UNION OF INDIA Vs. BALDEV DUTT

JUDGEMENT

(1.) Respondent No. 1 (hereinafter called the Contractor) entered into a contract with the President of India, the Union of India for the purpose of this litigation (hereinafter called the Government) to carry out the work of development of land (Levelling and Dressing) in 1964. The work was to be completed by June 1965. The progress of the work was, however, delayed beyond that date. The delay, according to the Contractor, was due to the failure of the Government to perform their part of the contract while the Government threatened to hold the Contractor liable for payment of compensation for delay under Clause 2 of the contract and also to get the reinder of the work done by another Contractor at the risk and the cost of the Contractor under clause 3 of the contract. Clause 25 of the contract provided that "all questions and disputes..........in any way arising out of or relating to the contract. ....... .shall be referred to, the sole arbitration of the person appointed by the Additional Chief Engineer. Central Public Works Department" and that "the arbitrator unto whom the matter is originally referred being transferred or vacating his office or being unable to act for any reason, such Additional Chief Engineer or administrative head as aforesaid at the time of such transfer, vacation of office or inability to act, shall appoint another person to act as arbitrator in accordance with the terms of the contract ........Subject as aforesaid the provisions of the Arbitration Act, 1940........ shall apply to the arbitration proceeding under this clause."

(2.) At the request of the Contractor made on 13-4-1967 the Additional Chief Engineer appointed Shri v. K.. Gupta, Superintending Engineer. as the arbitrator and referred to him the disputes whether due to the default of the. Government time had ceased to be the essence of the contract, whether the contract ceased to subsist after 12-6-1965 and whether the Contractor was entitled to higher rates for the work done after June, 1965. Before the arbitrator the Contractor specifically claimed the refund of security deposit amounting to Rs. 78,487.00. damages for the defaults of the Government and a direction to the Government to pay his dues quickly. He denied that the Government was entitled to compensation from him or to get the remainder of the work done by another contractor at his cost under clauses 2 and 3 of the. contract respectively. The Government denied the Contractor's claim and asserted its right to take action under clauses 2 and 3 of the contract. On 16-1 1-1967 the Contractor filed a replication accompanied by copies of correspondence between the parties from the time of the formation of the contract till the reference to arbitration showing the complaints made by the Contractor of lack of co-operation on the part of the Government and warnings given by the Government about the delay in finishing the work by the Contractor.

(3.) On the first two hearings held by the arbitrator at Delhi on 5-12-1967 and 2-2-1968 the Government maintained that only those claims of the Contractor as contained in the original reference as distinguished from the pleadings before the arbitrator could be considered by the arbitrator. The. Contractor requested the arbitrator to make an interim award oil matters 'already discussed. The arbitrator informed the parties that he was under orders of transfer to Poona and the parlies agreed that further hearings could be, held at Poona.