COMMANDER WORKS ENGINEERS Vs. EAPEN VARGHESE

JUDGEMENT

(1.) THE respondent in this appeal entered into a contract with the Union of India for the construction of as access road to N A. D (Naval armament Depot), Alwaye The work under the contract consisted mainly of excavation of earth from the quarry, transporting of earth to the place, where the embankment on which the road to be laid has to be raised and raising the embankment. The contract was a lump sum contract for a sum of Rs. 5,48,659 and was predominantly a labour contract. During the course of the execution of the work a dispute arose between the contractor (the respondent) and the Commander works Engineers, Cochin - the appellant herein - who on behalf of the Union of India was seeing to the execution of the work. It can be said that the dispute mainly centered around "the nature of the soil" to be excavated from the quarries viz. , whether it is ordinary rock (laterite) or hard soil. As non-payment for extra expenditure for excavating the ordinary rock would have materially affected the progress of work, reference was made to the Arbitrator during the currency of the contract itself. The contract had provided (in para 70 of General Conditions of Contract I A. F. W. 2249) that unless the parties otherwise agree reference to arbitration shall not take place until after the completion, alleged completion or abandonment of the works or the determination of the contract In the particular circumstances the reference to arbitration was made as agreed to by the parties The provision for reference to arbitration in the contract - para 70 referred to above is to the effect that all disputes, between the parties to the contract, other than those disputes for which the decision of the C. W. E.-Commander Works Engineers - or any other person is by the contract expressed to be final and binding shall after written notice by either party to the contract to the other of them - be referred to the sole arbitration of an Engineer officer to be appointed by the authority mentioned in the tender documents. The arbitrator appointed was a Senior Officer in the department - a Superintending engineer - who no doubt retired during the course of arbitration and his award was published on 6th July 1972 after his retirement from service, which was on 21st November 1971. The contractor submitted his various claims before the arbitrator and the appellant submitted his objections thereto. The Arbitrator passed an award for Rs. 8,91,561. 36 altogether for the claims of the contractor allowed by him

(2.) THE respondent contractor filed O. P 38 of 1972 in the court of the Additional Subordinate Judge for a decree in terms of the award. The appellant as respondent in the said O. P. filed application I. A. 4762/72 in the same court for setting aside the award on modification of the same. The award was challenged on the grounds. (i) there is legal misconduct inviting court's jurisdiction under S. 30 (a) of the Arbitration Act; and (ii) there is error apparent on the face of the record. After a detailed discussion of the case the award was accepted by the learned sub Judge and a decree was passed in accordance with the award. The contractor-respondent herein was held entitled to 6 per cent interest from the date of decree till date of realisation on the amount held due to him. The parties were directed to suffer costs of the proceedings

(3.) THE contentions taken up by the appellant can be summarised as follows: The Arbitrator had deviated from the terms of the contract by which he has to pass an award and has really exceeded his terms of reference. The General Conditions of Contract I. A. P. W. 2249 and M. E. S. Standard Schedule of Rates form part of the contract and the Arbitrator was required to pass his award in terms of the contract This the Arbitrator has ignored. According to the Arbitrator the extra work involved due to presence of rock at the quarry immediately below the surface soil amounted to radical change in the contract work and not merely a deviation as contemplated under the agreement. But all these circumstances were such as were taken care of even at the time of entering into contract and were provided for under the term "deviation". Whenever the contractor has to execute such work by deviation, payment has to be made to him in accordance with the terms of the contract. If really it was the case of the contractor that these things have resulted in a radical change of the contract, then he should have come for a fresh arrangement, because the radical change can be recognised only under a fresh agreement. It was also contended at the time of argument that the contractor cannot plead a case of implied agreement based on the circumstances, of the case, because of the mandatory provisions in Art. 299 of the constitution. The learned counsel for the appellant, Sri Parasaran, advocate-General of Madras very strongly contended that the Arbitrator in proceeding on the basis of a radical change is the contract has acted without jurisdiction. This contention was based on Clause. 7 of the Contract I. A. F. W,-2249 wherein it was provided. "the contractor shall not make any alteration, in addition to or omission from the works as described in the tender documents except in pursuance of the Chief Engineer No work that radically changes the original nature and scope of the contract shall be ordered as a deviation and in the event of disagreement between the contractor and the Accepting Officer, the decision, of the next higher authority (or Chief engineer in the case of contracts accepted by him) shall be final and binding on the con-tractor"; The learned counsel pleaded that the action of the arbitrator in this matter being absolutely without jurisdiction, the fact that objection was not taken before the Arbitrator or even in the court below in regard to this jurisdictional question will not be of any significance. It was also contended on behalf of the appellant that the Arbitrator's jurisdiction in the nature of the agreement extends only to matters arising out of the contract.