STATE OF KERALA Vs. EXECUTIVE ENGINEER

JUDGEMENT

(1.) This is an appeal preferred under Section 39 of the Arbitration Act, 1940, hereinafter referred to as the Act, by the State of Kerala, represented by the Chief Secretary and the Executive Engineer, Irrigation Division, Thiruvananathapuram, challenging the correctness of the order passed by the Principal Sub Judge, Thiruvananthapuram in I.A. No. 861 of 2015 in I.A. Nos. 1071/2015 and 1070/2015 in O.P. (Arb.) No. 42/2000.

(2.) It is the common case that the work of 'Maintenance of Neyyar Irrigation Project (NIP) - Extending the river training wall on the right bank of the Neyyar River downstream of Neyyar Garden' was awarded to the respondent by agreement No. 31/EE/79/80 dated 04.02.1980. The probable amount of contract (PAC) was Rs.68,685/-. The contractor, the respondent agreed to undertake the work 25.1% below the estimate amount. After executing necessary agreement and also depositing a sum of Rs.2,800/- as security deposit, the respondent agreed to complete the work by 30.04.1980. But the work could not be completed by the respondent in time. In this regard, divergent contentions were raised by the parties. According to the appellant State, in spite of repeated requests made by the officials of the Public Works Department, the respondent was lagging; ultimately, he did not complete the work despite granting extensions of time to him. On the other hand, the version of the respondent is that he was ready and willing to complete the work on the scheduled time/extended time, he had to undertake extra works as and when directed by the officials of the department, for which payments were not made in spite of repeated demands; works could be undertaken only on supply of items, especially cement, which was a controlled commodity at the relevant time. He could not commence the work as scheduled owing to the laches on the part of the officials of the department and non-supply of items. Moreover, unexpected heavy rains also had caused obstructions and damaged the constructions already made; he had to re-do the work for making good the damage caused due to heavy rain. In spite of his diligent efforts to complete the work, at the fag end of the contract, payments were not made. Ultimately, he had to resort to arbitration proceedings for getting his due amount. By the award dated 19.02.2015, a sum of Rs. 46,72,610/- was awarded to him including 15% hill allowance and loss of profit calculated at 15%, which is the actual amount due to him; 18% interest with effect from 28.05.1986 was also slapped on the State. The Principal Sub Judge, Thiruvananthapuram, who vetted the award dismissed the application filed by the State to set aside the same and granted him a decree in terms of the award and therefore, so much amount is due to him.

(3.) The appellants have disputed the claims. According to them, the contract had failed owing to the laches on the part of the respondent. All the extra works done were reckoned by the officials, part payments were made and the Arbitrator is not justified in passing such a huge award. It has no basis at all.