STATE OF KERALA Vs. SOMDATT BUILDERS LTD

JUDGEMENT

(1.) The Appellant State of Kerala, represented by the Chief Engineer, did not succeed in its application under S.34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to the Act), to set aside the Award of the Arbitral Tribunal constituted as per G.O. (Rt) No. 26/99/PWD, dated 1111999, to decide the dispute between it and the respondent the Contractor. Hence this Appeal under S.37(1)(b) of the Act.

(2.) There was an agreement dated 15-3-1994 between the appellant and the respondent contractor, in relation to road work concerning four laning and strengthening of Aluva - Vyttila, four laning and strengthening of Vyttila - Aroor and four laning of Aroor - Cherthala stretches of NH 47. The period specified in the agreement for completion of the work was fortytwo months. It is common case before us that the work could not be completed within the agreed period, thus warranting extension of time on two occasions, so far as this case is concerned, by 18 and a half months. On account of this extension which the contractors claim to be for no fault of theirs, they had to continue their site office in Cochin, they had to incur additional expenditure in relation to their work at Cochin in the Head Office at New Delhi, they had to incur further expenditure towards equipment ownership charges in respect of the machinery worth Crores of Rupees employed for the work and under other attendant heads. Accordingly, on these counts, they raised a claim on 22-2-1998, as is revealed by Ext. A, before the Engineer. The agreement provides that the contractor shall prefer such claim first before the Engineer who is none other than the Project Director in respect of the project in question. According to the contractors, there was a decision by the Engineer in terms of Clause.67.1 of the agreement as is revealed by Ext. B dated 23-4-1998 on Claim No. 1 concerning the equipment ownership charges, site office overheads etc. recommending payment of Rs. 13,01,42,462. The rest of the claims were referred by the Engineer to the Site Engineer for appropriate orders after consulting the parties concerned. As the decision in Ext. B in respect of Claim No. 1 recommending payment of Rs. 13,01,42,462 was not implemented and as no decision was forth coming from the Engineer in respect of the rest of the claims, they sought for reference of the dispute covering Claim No. 1 to arbitration under Clause.67.4 of the Agreement as is revealed by Ext. C dated 31-7-1989 and concerning the rest of the claims, which had not been decided by the Engineer, as is seen from Ext. E dated 30-1-1994. While so, the Chief Engineer who is the employer had, referring to Ext. B, addressed the Ministry of Transport, New Delhi under Ext. J dated 11-5-1998 pointing out that there is a decision by the Engineer in terms of Clause.67.1 to pay the amount covered by that decision and to arrange payment, as according to them, the extension of the contract was due to the delay in handing over the site free from the obstructions, delay in approving the Benchmarks, delay in finalisation of the proposed road levels, delay in issuing work drawings, delay in finalisation of extra items, etc. Later, the State of Kerala, as is revealed by Ext. CH2 G.O. (Rt.) No. 26/99/PWD dated 11-1-1999, before the date of Ext. E, referred the disputes covering an amount of Rs. 26.92 Crores which really includes the claim under Claim No. 1 decided by the Engineer in Ext. B and the other claims which were not decided by the Engineer. Accordingly, an Arbitral Tribunal including the nominee of the Chief Engineer the employer, the nominee of the contractor and the nominee of the Ministry of Surface Transport, New Delhi as its Chairman was constituted. This Arbitral Tribunal after hearing the parties and perusing the documents produced by either side, rendered an Award on 20-12-2003 for an amount of Rs. 7,61,41,460 towards Claim No. 1, an amount of Rs. 2,86,985 under Claim No. 4B, Rs. 1,00,26,900 under Claim No. 5 and an amount of Rs. 2,31,821 under Claim No. 6 with pendente lite interest at 10 per cent and future interest at 18 per cent on the amount so awarded. This Award was challenged by the appellant filing a petition under S.34 of the Act before the District Court, to set it aside. It was unsuccessful. Hence this Appeal.

(3.) Several contentions are urged by the learned Additional Advocate General, Shri V. K. Beeran, assailing the finding of the court below in refusing to set aside the Award. It is submitted that the delay occasioned in completing the work, cannot be attributable to the acts and omissions of the Government. The contractor was also equally liable for such delay as was, in detail, submitted in the Statement of Defence filed before the Arbitral Tribunal, as well as urged before the court below in the petition under S.34 of the Act. It is submitted that the contract was for widening and strengthening of an existing road and the contractor did not submit the programme chart in time and in the right form, so that the Project Director can act in terms of thereof, locating the portion of the site and giving the necessary drawings, for carrying out the work. Admittedly, some part of the delay was occasioned for fault of neither of the parties, such as, adverse climatic conditions, strikes and bundhs organised by the trade unions and political parties, etc. Therefore, whether the extension was the result of the commissions and omissions of the contractor also, ought to have been considered by the Arbitral Tribunal. It is without considering these, the Arbitral Tribunal has entered into the finding in one sentence that the extension was not on account of any reason attributable to the contractor, without any supporting reason.