being injury, loss
or damage arising out of or in any way in connection with
the execution or purported execution of the Contract and
further, the Contractor shall indemnify Government
against all claims enforceable against Government (or any
agent, servant or employee of Government) or which
would be so enforceable against Government were
Government, a private person, in respect of such injury
(including injury resulting in death), loss or damage to any
person whomsoever or property, including all claims
which may arise under the Workmen‟s Compensation Act
or otherwise.
160. The stand of the respondent was, the water logging was due to bad
workmanship of the third agency, whereas the petitioner‟s stand was that
the respondent should have taken precautions and any loss suffered was
on account of the respondent. According to the petitioner, it had never
ordered or gave direction to the respondent to carry out such work. The
objection of the petitioner, primarily being; that there is no evidence to
substantiate water logging in the basement had affected the work of the
respondent; work of water logging was actually carried out by the
respondent and the actual cost incurred in carrying out such work. It was
the case of the petitioner that the dewatering was done by the other agency
M/s Simplex Concrete Piles India Ltd., which was carrying out the work
pertaining to leakage. This stand of the petitioner suggests that there was
a leakage, which resulted in water logging of the basement. The
respondent relied upon certain letters, a reference of which is made in the
Award. I have seen some of the letters annexed along with short synopsis
filed by the respondent. From the perusal of the same, it is noted that the
respondent did refer to water logging of the basement, wherein, it is stated
that basement at certain places is full of water and the same is being
pumped out. They have also stated, that they would be claiming for the
pumping out of the water separately. Clauses 36 and 48 of GCC does not
suggest, that the contractor shall be liable for the damage caused due to
the workmanship of the third party or for the damage caused for which he
has no responsibility. Further, it is noted, the water logging was not for
the reasons attributable to the respondent as no evidence has been placed
to prove the same. Since, the finding of the learned Arbitrator is based on
the letters and the learned Arbitrator has granted an amount of
Rs.3,00,000/- for the amount spent for engaging labour and deployment of
machinery, no ground exists for interfering with the award.
Claim No. 18: Balance payment due to escalation embargo imposed
by CEDZ:-
161. Having heard the learned counsel for the parties, insofar as the
submission of Mr. Wadhwa that this claim was not part of the final bill
dated March 29, 1997 needs to be rejected in view of my conclusion
above. To appreciate the submissions made by learned counsel for the
parties, it is necessary to reproduce the contents of the amendment dated
January 6, 1994. The same is reproduced as under:-
"AMENDMENT No.1 dated 6.1.1994
WHEREAS on the 29th day of June 1994, agreement was
entered into between the resident of India represented by
Chief Engineer, Delhi Zone, Delhi Cantt-10 (hereinafter
referred to as Government and M/s S.A. Builders Ltd,
Registered Office: 500, No.50, Section 26, Madhya Marg,
Chandigarh-160019 (hereinafter referred to as the
Contractor) under which the said contractor among other
conditions contracted to provide provn of accn for army
hospital (R&R) at Delhi Cantt.
AND WHEREAS the said parties are mutually
desirous of amending the said agreement in certain
respects.
It is therefore, hereby agreed by and between the
parties thereto as follows:-
FIRST: That no reimbursement due to variation in
prices of material shall be admissible beyond 30 th April,
1994, except as described in subsequent paras.
SECONDLY: That the reimbursement due to
variation in prices for any new materials ordered now
onwards and luxalon and door shutters shall remain
admissible provided that contractor places firm orders for
procurement of luxalon and door shutters by 10.1.1994
failing which the reimbursement due to variation in prices
of materials for luxalon and door shutters shall be
admissible beyond 30.4.1994.
THIRDLY: That this amendment shall be numbered as
serial page 505 (sic.) of the contract that the total number
of pages on the contents shall be amended to read as 559
in lieu of 558.
LASTLY: That all other terms of the contract shall hold
good in all other respects and be in full force and effect."
