Rajasthan High Court
State Of Rajasthan vs M/S Bharti Construction Company on 21 August, 2024
Author: Pankaj Bhandari
Bench: Pankaj Bhandari, Praveer Bhatnagar
[2024:RJ-JP:32448-DB]
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
D.B. Civil Miscellaneous Appeal No. 2930/2020
1. State Of Rajasthan
2. Chief Engineer, Irrigation Department, (Presently Water
Resources Department) Rajasthan.
3. Executive Engineer, Chawali Irrigation Project Presently
Chawli Canal Division Jhalawar Through Executive
Engineer, Chawli Irrigation Project Present Chawli Canal
Division Jhalawar Rajasthan.
----Appellants
Versus
M/s Bharti Construction Company, Kushalbagh Banswara
Rajasthan
----Respondent
For Appellant(s) : Mr. B.S. Chhaba, AAG with
Mr. Avinash Choudhary, Adv.
Ms. Shruti Pareek, Adv.
Ms. Kavita Bhargawa, Adv.
For Respondent(s) : Mr. Sanjay Mehrish, Adv. with
Mr. Rakesh Kumar Saini, Adv.
HON'BLE MR. JUSTICE PANKAJ BHANDARI
HON'BLE MR. JUSTICE PRAVEER BHATNAGAR
Judgment
RESERVED ON :: 23/07/2024
PRONOUNCED ON :: 21/08/2024
(Per. Pankaj Bhandari, J)
1. Appellant-State has preferred the instant appeal
aggrieved by the judgment dated 16.11.2019 passed by the
Commercial Court, Kota, whereby the application filed by the
appellant-State under Section 34 of the Arbitration and
Conciliation Act, 1996 (hereinafter referred to as 'the Act of 1996')
was rejected and the award dated 09.11.2015 was confirmed.
[2024:RJ-JP:32448-DB] (2 of 8) [CMA-2930/2020]
2. Succinctly stated the facts of the case are that the
Superintending Engineer, Irrigation Circle, Jhalawar invited tenders
on 19.11.1996 for the work of construction of Earthen Dam from
R.D. (-) 60m to R.D. 1290m of Chauli Irrigation Project, Pirwa,
District Jhalawar. The respondent-claimant submitted the tender,
which was found lowest and accepted by the competent authority
of the Government and the same was communicated to the
claimant. An Agreement was executed between the parties on
28.03.1997. The claimant submitted their claims before the
learned Arbitrator amounting to Rs.14,24,721/- towards enhanced
rate for extra work beyond 50% in the work of head outlet sluice;
Rs.52,24,900/- towards extra lead of sand and filter material;
Rs.181.18 lacs on account of infrastructure overhead expenses
and loss of profit being retained longer on the contract;
Rs.41,65,750/- on account of idling of men and machineries and;
Rs.45,38,686/- towards the increase in the rate of minimum
wages.
3. The defence of the appellant-State was that the
contractor before submitting the tender must have verified all the
facts about the site i.e. source of material, labour, borrow area,
quarry sites and other necessary information useful for the
execution of the work. The contractor is not entitled for payment
of extra lead as per Clause-63 of the Agreement. The appellant-
State also stated in their reply that delay in executing the work
within the stipulated period is due to failure of the contractor to
accelerate the work. Several letters were written to the contractor
in this regard, but no attention was paid by the contractor. In
regard to the excess quantity of the work, it is pleaded in the
[2024:RJ-JP:32448-DB] (3 of 8) [CMA-2930/2020]
reply by the appellant that there was no mutual agreement
regarding executing the additional quantity of work and thus, the
contractor is not entitled for any payment in this regard.
4. Learned Arbitrator had framed as many as seven issues
and along with these issues, decided five claims raised by the
claimant. Claim No.1 pertained to a claim of Rs.14,24,721/-
towards enhanced rate for extra work beyond 50% in the work of
head outlet sluice, was decided in favour of the claimant; Claim
No.2 is pertaining to Rs.52,24,900/- towards extra lead of sand
and filter material, was also decided in favour of the claimant;
Claim No.3 of Rs.181.18 lacs on account of infrastructure
overhead expenses and loss of profit, was rejected; Claim No.4 of
Rs.41,65,750/- on account of idling of men and machineries, was
partly allowed and Rs.4,09,200/- was awarded to the claimant
and; Claim No.5 of Rs.45,38,686/- towards increase in the rate of
minimum wages, was also rejected. Aggrieved by the award dated
09.11.2015, appellant-State filed an application under Section 34
of the Act of 1996 before the Commercial Court, Kota, which was
rejected vide order dated 16.11.2019. Thus, aggrieved by the
award dated 09.11.2015 as well as the Judgment and Order dated
16.11.2019, the appellant-State has preferred the present appeal
before this Court.
