STATE OF KERALA Vs. E A CHERIYAN KUNJU

JUDGEMENT

(1.) This is an appeal filed under Section 39 of the Arbitration Act (for short, 'the Act'). As per the impugned judgment, the learned sub-Judge, Thiruvananthapuram has refused to set aside an award passed in favour of the respondents by a sole arbitrator and has passed a decree in terms of the award under Section 17 of the Act. The State of Kerala and the Superintending Engineer, Kallada Irrigation Project (Right Bank) Circle, Kottarakkara are the appellants. The sole respondent in the appeal is the Contractor in whose favour the decree has been passed in terms of the award.

(2.) The appellants have entrusted to the respondent the work of Kallada Irrigation Project (K.I.P.)-RBC-SBC-Lining the Ivarkala Distributory No.1I from Ch. O to 4085 m. Sub-channel No. 1 from Ch. O to 3300 m and channel No. II from Ch. O to 2140 m pursuant to Agreement No. 27/SE/KP/85-86 dated 10-2-1986. Certain disputes and differences arose between the contracting parties in the execution of the above work. In view of the provisions contained in Clauses 51 and 52 of the Local Competitive Bidding Specification (for short 'LCB' specification) forming part of the agreement, those disputes and differences were referred to a sole arbitrator with the consent of both parties. The arbitrator accordingly entered on reference received statements as pleadings from the parties, took evidence from both sides and passed and published his award on 23-6-1993. The arbitrator has filed the award in court on 1-7-1995. On filing the award in Court, suo motu proceedings were initiated under Section 17 of the Act. The respondent contractor prayed for a decree in terms of the award. The appellant on the other hand filed a detailed objection and prayed for setting aside the award under Section 30 of the Act The learned sub-Judge has overruled the objections and has passed a decree in terms of the award except in respect of the rate of interest and granting interest on the amount awarded at 16.5% per annum from 23-12-1988 till 23-6-1993 and 12% from 1-7-1993 to the date of the decree and 9% thereafter till payment.

(3.) Some more facts are relevant and necessary and can be stated thus: Regarding certain factual details of the case, there is no dispute and they can be stated first : The tender for the work in question was one invited in accordance with LCB specification. The P.A.C. (Probable Amount of Contract) shown in the tender notification was Rs. 6,80,230/-. The respondent submitted his tender on 27-12-1985 with the increased P.A.C. of Rs. 9,10,500/-. The tender as submitted by the respondent was accepted and selection notice was issued on 30-1-1986. The original agreement entrusting the work of the respondent on the basis of his tender was executed on 18-2-1986. The period of the works was 5 months from the date of issue of work order. The work order was issued on 7-3-1986. As per records, the initial levels seems to have been finalised by the Executive Engineer (E. E.) only on 12-9-1986. It was approved by the Superinteding Engineer (S. E.) on 29-3-1987. As the work was not completed in time, the period of completion was extended on three occasions as per three supplementary agreements executed between the parties till 30-6-1987. Supplementary agreement Nos. 1, 3 and 4 were agreements executed only for the purpose of extending the period from time to time. They were respectively executed on 30-9-1986, 31-1-1987, and 8-6-87. All extensions were for a period of three months each. On 30-9-1986, supplementary agreement No. 2 was executed entrusting certain extra items of work for a like amount of Rs. 2,34,968/- at the rates mentioned therein. The respondent ultimately abandoned the work with effect from 31-31987. Thereafter, the contract was terminated on 1-3-1988, as per the order passed by the S. E. The work was thereafter completed by entrusting it to a new contractor at the cost of the respondent. It is the common case of the parties that substantial quantity of work was carried out before the work was abandoned, though them is dispute regarding the exact extent of the work done. According to the appellants, work done will only be about 75%. But, according to the respondent, it is 90%. There is no dispute regarding the quantity of cement supplied and the part payment made to the respondent as indicated in the schedule given below.: @@ Details of supply of cement SL No.Date Quantity of cement in bags 1.12.3.86 600 2. 8.4:86 6003.23.4.86 400 4.13.6.86 4005.30.6.86 4006.22.7.86 6007.20.7.86 -70 (Transferred 70 bags as per departmentalorder to a different work site)8.22.8.86400 9. 8.10.86600 10.17.10.86 400 l1. 4.11.86600 12.21.11.86600 13.1/87 400 14.3/87 400 15.3/87 400 16.9/87 350 7150 - 707080 @@ Details of part payments indicating the quantity of cement used and earth removed Sl. No.Particulars of part billsTotal amount of bill Rs.Quantity of cement treated as used and materials' value including that of cement Cheque amount after deducting all recoveries @@ Rs.Quantity ofearth removed (1)(2) (3) (4) (5) (6) 1. CCI and Part 76,708/-575 bags 52,155/-605 Cubic Meter 22.3.86 19,800/-2. CC II and Part 3,49,606/- 2715 bags 2,30,289.60 1406 " 30.9.86 55,148/-3. CC III and Part 1,82,308/- 1536 bags 84,577.45 606 " 26.12.86 75,742/-4. CC IV and Part 67,164/- 560 bags 65,542/- 505 " 3.3.87 (No recovery)5. CC V and Part 87,341/- 647 bags 59,001/- 659 " 27.3.87 26,400/- Total 7,63,127/- 6033 bags 4,91,565.05 3781 " 1,77,090 . @@