162. There is no dispute that the date of start of work was March 17,
1991. The stipulated date of completion was October 16, 1993. The
period of completion of the work was 27 months. The work was actually
completed on March 25, 1997. The work was extended/delayed by 42
months. It was the case of the petitioner that the escalation embargo was
put with the consent of both the parties by making amendment of
Contract. Reliance has been placed on letters dated May 25, 1993, March
22, 1995 and May 15, 1996 to contend that both the parties understood the
amendment to mean freezing of rates. That apart, I note, that in letter
dated November 25, 1993, the petitioner had, in its communication to the
respondent, wherein, it was communicated to the respondent that to
review grant of final extension, the respondent was requested to give an
undertaking that it will not claim for price escalation towards material,
fuel and labour for variation in price indices and labour indices
respectively as per provisions under conditions 24 and 25 of the Special
Conditions. The amendment dated January 6, 1994 was duly signed by
the respondent. Even communications, thereafter (which have been given
to me during the course of the arguments), more specifically the letters
dated July 26, 1996, June 15, 1996, May 15, 1996, February 26, 1996,
November 18, 1995, March 22, 1995 also reveals that it was the
understanding of the respondent as well that the amendment dated January
6, 1994 had put a freeze on escalation. In view of the above, Mr. Wadhwa
is right in his submission, inasmuch as the amendment dated January 6,
1994 signed by both the parties expressly prohibits reimbursement due to
variation in prices of material beyond April 30, 1994. The wholesale
price index was agreed to be frozen as of April 30, 1994 prices. On the
interpretation of second para of the amendment, it must be read to mean
that the reimbursement due to variation in prices for new materials
ordered now onwards to mean luxalon and door shutters, provided further,
the respondent places firm orders for procurement of luxalon and door
shutters by January 10, 1994. If the second para is read to mean that
reimbursement due to variation in prices would be available for materials
as well then the first paragraph would become redundant. I agree with the
submission of Mr. Wadhwa in that regard. The presence of the word
„AND‟ is superfluous and if it is read so, it would nullify the very purpose
of the amendment dated January 6, 1994 as the original tender already had
a provision of escalation and the second para of the amendment is limited
to door shutters and luxalon, if the orders for procurement are placed by
January 10, 1994, failing which no reimbursement due to variation in
prices of materials for luxalon and doors was admissible beyond April 30,
1994. The submission of Mr. Nidhesh Gupta that the plain language of
amendment shows, there was no freeze on escalation on new materials
orders after the amendment need to be rejected for the reasons already
stated above.
163. Insofar as his submission that it is a settled law, while interpreting a
Contract, its plain and simple meaning is to be taken into consideration to
arrive at the intention of the parties and Courts cannot supplement or
supplant words to it, howsoever the Court might dislike the result, by
placing the reliance on the judgment of Central Bank of India, Amritsar
(supra) is concerned, the Supreme Court was concerned with the
interpretation of clause 10 of the policy, which I reproduce as under:-
" 10. This insurance may be terminated at any time at the
request of the insured, in which case the company will
retain the customary short period rate for the time the
policy has been in force. This insurance may also at any
time be terminated at the option of the company, on
notice to that effect being given to the insured, in which
case the company shall be liable to repay on demand a
rateable proportion on the premium for the unexpired
term from the date of the cancelment. "
The Supreme Court held that the plain and categorical language
cannot be radically changed by relying upon surrounding circumstances.
Thus, right to terminate at will, cannot by reason of the circumstances be
read as a right to terminate for a reasonable cause.
164. Insofar as the Delhi Development Authority (supra) is concerned,
the Supreme Court in para 9 has stated as under:-
"9. Though the intention of Development Authorities in
general is to allot plots to the houseless, the policy and
scheme has to be given effect with reference to the
specific wording of the eligibility provision. If DDA
wanted to bar everyone owning a plot/house/flat from
securing an allotment, it could have made its intention
clear by simply providing that "anyone owning or holding
a long term lease, any plot/house/flat in Delhi/New
Delhi/Delhi Cantonment area, will be ineligible for
allotment under this scheme". But DDA chose to make the
eligibility clause subject to an exemption. If it chose to
exempt certain categories, such exemption has to be
given effect. When the term of exemption is specific and
unambiguous, it is not possible to restrict its applicability
or read into it, a meaning other than the plain and
normal meaning, on the assumption that the general
object of the Scheme was different from what is spelt out
in the term. Be that as it may."
165. In Mysore State Road Transport Corporation, Bangalore (supra),
the Supreme Court in para 10 has stated as under:-
"10 The words "have been given" are significant. They
would refer to the interim relief and dearness allowance
already given to the Mysore employees and such Bombay
and Hyderabad employees as had opted for the Mysore
rates of dearness allowance as stated in various orders
issued between 1960 and 1964. It is not possible to sell
out from them an agreement that the respondents would
get interim relief and also increased dearness allowance
with retrospective effect from January 1, 1960. The next
important word is "now" in the second part f Clause
16(1). The word "now" occurs in the sentence "the
management now agree to set up a Joint Committee of
representatives of management and labour". If the first
part of Clause 16(1) had really incorporated an
agreement as contended for by the respondent, the work
"now" could not have been used in the second part.
Instead of the word "now" the draftsman would have
used the word "also" or "further", because the second
part would incorporate another agreement. Again, the
word "agree" is expressly used in the aforesaid sentence
in the second part. Similarly the expression "it is
agreed" is expressly used in Clause 16(11). If the first
part of Clause 16(1) were intended to incorporate an
independent agreement, the draftsman would have used
the same language there. The omission of the word
"agree" or "it is agreed" is therefore significant. It is
plain that the first part of Clause 16(1) does not
incorporate an independent agreement. The word
„employees‟ in the first part of Clause 16(1) cannot refer
to all the employees belonging to Mysore employees
because the increases in the dearness allowance made
with effect from January 1, 1960, January 1, 1961, April
1, 1963 and April 1, 1964 were granted to the Mysore
employees and to those Hyderabad and Bombay
employees who made an option for the Mysore rates of
dearness allowance. Admittedly, the Hyderabad and
Bombay employees did not exercise the requisite option.
