STATE OF UTTARAKHAND Vs. M/S BANSAL CONSTRUCTION

JUDGEMENT

(1.) This appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the 'Act') has been preferred assailing the judgment and order dated 19.8.2014 rendered by the District Judge, Haridwar, whereby the learned Judge has disallowed the objections under Section 34 of the Act pertaining to the claim no. 2, 3, 6, 7, 8, 9, 10, 11, 14 and 15. The objection of the State in respect of claim no. 1 has partly been allowed, while it has been allowed completely pertaining to claim no. 12. Feeling aggrieved, the State has come up in appeal before this Court.

(2.) It would be pertinent to lay down certain facts, shorn of unnecessary details. In the year 2008 -09, tenders were invited by the appellant for construction and improvement of Manglore -Landhora Road in the wake of upcoming Kumbh Mela, 2010 in District Haridwar. The respondent floated its tender, which after due scrutiny was accepted by the Public Works Department (PWD) of the State and an agreement dated 28.6.2008 was reduced into writing depicting the whole terms and specifications of such contract. Total cost of the tender was Rs. 3,85,76,350/ -. The work had to be initiated w.e.f. 28.6.2008 and to be completed within the next nine months, i.e. uptill 27.3.2009. However, the contractor on account of myriad constraints could not complete the work. So, the time for such completion was extended up to 15.6.2009. One of the primary reasons for this delay in completion of work was that during the course of working, when a third party Shri Ram Institute for Industrial Research, New Delhi was called to check and test the quality and standards of the work as per the specifications of the Ministry of Road Transport and Highways (MORTH), then it was found that the work of the contractor in laying down the road of as long as six kilometres was not up to the mark. Therefore, the Superintending Engineer/Executive Engineer of the PWD issued a letter dated 19.11.2008 directing the contractor to dismantle the executed work for deficiencies and redo the work after removing those shortcomings as per the specifications and this was the reason, the State was impelled to extend the time for completion of such work up to 15.6.2009, but still the same could not be completed and the contractor took almost 13 months further to commission the road on 24.7.2010.

(3.) When the dispute arose regarding the enhanced payments as demanded by the respondent, the matter was referred to the arbitrator at the initiation of the contractor. Mr. Girish Chandra Garg, retired Chief Engineer of the PWD, was appointed arbitrator by the High Court to adjudicate the dispute. Award was made on 17.11.2011. The arbitrator did not consider it appropriate to accept the claim no. 4, 5, 10 and 13 which were regarding the compensation for loss of overhead charge, compensation for loss of profit, reimbursement required for renewal of bank guarantee and future recovery respectively. Most the claims were accepted by the arbitrator subject to certain modifications. In total, the arbitrator had awarded Rs. 2,03,60,197/ - along with 9 per cent interest w.e.f. 1.9.2010 to the date of award and future interest on all claims further @ 9 per cent from the date of award to the date of payment.