GUJARAT HOUSING BOARD Vs. HARILAL JETHALAL

JUDGEMENT

(1.) The Gujarat Housing Board has preferred this appeal against the judgement and order dated 27th October 1988 passed by the learned Judge, City Civil Court No.2, Ahmedabad in Civil Suit No. 3799 of 1981 directing the appellant to pay Rs.6,50,691=00 with proportionate costs and interest at the rate of 12% per annum on the amount of Rs.6,08,879=00 from the date of the suit till realisation.

(2.) The respondent - plaintiff, a registered partnership firm dealing in building construction activities, had submitted a tender for construction of a building for the Employees' State Insurance Corporation, at Ahmedabad. After negotiations, the appellant original defendant had accepted the tender on 17th August 1973 and issued a work order to the respondent on 28th November 1973, fixing the date of commencement of work on 1st December 1973. According to the respondent, there was delay in issuing the work order due to the fact that the plans for construction had not been approved by the Ahmedabad Municipal Corporation and the commencement certificate was not granted till that date. Further more, the work was delayed due to the Board's inability to supply drawings of R.C.C. pillars in time. It was averred in the plaint that there was nearly eight months' delay in supplying the drawings. While the work was being carried out, according to the respondent, it had submitted an application to the Executive Engineer, as also to the Housing Commissioner contending that there was a most unusual increase in the rates of materials and labour, and as a result of the delay on the part of the officials of the Board, the respondent had to suffer a loss of nearly Rs.6,00,000=00. It was also alleged that there was a delay in supply of cement and steel, which had also affected the pace of the progress of the work entrusted to the respondent. The respondent had completed the contract and as contemplated by clause 30 of the agreement, had submitted a claim for enhanced rates to the Housing Commissioner. According to the respondent, this application was treated as a reference to the arbitration by the Housing Commissioner and a number of hearings were held commencing from 11th July 1978 till 17th January 1979, but no award was declared. The respondent gave notices on 11th January 1980 and 12th February 1980 through its advocate requesting the Housing Commissioner to declare the award, but it was not declared. It was further averred that the respondent came to know that the Board had taken up a stand in some proceedings in the City Civil Court that clause 30 of the agreement was not an arbitration clause. The respondent therefore concluded that the agreement between it and the defendant - Board did not have any arbitration clause and filed the suit. It was averred in para 13(E) and 14 of the plaint that there was increase in the rates of the R.C.C. work which was included in the tender to the extent of Rs.3,10,000=00, in respect of brick work to Rs.57,800=00, for steel work to the extent of Rs.85,300=00, for M.S. steel and reinforcement to the extent of Rs.26,250=00 and for flush doors to the extent of Rs.35,851=00. There was a further increase of Rs.17,559=00 for the water supply and sanitary fittings and an increase of Rs.76,129=00 for internal electrification. There was, thus, an additional cost of Rs.6,08,879=00 incurred by the respondent over the tendered amount for the contract. According to the respondent, this increase was caused because it was prevented from carrying out the work in time by reason of the delays and defaults attributable to the Board and its officials. In para 16 of the plaint, it was contended that if the Board took up a stand that, under the terms of the agreement between the parties, the respondent was not entitled to claim any increase in rates, then in that event, the respondent was contending that the agreement between the parties was required to be signed by the Chairman of the Board, and that since the same was signed by the Executive Engineer, it was per se illegal, and did not create any right in favour of the Board to raise such contention and that the respondent was therefore entitled to claim for the actual cost incurred by it on quantum meruit basis. It was admitted in para 16 of the plaint that the plaintiff had filed the suit more than three years after the work was completed and the amount became payable under the agreement between the parties. It was however contended that since the Housing Commissioner had started the arbitration proceedings under clause 30 of the agreement, but did not give an award till the date of filing of the suit, those proceedings were deemed to be pending as arbitration proceedings, and therefore, the cause of action continued in favour of the respondent and the suit was not barred by limitation. The plaintiff therefore prayed for a decree of Rs.6,08,879=00 as the amount due to the plaintiff "for carrying out the work of construction under the contract"; Rs.4,00,337=92 by way of interest at the rate of 18% per annum from 23-1-1978 till the date of the suit; and Rs.300=00 by way of notice charges, i.e. in all Rs.10,09,516=92.

(3.) In its written statement exh.9, the appellant contested the suit and contended that the suit was barred by limitation and also under section 71 of the Gujarat Housing Board Act. It was contended that the tender was accepted within its validity period after negotiations, on 17th August 1978, and therefore, there was no delay in the matter of acceptance of the tender on the part of the Board. It was averred in para 5 of the written statement that the respondent did not complete the contract documents, income tax clearance certificate etc. and as soon as these requirements were completed, the work order dated 28-11-1973 was issued fixing the effective date of start of work to be 1-12-1973. It was contended that, before the completion of the requisite documents, no work order could have been issued. It was further contended that the question of drawings of R.C.C. pillars did not arise at the initial stage of excavation of the earth and that on receiving the soil test report in April 1974, the R.C.C. drawings were immediately given to the respondent. It is therefore denied that there was delay of about eight months in supplying the R.C.C. drawings to the respondent. It was stated that the original time limit was extendedk at the instance of the respondent without levy of any compensation by the Board. It was further stated that, considering the representations of the contractors, the Board adopted a liberal and humanitarian view and gave an ad-hoc increase of 7.1/2% for the work done from 1-4-1974 upto 31-12-1974, even though the contract did not provide for price escalation on the fluctuation of the market rates. According to the appellant, the respondent had accepted this ad-hoc increase. It was denied that there was any delay in supply of cement and steel affecting the progress of the work. It was denied that the respondent was entitled to any enhanced claim under the terms of the contract. It was averred that clause 30 of the agreement was not an arbitration clause and was only a superintending clause as held by the Supreme Court. It was also denied that the market rates had increased from 25% to 100%, as alleged. Various amounts which were claimed towards the increase in costs said to have been incurred by the respondent, were denied, and it was contended that the respondent was bound by the terms and conditions of the agreement and that the claim of the respondent was false and frivolous.