The High Court says that it makes little sense if the first
part of Clause 16(1) is construed as a mere recital of
history. If the draftsman had not intended to grant
increased dearness allowance to the respondents, he
would have omitted the first part and then Clause 16(1)
would have included only the second part thereof. With
respect, this reasoning does not appear to us to be
cogent, for even on this reasoning the opening phrase in
Clause 16(1) "the pay-scales of the Corporation
employees not having been revised since the first Trace
Agreement of January 10, 1998", remains a mere recital
of history and should have been omitted. As the language
of the first part is plain and unambiguous, it is not
legitimate to speculate into the reasons which prompted
the contracting parties to include it in clause 16(1)."
The Supreme Court held, where a language of a part of a clause of a
Contract is plain and unambiguous, it is not legitimate to speculate into
the reasons which prompted the contracting parties to include in it that
clause.
166. Similarly, in H.M Kamaluddin Ansari and Co. (supra), the
Supreme Court in para 27 has held as under:-
"The headings prefixed to a section or a group of
sections in some modern statutes are regarded as
preambles to those sections. They cannot control the
plain words of the statutes but they may explain
ambiguous words. The view is now well settled that the
headings or titles prefixed to a section or a group of
sections can be referred to in determining the meaning of
doubtful expressions. It is true that the court is entitled to
look at the headings in an Act of Parliament to resolve
any doubt they may have as to ambiguous words. The law
is clear that those headings cannot be used to give a
different effect to clear words in the section where there
cannot be any doubt as to the ordinary meaning of the
words. The golden rule is that when the words of a statute
are clear, plain and unambiguous, that is, they are
reasonably susceptible to only one meaning, the courts
are bound to give effect to that meaning irrespective of
the consequences. The duty of a Judge is to expound and
not to legislate, is a fundamental rule. If we apply the
same principle to the interpretation of cl. 18 of the
standard form of contract, it would be clear that the
clause unequivocally contemplates a claim for the
payment and it is open to the Union of India to
appropriate any amount due to the contractor under
other pending bills. It does not contemplate the amount
due and, therefore, the heading of this clause which talks
of only 'Recovery of sum due' will not control cl. 18. The
clause in our opinion gives wide powers to the Union of
India to recover the amount claimed by appropriating
any sum then due or which at any time thereafter may
become due to the contractor under other contracts."
167. From the perusal of the judgments referred to above, there is no
dispute on the proposition of law laid down in those judgments. Surely,
the judgments has to be read in the context where there is no ambiguity in
the provisions of the Contract/Statutes, which have clear words then the
plain and simple meaning need to be given. Insofar as the present case is
concerned, the second para of the amendment dated January 6, 1994,
more specifically the presence of the word „AND‟ has created ambiguity.
In fact if the word „AND‟ is read then the para No.1 would become
redundant, which would defeat the very purpose of the amendment dated
January 6, 1994. To make the amendment dated January 6, 1994 more
meaningful and to achieve the purpose for which it was entered and to
ensure, every clause therein is made purposeful, then the only way, it has
to be read in the manner specified above that no escalation on materials
after April 30, 1994. Suffice to state, the judgments relied upon by Mr.
Gupta are not applicable to the facts of this case. In the case in hand, as
noted above, it was the understanding of the respondent as well that the
amendment puts an embargo on the admissibility of variation in rates of
material. Even on that ground, the plea of the respondent that the contents
of paragraph two are clear and unambiguous need to be rejected.
168. The plea of Mr. Gupta that if the amendment dated January 6, 1994
is interpreted in the manner suggested by Mr. Wadhwa would lead to
absurd consequences and impossibility of performance is concerned, the
same is liable to be rejected for the reason that the amendment was
executed on January 6, 1994. The cut of date was January 10, 1994. As
concluded above, the reimbursement due to variation in prices would be
relevant only for luxalon and door shutters, provided, the orders for
procurement of luxalon and door shutters is made before January 10,
1994, which was still four days away from January 6, 1994. Merely,
because the date of January 10, 1994 has elapsed would not make the para
redundant or would be a case of impossibility of performance. Moreso,
the respondent could have sought the extension of time beyond January
10, 1994 so as to enable the respondent to place orders with regard to
luxalon and door shutters. Nothing has been brought to my notice to
show that the extension of time was sought for beyond January 10, 1994.
