STATE OF TAMILNADU Vs. K RAMACHANDRAN

JUDGEMENT

(1.) ORIGINAL Side Appeal No.406 of 2000 is filed by the appellants/petitioners in O.P.No.908 of 1999 challenging the common order dated 26.4.2000 passed by the learned single Judge, rejecting their claim for setting aside the Award dated 27.3.1999 passed by the sole Arbitrator in Application No.76 of 1995 in C.S.No.263 of 1987.

(2.) ORIGINAL Side Appeal No.407 of 2000 is filed by the appellants/respondents in A.No.1221 of 2000 in O.P.No.326 of 1999 challenging the common order of learned single Judge dated 26.4.2000 allowing O.P.No.326 of 1999 to receive and confirm the award and A.No.1221 of 2000 to pass decree in terms of the Award dated 27.3.1999.

(3.) THE brief facts of the case as stated by the claimant is as follows:- THE appellants floated a tender for the formation of R.C. Jetty at Valinokkam Fishing Harbour in Ramanad District. THE nature of work was precasting and driving of R.C.C. Piles. THE last date of receipt of tender was fixed on 30.12.1983 as per the tender schedule. THE tender will be valid upto six months from 30.12.1983 to 29.6.1984. During the opening of the Tender, the first respondent/claimant made the following conditions:- (1) Mobilisation charges of Rs.2 lakhs and Electric Power and Water Supply should be made available at the site by the Department and (2) Required cement and steel for the casting yard should be supplied by the Department free of cost THE first respondent/claimant submitted the lowest quote. On the request made by the Department by its letter dated 1.8.1984 claimant revalidated the tender and finally, it is stated that the claimant received the work order dated 26.3.1985. Since the work order was issued after lapse of 15 months, claimant sent a letter dated 28.3.1985 claiming 30% escalation as against 20% claimed earlier. At the request of the Superintending Engineer that the escalation amount will be paid on receipt of formal orders from the Government, claimant/contractor accepted the contract work on 20.4.1985. After accepting the agreement in the presence of Mr.G.Kaliasundaram, the then Superintending Engineer, the claimant brought all Pile Driving Equipment and machinery and the construction materials necessary for this project work in the site. Some portion of Pile Driving machinery, were hypothecated under the hypothecation agreement with the then Superintending Engineer Mr.G.Kaliasundaram on 18.5.1985 and received the recoverable mobilisation charges of Rs.2 lakhs as mentioned in the tender condition dated 30.12.1983. However, it is only on 4.7.1985 that the Department handed over the site. On 4.7.1985 itself casting of Pile work was started. During the casting of piles, the Department did not supply the required cement and steel and proper instructions were not given. However, the claimant has completed the casting of piles. Due to the aforesaid delay, the claimant incurred loss as the machinery and labour were kept idle. Further, 3rd appellant did not pay the full bill amount for the work done upto October, 1985 and has not prepared the escalation bill amount according to letter dated 6.4.1984. Due to non-payment of escalation bill amount as promised, the claimant was unable to make any progress in the driving of piles. After many oral representations and several letters, 3rd appellant arranged a Dredger in October, 1985 for the above work. THE Dredger, however, sunk on its way near Pamban Bridge at Rameswaram on 30.12.1985. After several oral representations and reminders, made by the claimant, the Superintending Engineer G.Kaliasundaram sent a letter dated 12.1.1986 stating that the approval of the Government regarding escalation charges will be obtained within a month, however, even after lapse of four months the Department did not pay the escalation bill amount. By letter dated 12.7.1986, claimant requested the third appellant to settle claim amount including the pending bill amount and also to release the machinery and equipment, in default to pay simple interest at 18% per month from 15.9.1986. claimant further intimated that failure to settle the claim before 31.12.1986, the claimant will seek remedy as per law. Inspite of this, the Department had not released pending bills, escalation bill amount and further did not release machinery and equipment, and thereby crippled the claimant from taking any other contract work. Claimant stated that he was incurring loss day by day. THE claimant, therefore, prayed for arbitration in terms of Clause 39 of General Conditions of the contract. Since the department refused to appoint an Arbitrator, claimant