IVRCL LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) THE applicant has approached this Court under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act') for appointment of an Arbitrator to resolve the dispute between the petitioner and the respondent.

(2.) THE petitioner had contracted for three works relating to Ezhimala Naval Academy and they are, Agreement No. 7/2005 -06 which gives rise to A.R. No. 69 of 2014, Agreement No. 8/2007 -08 which gives rise to A.R. No. 67 of 2014 and Agreement No. 9/2005 -06 which gives rise to A.R. No. 68 of 2014. Agreement No. 7/2005 -06 relates to the work of the main building, Agreement No. 8/2007 -08 relates to large scale construction and Agreement No. 9/2005 -06 relates to residential quarters, each valued at Rs. 125 Crores, Rs. 32.65 Crores and Rs. 62.76 Crores respectively. The time for completion of the work was 24 months with respect to Agreement Nos. 7/2005 -06 and 8/2007 -08 and 18 months with respect to Agreement No. 9/2005 -06.

(3.) THE petitioner would contend that the economic viability of the agreement would depend upon the completion of the work. The inordinate delay in completing the work, mainly due to the conduct on the part of the respondent, resulted in considerable increase of cost of construction. According to the petitioner, usually in these types of contracts, an escalation clause will be provided. But for reasons best known to the respondent, it was conspicuously absent in the agreements on hand. The petitioner would assert that as per the various decisions of the various High Courts and Apex Court in such cases, the contractor is entitled to enhanced rate especially when the period for completion of work has been extended by the other party. The various communications sent to the respondent are produced in these applications. It is pointed out by the petitioner that as far as Agreement No. 7/2005 -06 is concerned, there were 1250 revised drawings and Agreement No. 8/2007 -08 is concerned, there were 75 revised drawings. In Agreement No. 9/2005 -06, there were 70 revised drawings. With respect to Agreement No. 7/2005 -06, 92% of the work had been completed and with respect to Agreement No. 8/2007 -08, the entire work has been completed and with respect to Agreement No. 9/2005 -06, 84% of the work had been completed. With respect to Agreement No. 7/2005 -06, Bank Guarantee worth Rs. 6.20 Crores was furnished, while in Agreement No. 8/2007 -08, Bank Guarantee worth Rs. 40 Lakhs was furnished and with respect to Agreement No. 9/2005 -06, Bank Guarantee worth Rs. 1.08 Crores was furnished.