Had they sought extension of time beyond January 10, 1994 and placed
the orders, the reimbursement for variation of prices would be admissible
on luxalon and door shutters. The plea of the respondent is clearly an
afterthought. The reliance placed by Mr. Nidhesh Gupta on the judgments
in the case of (i)Chairman and M.D., N.T.P.C. Ltd. V. Reshmi
Constructions, Builders and Contractors (2004) 2SCC 663; (ii)
National Insurance Co. Ltd. vs. Boghara Polyfab Pvt. Ltd. (2009 )1SCC
267; (iii) Ambica Construction vs. Union of India (UOI) (2006
)13SCC 475; (iv) Associated Constructions v. pawanhans helicopters
ltd. (2008)16 SCC128; to contend that doctrine of impossibility is a valid
excuse to legal obligation would not be applicable to the facts of this case.
Insofar as the plea of coercion is concerned, the same is also liable to be
rejected. It is noted that the amendment was signed without protest and
demur on January 6, 1994. The first letter, wherein the plea of coercion
was raised was on December 11, 1995 and also July 26, 1996 (as noted
from the documents handed over during the submissions), wherein the
respondent had stated that "the amendment to this was signed by the
undersigned under coercion and the same was specifically asked by the
department in writing. At that time, we were left with no alternative as
the department was not giving the extension without this amendment". A
letter after almost more than 1 ½ years would not suggest/prove coercion.
Coercion need to be specifically pleaded. In any case, the Arbitrator has
not granted the claim on the basis of coercion. Such a plea would not be
available to the respondent to justify the grant of claim in its favour.
Hence, the conclusion of the learned Arbitrator is implausible and
perverse and need to be set aside.
Claim No.20 Payment of item No.238 of Schedule A and other items:-
169. The objection of Mr. Wadhwa, that this claim was not part of the
final bill needs to be rejected. Insofar as the submission of Mr. Wadhwa
that the learned Arbitrator has failed to appreciate, as per section 13 of
SSR, rates for marble flooring is inclusive of cement slurry used for
joining and setting the tiles, hence claiming it again under item 238
amounts to double payment is concerned, Section 13(a) of the SSR which
relates to Floor, Finishes and Pavings stipulates that the rates are
exclusive of bedding layer or screed but included for setting and jointing
the tiles in cement paste or slurry.
170. At the same time, item 238 of schedule A reads as under:-
"Brushing with cement slurry over concrete/brick
surfaces, with 3 kg. Of cement per square metre including
cleaning of surfaces."
171. There is no dispute that the claim relates to payment of 3 kg cement
slurry used for flooring which was not made as per rates mentioned in
item 238. There is no dispute that the work pertaining to item 238 of
Schedule A had actually been executed but payment has not been made on
the instructions of Engineer-In-Chief (para 294 of the Award). Therefore,
the amount needs to be paid. The Arbitrator has also held that since the
said item is Schedule A item, it qualifies for escalation and had awarded a
sum of Rs.7,84,285 by adding escalation on the same. In total, he granted
an amount of Rs.10,37,217/-. During the course of submission, Mr.
Wadhwa has conceded to the claim. Having seen the Award and the fact
that the learned counsel for the petitioner had not contested the claim as
awarded, the objection to claim 20 of the Award needs to be rejected.
Claim No.21 Payment on account of defective CI Pipes for fire
fighting system:-
172. The submission of Mr. Wadhwa that this claim was not part of the
final bill dated March 29, 1997 needs to be rejected for the reasons
already stated above. There is no dispute that the petitioner was to supply
the pipes to the respondent. There is also no dispute that under clause
10(b) of GCC, the respondent was liable to bear the cost of transportation,
loading, unloading, storing etc and in terms of clause 46 of GCC, the
respondent was liable to cure/repair any defect till the expiry of the Defect
Liability Period. There is no doubt, in normal course, if any pipe was
defective, the respondent could have asked the petitioner to replace it.
There is no such evidence, placed on record nor brought to my notice that
the respondent has written such letters to the petitioner. Be that as it may,
the primary objection to the Award against this claim is that there is no
evidence that the pipes were defective when supplied by the petitioner; the
pipes were not damaged while in the custody of the respondent including
during transportation; no replacement order/voucher in support of actual
cost incurred in replacing the pipes.
There is a finding by the learned Arbitrator that the defective pipes
were issued by the petitioner. Even though, he had referred to the fact
that the said aspect was brought to the notice of the petitioner by the
respondent vide letter dated March 23, 1998, the said letter was after the
final bill dated March 29, 1997 was submitted. During the course of
submission, Mr. Nidhesh Gupta, learned Senior Counsel has placed before
me a letter dated August 26, 1997 also which was written by the
respondent to the petitioner during the Defect Liability Period, wherein, it
was mentioned that the pipes supplied by the petitioner were not
withstanding the pressure. The pipes burst and broke at many places at
site. No communication has been shown, wherein, the petitioner had
called upon the respondent to seek replacement of the defective pipes. In
the given background, the Arbitrator had awarded an amount of
Rs.40,600/- against this claim fixing the cost of each pipe at Rs.700/-. I
do not see any perversity in the Award against this claim, which can be
interfered by this Court. The award to this claim is upheld.
