STATE OF GOA Vs. JYOTI LIMITED

JUDGEMENT

(1.) THE State of Goa, the appellant herein, has come up with this appeal aggrieved by the judgment passed by the Civil Judge S. D. , Quepem dated 6-12-1990 in Special Civil Suit No. 35 of 1990 whereby that Court has dismissed the application filed by the State of Goa to set aside the award passed by the Arbitrator appointed for resolving the dispute between the State of Goa and the respondent herein.

(2.) THE dispute arose between the appellant and the respondent in respect of a contract awarded by the appellant in favour of the respondent. The Work Order was issued on 7-6-1982. The total amount of contract was for Rs. 1,40,24,076. 50. The work was for construction of a Wet-Well-Pump House. The period of contract as specified by the contract was for two years. The date of commencement of the work in terms of the Work Order was 22-6-1982. So under the contract the work had to be completed on 21-6-1984, but actually the work was completed much later than the stipulated date i. e. on 28-5-1988. A retired Chief Engineer of Madhya Pradesh was appointed as Arbitrator in terms of the arbitration clause contained in the contract between the appellant and the respondent. The dispute was referred to the Arbitrator on 17-1-1989. The Award was made on 14-6-1990. Before the Arbitrator a claim for Rs. 1,43,55,927/- was made by the contractor. The State also filed a counter claim totalling Rs. 1,30,680. 26. The Arbitrator has made an award for the amount of Rs. 49,26,200. 00 to be paid to the respondent plus future interest at the rate of 12% p. a. This Award was challenged before the Court below under sections 30 and 33 of the Arbitration Act by the appellant. The Court below after considering all the evidence and material on record, has found that the Arbitrator has not committed any misconduct and also did not exceed his jurisdiction in passing the Award. On that score the application filed by the appellant was dismissed.

(3.) THE next claim related to Issues No. 27 and 28 with regard to the escalation awarded beyond the contractual period. The learned Advocate General contested this claim on the ground that there is no power for the Arbitrator to award this escalation. However, he admits that there is a clause in the contract that during the period of the contract the Arbitrator can award the escalation. In other words, he submits that though the contract provides for escalation during the contractual period in the absence of any express provision, the award of escalation in respect of the period beyond contract is illegal. We cannot agree with this submission. Once the contractual terms pertaining to escalation in the contract had to be extended in the circumstances beyond the control of the contractor, we fail to appreciate how this contention is sustainable. In the absence of an express prohibition of granting escalation it cannot be said that the award on that account is in exercise of excessive jurisdiction. On the other hand in this case admittedly there is a clause for escalation and therefore we find no reason to set aside the award on this ground. We further find that the contractor is entitled to this amount by way of damages because the delay in completing the contract is mostly attributable to the acts and omissions on the part of the appellant. Therefore we find no reason to interfere.