5. It is contended by Mr. B.S. Chhaba, Additional Advocate
General, appearing for the appellant-State that the learned
Arbitrator has misconducted the proceedings by not considering
the specific clause in the Agreement that no extra payment will be
made on account of extra/excess lead involved in carting the
material from longer lead. It is also contended that the learned
[2024:RJ-JP:32448-DB] (4 of 8) [CMA-2930/2020]
Arbitrator has failed to consider Clause No.2 & 63 of the
Agreement which provides that it was the duty of the contractor to
acquaint himself and it was specifically provided that it shall be
deemed that the contractor has carefully examined the work and
site conditions, special conditions, the specifications and drawings
and shall be deemed to have visited the site of the work and to
have fully informed himself regarding the local conditions. It is
contended that it was specifically provided in Clause No.63 of the
Agreement that no extra lead/lifts for any material for any item of
work whatsoever it may be due to any reason shall be paid to the
contractor on this account. The lead/source adopted are of
computing the rates. The contractor should verify the source/lead
before quoting the rates as no claim on account of change of
source/lead will be entertained.
6. It is contended that when there was a specific bar on
providing extra amount for lead, the learned Arbitrator has gone
beyond the terms of the Agreement and thus, the award should
have been quashed by the Commercial Court. It is argued that the
Arbitrator is bound by the terms of the Agreement and cannot go
beyond the same and thus, the Arbitrator has committed
misconduct in conducting the proceedings. It is further contended
that the learned Arbitrator has erred in awarding claim for
additional work which was contrary to Clause- 12A of the
Agreement. It is contended that the learned Arbitrator has further
erred in awarding idling charges and also awarding 12% p.a.
interest when there was no condition of interest in the Agreement.
It is argued that the award is contrary to public policy.
[2024:RJ-JP:32448-DB] (5 of 8) [CMA-2930/2020]
7. Counsel appearing for the respondent-claimant has
vehemently opposed the appeal filed under Section 37 of the Act
of 1996. It is contended that the scope under Sections 34 & 37 of
the Act of 1996 is limited. The Court cannot sit as Appellate Court
in matters of award passed by the Arbitrator. It is also contended
that the learned Arbitrator has rightly allowed the claim of
Rs.14,24,741/- towards enhanced rate for extra work beyond 50%
in the work of head outlet sluice as Superintending Engineer-I
(S.E.-I) and Executive Engineer had given assurance to the
claimant to execute the work & that payment will be made after
sanction and it is only on this assurance that the contractor
executed the work. It is contended that the learned Arbitrator has
properly dealt with the letters written by S.E. Irrigation and the
correspondence which took place between the Officers of the
Department. It is argued that the claimant cannot be held
responsible for inaction of Addl. Chief Engineer for not taking
decision with regard to extra lead of sand and filter material. It is
argued that quarry site of filter material and sand was specified
from Himmatgarh with a lead of 2 kms, but as the material was
not available as per specification, the claimant had to carry the
material from AHU river, which involved a lead of 55 kms. It is
argued that the claimant is entitled to extra lead as he had
submitted his tender considering the lead to be 2 kms. It is
contended that the Arbitrator has rightly awarded amount in lieu
of idling charges as the men and machinery of the claimant
remained idle due to lapses on part of the appellant.
8. We have considered the contentions.
[2024:RJ-JP:32448-DB] (6 of 8) [CMA-2930/2020]
9. It is settled preposition of law that the powers under
Sections 34 & 37 of the Arbitration Act can be exercised only if the
case falls within the purview of Section 34 of the Act. It is also
settled preposition of law that the Courts cannot sit over the
award passed by the Arbitrator as an Appellate Authority.