approached this Court by filing C.S.No.263 of 1987 for appointment of an Arbitrator to settle the claim amount and for release of machinery and equipment and other construction materials. Mr.C.R.Gopal, the then Superintending Engineer promised to arrange for a Dredger and instructed the claimant to start Pile Driving work. THE Department paid 20% escalation amount on 27.7.1987 in G.O.No.791. However, by letter dated 14.1.1988, the Executive Engineer directed the claimant to refund the above said escalation amount. Trusting the words of the third appellant, claimant started the Pile Driving work for which the bill amount was not paid to the claimant inspite of several requests and reminders. THE pile driving work could not be proceeded as the third appellant failed to arrange for a Dredger during 1988. Since the area was covered by sea sand, the jetty was not constructed as the seabed was not dredged. Instead of supplying a Dredger to enable the claimant to complete the work, the then 3rd appellant terminated the contract on 11.4.1989 while the piling work was in progress. Because of the failure on the part of the appellants Department for arranging a Dredger and dredging the seabed, the claimant was unable to proceed further with the Pile Driving work. Aggrieved by the termination of the contract without paying the claimant the Pile Driving Bill amount, Pile Casting Bill amount, Escalation Bill amount and other claims made earlier, as illegal and arbitrary, the first respondent/contractor sought for arbitration of the dispute. According to the first respondent/claimant due to delay at various stages he suffered huge loss and the non-use of machinery, equipment and other materials from 30.12.1983 to 11.4.1989, he suffered further loss. First respondent/contractor made a claim for Rs.2,46,42,498/- under various heads as follows:- "CLAIM No.1: Value of work done not yet paid - Claim according to agreement rates Casting of 160 numbers of Piles: 1.Shuttering, Centering, Seafolding, Steel Rods Bending & Building & Oiling the shuttering & concreting and curing all the works: Lumpsum Rate for each Pile : Rs.5160/- For 160 numbers of Piles : Rs.5160 x 160 Piles = Rs.8,25,000/- 2. Handlying & Driving the Precast Piles: Lumpsum Rate for each Pile : Rs.5870/- For 10 Piles : Rs.5870 x 10 = Rs. 58,700/- --------------- Total amount = Rs.8,83,700/- Minus the Bill amount paid = Rs.2,20,000/- --------------- Balance to be billed: Net amount due = Rs.6,63,700/- --------------- Balance to be billed: Net amount due = Rs.6,63,700/- CLAIM No.2: Escalation Lumpsum @ 180% on the compelled work during the extended period beginning from 4.7.1984 to 11.4.1989 Completed work : Rs.8,83,700/- Escalation @ 180% : Rs.8,83,700 x 180 = Rs.15,90,660/- 100 CLAIM No.3: Non Recoverable Mobilisation charges not paid = Rs.3,00,000/- CLAIM No.4: Compensation for Losses suffered on account of overheads & Loss of profit during the stipulated period of contract from 4.7.1985 to 3.1.1986 = 6 months a) Amount of contract = Rs.33,25,500/- b) Overheads component of (a) 20% worked out during quoting of tender: = Rs.6,65,100/- c) Value of work done upto 3.1.89 (contract period of six months) = Rs.8,25,000/- d) Prorate (b) on (c) 20% on Rs.8,25,000/- being overhead & profit for 6 months = Rs.1,65,000/- e) Net loss on overheads profits on = (b) (d) = Rs.5,00,000/- Rs.5,00,000/- CLAIM No.5: Losses suffered during the extended period from 4.1.86 to 11.4.89 on account of overheads & loss of profits for 39 months: (a) Provision for overheads & profits made by the claimant while working out the revalidated tender amount is = Item (b) in claim No.4 6 months Contract period 6 months : Rs.6,65,100/- 6 months Overheads & Loss of Profit for each months : Rs.1,10,850/- (b) Overheads & Loss of profit during the extended period per month : Rs.1,10,850/- for 39 months : Rs.1,10,850/- x 39 = Rs.43,23,150/- CLAIM No.6: Damages due to Idle of Machinery, Equipment & other construction materials withheld by the respondents from 4.1.1986 to 22.6.93 Total 89 months: Machinery Component : 35% Contract value : Rs.33,25,500/- For 35% for 6 months in the value of contract : Rs.11,63,923/- 6 months Loss on account of idle of machinery for each month : Rs.1,93,,987.50 For 89 months : Rs.1,93,987.50 x 89 = Rs.1,72,64,888/- CLAIM AMOUNTS Claim No.1 : Rs. 6,63,700/- Claim No.2 : Rs. 15,90,660/- Claim No.3 : Rs. 3,00,000/- Claim No.4 : Rs. 5,00,000/- Claim No.5 : Rs. 43,23,150/- Claim No.6 : Rs.1,72,64,888/- ------------------ Total claim amount Rs.2,46,42,498/- ------------------ Thus, claimant prayed for passing of award for Rs.2,46,42,498/-.