GOVERNMENT OF KERALA Vs. SOM DATT BUILDERS LIMITED

JUDGEMENT

(1.) This appeal has been preferred by the Government of Kerala (Public Work, Department) represented by the Chief Engineer, National Highways Trivandrum under S.37 of the Arbitration and Conciliation Act, 1996 (Act 26 of 1996) (hereinafter referred to as 'the Act') against the Order in O.P. (Arb.) No. 222 of 2000 of the District Court, Ernakulam. By Order dated 28th June 2001 the court below dismissed the petition filed by the Government of Kerala under S.34 of the Act and refused to set aside the Arbitration Award dated 18th August 1999 except with regard to claim No. 1 against which respondent herein has preferred the Cross Appeal.

(2.) Government of Kerala awarded the work of four lining and strengthening of Alwaye - Vyttila, Aroor - Cherthala and strengthening of Vyttila - Aroor section of vide agreement dated 8th March 1994. In response to the notification issued by the Government of Kerala, claimant submitted its tender on 29th April 1993. Tender price quoted for both packages by the claimant was Rs. 78,01,87,261. Work was started on 25th May 1994 and was to be completed by 30th September 1998. Cost of construction including land acquisition cost worked upto Rs. 10,74,69,856. The work was completed on 31st March 1999. Final bill was submitted on 31st March 2000 by the claimant and was paid on 30th November 2000. Before that disputes and differences arose between the parties. Claimant alleged that State did not fulfil their part of the obligation and committed breach of contract. Thirty four claims were submitted by the claimant to the Engineer as per Clause.7.1 of the agreement. Four claims were allowed. No reply was received with regard to rest of the claims therefore treated as rejected and the claimant invoked Clause.67.1 of the agreement and gave notice of intention to commence arbitration. Claimant appointed K. D. Bali, Ex Director General of CPWD as Member of the Arbitration Committee, vide letter dated 4th December 1996 and requested the Government and Ministry of Surface Transport (MOST) to nominate Arbitrator from their side so as to constitute the Arbitration Committee. Government nominated Sri R. Krishnan Nair (Retd. Chief Engineer), N. H., Kerala P.W.D. vide letter dated 24th January 1997 as Member of the Committee. Ministry of Surface Transport nominated Shri V. P. Kamdar, Former Secretary, P.W.D. Government of Gujarat as Chairman (Presiding Arbitrator) of the Arbitration Committee vide letter dated 2nd April 1997. Arbitration Committee consisting of the above mentioned persons was formally constituted by the Government of Kerala, vide Order No. G. O. (Rt.) No. 756/97 / P.W. and 7, dated 24th June 1997. Latter, Secretary, P.W.D. appointed two committees, one headed by Chief Engineer and another by the Special Secretary (Finance and Expenditure) and as per the decision of those two committees, Government had allowed claims listed as serial Nos. 1 to 5, 7 to 18, 22, 23, 27, 28 and 30 of Appendix A attached to the claimant's Letter dated 4th December 1996 forwarded to the Arbitrators vide claimant's letter dated 22nd June 1997. However, claim Nos. 6, 19, 20, 21, 24 and 31 were not allowed. Before the Arbitration Committee, altogether 9 claims were raised. Claim No. 1 was bifurcated as 1(a) and 1(b), 1(a) relates to additional payment for revision of BOQ, items due to ratification of cement base price from Rs. 1,900 per M. T. to Rs. 2,340 per M. T. amounting to Rs. 73,88,767.17 and 1(b) relates to escalation payable on the amount given under claim No. 1(a), viz., Rs. 16,93,854.00. Claim No. 2 relates to reimbursement of increased Bank guarantee charges paid and / or to be paid amounting to Rs. 42,23,335. Claim No. 3 relates to abnormal increase in prices of construction materials amounting to Rs. 5,52,93,623. Claim No. 4 relates to abnormal increase in prices of sand as a result of stay order issued by the High Court of Kerala amounting to Rs. 18,20,934. Claim No. 6 relates to reimbursement for idle charges of piling rigs deployed at Ponnurunni and Chandiroor bridge site amounting to Rs. 87,34,100. Claim No. 7 relates to on account of unseasonable rain amounting to Rs. 84,09,440. Claim No. 7 A relates to balance payment of excess work done / extra items carried for Engineer's building at Edappally, Rs. 46,94,867.63. Claim No. 8 a related to interest on claim amount 1 to 7 and 7A upto 4th December 1996 at the rate of 23 per cent. Claim 8b relates to pendente lite interest on claim amount 1 to 7 with effect from 5th December 1996. Claim 8c relates to future interest on claim amount 1 to 7 and claim 9 relates to claim on cost of arbitration.

(3.) Claimant submitted their statement of claims before the Arbitration Committee on 20th September 1997. Later the claim was updated by letter dated 18th September 1998 and also submitted rejoinder vide letter dated 31st December 1997. Claimant in compliance with the Arbitrators' decision dated 16th March 1999 submitted list of exhibits / documents and details against each claim and other information / details as required in the aforesaid Arbitrators directions. Government also submitted its detailed defence statement 011 17th November 1997 to the rejoinder filed by the claimant on 23rd March 1998. Government also submitted vide letter dated 12th May 1999 list of documents and furnished other information in compliance with the direction of the Arbitration Committee dated 16th March 1999. The Committee held 14 hearings. Proceedings were later closed and the parties were given opportunity to make their written submissions in a summarised form before 5th March 1999.