Claim No.23 Refund of rebate over and above quoted sum:-
173. Insofar as claim No.23 is concerned, the objection of Mr. Wadhwa
that it was not part of the final bill needs to be rejected. It is noted that
this claim was primarily allowed by the learned Arbitrator relying upon
the letter dated October 23, 1990 of the petitioner, wherein the petitioner
has clarified that rebate of 12% is on the quoted sum and not on the
quoted rates. No doubt, Mr. Wadhwa is right in his submission that the
respondent had offered 12% rebate on the quoted rates, to be calculated on
the basis of the final bill by referring to the letter of the respondent dated
September 28, 1990 wherein the respondent has stated as under:-
"We have quoted our rates under the provisions of the NIT
and also offered a rebate of 12% on our quoted rates on
the subject work. We have again reviewed our rates
referred by you in the letter under reference and ofund that
no revised rates can be offered by us for these items.
Hence, we are returning herewith the letter in original and
its enclosures duly signed for your records.
We further request you to kindly expedite the acceptance of
the tender as our offer is valid only upto 23rd November,
1990."
174. Such an offer of the respondent was not agreed to by the petitioner
when the petitioner, in its letter dated October 23, 1990 has clarified that
the rebate is on the quoted sum and not on the quoted rates. That being
so, if the learned Arbitrator has awarded the refund of Rs.22,46,224/-
being 12% rebate on the Contract sum of Rs.25,00,44,768/-, I do not see
any illegality in the same. The award is upheld.
Claim No.29 Extra payment due to late taking over of building
causing thefts and more watch and ward:-
175. Insofar as this claim is concerned, the submission of Mr. Wadhwa
that it was not part of the final bill needs to be rejected. There is no
dispute, that the building was taken over when it is actually certified as
complete and this is the position under clauses 16, 36, 48 and 49 of GCC.
There is also no dispute that it was the respondents‟ responsibility to
provide necessary security for the protection of the site and respondent
was also responsible for safe keeping of all the materials provided on the
site and is liable to make good all damage/loss occasioned thereto. I note,
that the learned Arbitrator has given a finding that there was a delay on
the part of the petitioner in taking over the blocks, which were completed.
A perusal of Clause 49 of GGC, the relevant part which I reproduce as
under, does indicate taking over by the petitioner such works, for which
separate period of completion has been mentioned in the contract and
which has been completed.
GCC
"49. Completion-
XXX XXX XXX
In the case of groups of items of Works for which
separate periods of completion are given in the
Contract, the G.E. may take over from the
Contractor such individual items as are completed
to his satisfaction before the completion of the entire
group, but for all purposes of the Contract except
for compensation for delay, the completion of the
entire group shall be taken into account.
The G.E. shall take over from the Contractor
from time to time items or groups of items of Works
for which separate periods of completion have been
mentioned in the contract and which have been
completed to the satisfaction of the G.E.
The G.E. shall certify to the Contractor the
Date(s) on which the items or group of items of
Works are completed and taken over and the state
thereof.
The G.E. shall also certify to the Contractor
the state of items or groups of items of the Works at
the end of the defects liability period".
In other words, the contract does stipulate phase taking over of the
work. A reference is given to letter dated August 26, 1995 when the work
was in progress, wherein a mention was made to the items stolen/lost. The
Arbitrator after considering the totality of facts has granted an amount of
Rs.25,000/-, the award against this claim cannot be faulted. I reject the
objection.
Claim No.33 Payment of pattern flooring instead of normal flooring
in marble floors and odd sized marble:-
176. The submission of Mr. Wadhwa that this claim was not part of the
final bill needs to be rejected. It was the case of the respondent that they
were made to install non standard size tiles (300mm x 375 mm) which
were unavailable in the market which lead to cutting of the tiles purchased
and thereby incurring excess labour cost. No doubt, it s the petitioner‟s
contention that as per clause 11.1.1 of particular specification provides
that size of tile shall not exceed 400mm x 400mm and not less than
200mm x 200mm as ordered, which means that any tile within these
dimensions can be ordered and a contractor i.e the respondent cannot
charge for cutting. What is important is the finding of the Arbitrator that
the drawings which were issued by the petitioner were for pattern flooring
and usage of tiles of non-standard size and which were also not square in
shape. It was also noted that as per specification and schedule A item, the
respondent was not to go in for pattern flooring. Meaningfully read, that
because of pattern flooring the cutting was required to be done which
resulted in extra labour cost. The reasoning of the learned Arbitrator to
award an amount for Rs. 5,92,807/-, on the basis of the total area being
3705.044 sq. meters to be paid at Rs.160 per sq. meter is justifiable. No
evidence has been placed by the petitioner to show that the cost of Rs.160
per sq. meter granted by the learned Arbitrator is on high side except
stating that no evidence has been placed by the petitioner for
substantiating the rate. The objection of the petitioner qua this claim
needs to be rejected and the Award cannot be interfered.