However, it is also settled preposition of law that if the Arbitrator
passes an award against the terms of the contract, the same can
be set aside by the Court. In the present case in hand, we have to
see whether the Arbitrator has passed the award against the
terms of the contract.
10. Learned Arbitrator in the present case has awarded
amount for excess lead as the sand was not available at a distance
of two kms. and was to be carried from a distance of 55 kms. from
the place of construction. It would be appropriate to reproduce
Clause No.12(a) & 63 of the contract:-
"12(a): The quantum of additional work for each item shall
not exceed 50% of the original quantity given in the
agreement and the total quantum of additional and or extra
items shall not exceed 20% of the total contract value unless
otherwise naturally agreed by the Engineer-in-Charge and the
contractor.
63. Leads and Lifts: The unit price of individual item shall
include all leads and all lifts and other items involved in
execution of work as per specifications and drawings specified
in the Schedule "G". No extra lead/lifts for any material for
any item of work, whatsoever it may be due to any reason
shall be paid to the contractor on this account. The lead/
sources adopted are for computing the rates. The contractor
should verify the source/lead before quoting the rate as no
claim on account of charge of source/lead will be entertained.
The materials as per specifications (as entered in schedule 'A-
6') shall have to be used irrespective of source/lead taken for
estimation purpose and entered in unit price and no claim on
account on change of leads/source will be entertained."
11. A bare perusal of above clause reveals that it was the
duty of the contractor to acquaint himself and it was specifically
[2024:RJ-JP:32448-DB] (7 of 8) [CMA-2930/2020]
provided that it shall be deemed that the contractor has carefully
examined the work and site conditions, special conditions, the
specifications and drawings and shall presume that he has visited
the site of the work and carefully informed him regarding the local
conditions. A bare perusal of Clause-63 also reveals that no extra
lead/lifts for any material for any item of work whatsoever it may
be due to any reason shall be paid to the contractor on this
account. It was also mentioned that the lead/source adopted was
for computing the rates and that the contractor should verify the
source/lead before quoting the rates as no claim on account of
change of source/lead would be entertained. Thus, there was a
specific bar on payment of extra amount for change of
source/lead. There being a specific bar, it was beyond the scope of
the Arbitrator to go beyond the terms of the agreement. This issue
was also brought to the notice of the Arbitrator but the Arbitrator
has awarded claim on the ground that in the tender document, the
lead was shown at a distance of two kms. Thus, the Arbitrator has
awarded the amount on the ground of equity.
12. We are of considered view that the Arbitrator is a
creature of the agreement and he cannot go beyond the terms of
the agreement. If there is specific bar on payment of extra
amount on account of change of source/lead then the Arbitrator
was not competent to award the said amount. It is settled
preposition of law as held by the Apex Court in Oil & Natural Gas
Corporation Ltd. Vs. SAW Pipes Ltd. (2003) 5 SCC 705 that if the
Arbitrator has gone beyond the terms of the agreement, the
award can be set aside. Since the award on account of extra lead
[2024:RJ-JP:32448-DB] (8 of 8) [CMA-2930/2020]
is beyond the terms of the agreement, the same cannot be
sustained by this Court.
13. However, as far as the claim of Rs.14,24,741/- towards
enhancement rate for extra work beyond 50% is concerned, from
letter written by the S.E. Irrigation and the correspondence which
took place between the Officers of the Department, it is clear that
the extra work was done on the assurance given to the claimant
by the Superintending Engineer and the Executive Engineer. The
claimant was thus, entitled for the extra work that he had done
beyond 50%. The learned Arbitrator has not committed any error
in awarding the said amount. Thus, the objections to the claim of
Rs.14 lac on account of enhanced rate for extra work cannot be
sustained. Learned Arbitrator has also properly appreciated the
documents and evidence and has committed no illegality in
awarding Rs.4 lac for idling of resources.
14. Consequently, the appeal deserves to be and is
accordingly, partly allowed. The claim with regard to the extra lead
of sand is rejected, however, the rest of claim as awarded by the
Arbitrator is upheld. The decree be modified accordingly.
15. Pending applications, if any, stand disposed.
(PRAVEER BHATNAGAR),J (PANKAJ BHANDARI),J
Chandan/
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