Claim No. 34: Balance payment due to non adoption of labour rates
as per Minimum Wages Act in formation of Star Rates
Claim No. 35: Balance Payment Due to Non Inclusion of T&P,
Electricity Charges, Sundries Etc. in Star Rates
Claim No. 36: Balance Payment Due Arbitrary Deductions in Rates of
Material Incorporated in Star Rates:-
177. The submission of Mr.Wadhwa that these claims were not part of
the final bill dated March 29, 1997 and as such not arbitrable need to be
rejected in view of my conclusion above on Clause 65 of the GCC. The
plea that star rates were calculated by the petitioner as per Clause 62(G) of
GCC and being an excepted matter the decision of CWE is final and
binding is concerned, that the said submission proceeds on a premise that
the rates with regard to material, labour, tools and plants were prepared by
the petitioner, but I note in para 370 the learned Arbitrator noted the
contention of the petitioner that the star rates to be prepared as per Clause
62(G) could not be finalized due to non-production of original vouchers
and non-signing by the respondent is a stand which is at variance. Be that
as it may, any decision of the CWE as per Clause 62(G) of GCC is final
and binding and could not have been subject matter of a claim has to be
looked from the perspective of the judgment as relied upon by Mr.Nidesh
Gupta in the case of Asian Techs Ltd. (supra). In the said case, the
Supreme Court was also concerned with a challenge to the judgment of
the High Court which had set aside the Arbitrator‟s award holding that
under the finality clause under Clauses 11(C) and 62(G) that decision of
the Commander Works Engineer is final and binding and has been
exempted from the purview of the arbitration clause which is Clause 70 of
the Contract. Clause 62(G) stipulates as under:-
"(G) For all contracts-
If any work, the rate for which cannot be obtained by any
of the methods referred to in Paras (A) to (E) above, has
been ordered on the contractor, the rate shall be decided
by the GE on the basis of the cost to the contractor at site
of works plus 10% to cover all overheads and profit.
Provided that if the contractor is not satisfied with the
decision of the GE he shall be entitled to represent the
matter to the CWE within seven days of the receipt of the
GE‟s decision and the decision of the CWE thereon shall
be final and binding.
If any alterations or additions (other than those authorised
to be executed by day work or for an agreed sum) have
been covered up by the contractor without his having given
notice of his intention to do so, the Engineer-in-charge
shall be entitled to appraise the value thereof and in the
event of any dispute the decision of the GE thereon shall
be final and binding".
The Supreme Court in para No.18 was of the view that Clause
62(G) read with Clause 7 makes it clear that the finality provided under
Clause 62(G) applies only to cases of deviation and not in cases when
there is material alteration and addition in the work done as is clear from
the correspondence between the parties. The Supreme Court also in the
said case noted that the jurisdiction of the CWE was with regard to cases
not exceeding Rs.20,000/- only. Be that as it may, what is relevant is,
whether the claims made were against deviation or is a case of material
alteration and addition in the work done. The contention of the respondent
was that it is the case of alteration or addition in the work done, which
aspect has not been disputed by the petitioner. Hence, the plea of
Mr.Wadhwa that the claims are excepted matter needs to be rejected. It is
also relevant, the Arbitrator while deciding the claims did not agree with
the calculations so made by the petitioner on the ground that the market
rates were available with the petitioner for the relevant point of time
during which the work was carried out. The methodology adopted by the
petitioner by taking into account the rate of a particular year 2001 and
reduced it by back calculation applying the All India Wholesale Price
Index and not taking correctly the rates of time at which the work was
done. The Arbitrator also noted that there is a definite difference in rate of
material, labour, tools and plants. The Arbitrator also held that the
vouchers and secured advance bills paid by the petitioner for the same
items were produced by the respondent for the relevant period for granting
these claims. It is also noted, out of 68 star items covered under these
three claims, the Arbitrator allowed increase only with respect to 33 star
items leaving aside 30 star items and with regard to 3 items he had
reduced the rate granted by the petitioner. In the given facts, the award is
liable to be upheld.
Claim No. 37 Extra cost due to maintenance of sewerage line after
handing over due to non-maintenance, contractor appointed by UOI:-
178. As is noted from above, the claim is with regard to extra cost due to
maintenance of sewerage lines after handing over the project as no
maintenance contractor was appointed. The objection of Mr. Wadhwa
that it was not part of the final bill needs to be rejected. No doubt under
clause 46 of GCC contractor is solely liable to remedy any defect/damage
caused during the Defect Liability Period. It was the case of the petitioner
that the blockage of the sewerage lines was caused due to bad
workmanship of the respondent. The claimant refuted the said contention
and has stated that the same had occurred due to blockage caused by
flushing/draining, hospital waste which included cotton bandages,
napkins, rubber gloves etc. The petitioner has stated that it was not bound
to appoint a maintenance agency under the Contract. No doubt, that there
is no obligation on the part of the petitioner to appoint a maintenance
agency but the conclusion of the learned Arbitrator was that the work of
maintenance had to be attended by the respondent. In other words, the
work which was asked to be done by the respondent was not removing the
defects but maintenance of the sewerage lines. The learned Arbitrator has
granted an amount of Rs.12,000/- per month. No doubt there is no
justification for arriving at that figure. But it appears, the intent of the
learned Arbitrator was to award an amount, which the petitioner would
have incurred had they given a contract for maintenance. Since the
amount is only Rs.12,000/- per month and moreso, on a finding of the
learned Arbitrator that it was not rectification of defects but maintenance
of sewerage lines, I do not think that this Court exercising jurisdiction
under Section 34 need to interfere with the same. The award to this claim
is upheld.
Claim No. 40: Compensation of the Block Payment from claim Nos.1
to 39 as mentioned above
Claim No.41: Future interest @ 24% per annum compounded
quarterly on the above award amounts of claim Nos.1 to 40 upto the
date of actual payment:-
179. Having considered the submissions made by the counsel for the
parties, and noting the judgments reported as 2006 (7) SCC 700
Rajasthan State Road Transport Corporation vs. Indag Rubber Ltd.,
wherein the Court had reduced the interest granted by the learned
Arbitrator from 12% p.a to 6% p.a from the date of award till realization
of the amount and 2007 (2) SCC 720 Krishna Bhagya Jalanigam Ltd. vs.
G.Harish Chandra Reddy & Anr., wherein the Supreme Court reduced
the interest of 18% p.a awarded by the learned Arbitrator for the pre-
arbitration period, for pendente lite and future interest to 9% p.a and also
considering the judgments relied upon by the learned counsel for the
respondent in the case of Syed Ahmed (supra), wherein the Supreme
Court by noting Clause (B) of Sub Section 7 of Section 31 of the Act
provides that if the award does not otherwise direct the amount awarded
shall carry interest as directed by the award and in the absence of any
provision of 18% p.a and holding that the award of 18% p.a granted by
the learned Arbitrator in that case is not contrary to Section 31(7)(B) of
the Act upheld the interest granted.
In the case of Manna Lal Prabhu Dayal (supra), the Supreme
Court has set aside the direction of the High Court reducing the rate of
interest from 12% p.a to 6% p.a. and retained the interest granted by the
learned Arbitrator of 12% p.a. all throughout pre-reference period,
pendente lite and post award period.
In Bhagwati Oxygen Ltd. (supra), the Supreme Court upheld the
grant of interest of 18% p.a by the learned Arbitrator on the ground that
was the rate at which the respondent had given an advance to the
petitioner- Bhagwati Oxygen Ltd., which was reduced by the Single Judge
and the Division Bench.
In M.D. J& K Handicrafts Jammu (supra), where the Court
relying upon the agreement entered between the parties which
contemplated 18% interest in certain contingency has granted the said
interest which can be taken as a reasonable basis for fixing the rate on
which the interest is to be awarded for the reason that even the appellant
therein considered that rate to be reasonable for recovery from the
respondent.
In Numaligarh Refinery Ltd. (supra), the Supreme Court has
granted rate of interest @ 12% p.a pendente lite from the date of the claim
till realization. On failure to pay the said interest, the payment shall carry
interest @ 15% p.a.
In Housing & Urban Development Corporation Ltd. (supra), this
Court has upheld the grant of 20% interest being in accordance with the
agreement.
The learned counsel for the respondent has relied upon the relevant
extract from Mustill & Boyd Second Edition 1989 and 2001 Companion
Volume to the Second Edition in support of his contention justifying the
interest granted by the learned Arbitrator.
There is no dispute that the respondent has not filed objections to
the award. The respondent despite a stipulation of 17% charged by the
petitioner as interest on the mobilization advance released to the
respondent, has accepted the grant of interest of 12% p.a and 10% p.a
with effect from October 01, 1997 and October 01, 1998 till the date of
award and from the date of award till realization respectively but during
the period in question, I note the banking interest rates varied between 9%
to 6.25% (1997-2002) and between 6.25% to 8.25% (2002-2015). There
are judgments, as noted above, wherein the Supreme Court has reduced
the interest to interest @ 6% p.a {Rajasthan State Road Transport
Corporation (supra)}, 9% p.a {Krishna Bhagya Jala Nigam (supra)}.
No doubt the Supreme Court and this Court has upheld/granted interest @
18% p.a. Keeping in view that the work was related to Army Hospital
(R&R), I reduce the pendente lite interest w.e.f October 1, 1997 and
October 1, 1998 till the date of the Award on claims No.1 to 39 at 9% p.a.
and future interest from the date of award till realisation also at 9% p.a.
Counterclaim No.1: Rectification of defects at contractor's risk and
cost:-
180. Having considered the findings of the learned Arbitrator and the
arguments/submissions made and filed against this claim of the petitioner,
the following position emerges:-
(i) The petitioner‟s case is that this claim is based on the Board of
Officers‟ Meeting held on July 05, 1998 and on subsequent dates.
(ii) The respondent did not get the notice of the meeting dated July
05, 1998. No representative of the petitioner was present at site on July
11, 1998.
(iii) There are no details as to which "subsequent days" the
meetings were held.
(iv) The defects pointed out during the Defect Liability Period has
been attended to by the respondent.
(v) The tender items were for the work not attributable to the
respondent.
(vi) The items for which tender was issued were for the works
which were never pointed out to the respondent for rectification except
few against which the learned Arbitrator had granted an amount of
Rs.4,35,000/-.
(vii) The petitioner had not been able to comply with the
requirements of Clause 46 of GGC.
(viii) The petitioner should have gone for the rectification of defects
in the year 1998 and not during 2001-02.
181. Clause 46 of the GGC reads as under:-
"Inspection of the Works- M.E.S. Officers concerned
with the Contract shall have power at any time to
inspect and examine any part of the Works and the
Contractor shall give such facilities as may be required
to be given for such inspection and examination.
Should the G.E. consider, at any time during the
construction or reconstruction or prior to the expiration
of period of a twelve calendar months after the works
have been handed over to Government (hereinafter
referred to as the "defects liability period") that any
work has been executed with unsound, imperfect or
unskilful workmanship or of a quality inferior to that
contractor for or not otherwise in accordance with the
Contract ( in respect whereof the decision of the G.E.
shall be final and binding), the Contractor shall, on
demand in writing from certified and paid for, forthwith
rectify or remove and reconstruct the Work so specified,
in whole or in part as the case may require, at his own
expense; and in the event of his failing to do so within a
period to be specified by the G.E. in his demand
aforesaid, the G.E. may carry out the Work by other
means at the risk and expense in all respects of the
Contractor. Provided always that the liability of the
Contractor under this Condition shall not extend beyond
the defects liability period except as regards
workmanship which the G.E. shall have previously
given notice to the Contractor to rectify."
182. A perusal of Clause 46 of GCC reveals that G.E. must form an
opinion about the work being defective before expiration of Defect
Liability Period. The Defect Liability Period expired on March 24, 1998.
The meeting alleged to have been held on July 05, 1998 was beyond the
Defect Liability Period for which the respondent did not had any notice.
The requirement of Clause 46 has not been met by the petitioner. The
conclusion in this regard of the learned Arbitrator is justified. Even
otherwise there is a finding that most of the defects were because of the
usage during several years between 1997-2001/2002. In any case the
learned Arbitrator on the basis of the defects mentioned in Completion
Certificate dated March 31, 1997 and certain defects likely to be of the
defect liability period granted an amount of Rs.4,35,000/-. It is not the
case of the petitioner that the findings are perverse. The learned Arbitrator
has also given a finding that the respondent has rectified the defects
during the Defect Liability Period. He is also the view that certain defects
being got rectified now are part of normal maintenance and part are not
covered in Board of Officers‟ Meeting. No attempt has been made to
highlight that the defects referred to in the Completion Certificate and the
work for which the tenders were issued were identical. I do not see any
perversity in the conclusion of the learned Arbitrator. The award is
upheld.
Counterclaim No.2 Devaluation of work due to bad workmanship and
adoption of inferior quality of material by the contractor:-
183. Having considered the submissions made/advanced, the learned
Arbitrator on the basis of details in Exh.GS-8, wherein the Board of
Officers have assessed the work which were defective and devalued it to
claim an amount of Rs.8 lacs against which the learned Arbitrator granted
Rs.3,15,000/-, which on a finding that many defects shown were due to
normal wear and tear can be a plausible finding, which is not perverse and
need to be upheld.
Counterclaim No.5: Interest @ 24% passed pendent lite and future
on awarded amount:-
184. The learned Arbitrator has not awarded interest to the petitioner
even though he had granted against counterclaim Nos.1 & 2 amount of
Rs.4,35,000/- and Rs.3,15,000/- respectively. As I have limited the
interest granted against claim Nos.40 & 41 to all the claims as granted to
the respondent in this award to 9% p.a. pendentelite and future interest,
the petitioner shall also be entitled to the same interest of 9% p.a.
pendentelite and future interest on the amounts awarded to the petitioner
against counterclaim Nos.1 & 2.
185. The petition is disposed of in terms of the above.
(V.KAMESWAR RAO)
JUDGE
SEPTEMBER 21, 2015
ak/akb/km
