KAMAL CONSTRUCTION COMPANY Vs. UNION OF INDIA

JUDGEMENT

(1.) This appeal challenges an order passed by District Court, Nashik in a petition under Section 34 of the Arbitration and Conciliation Act, 1996. By the impugned order, the learned District Judge rejected the petition filed by the Appellant herein challenging the impugned award passed by a sole arbitrator in the matter of reference of disputes between the parties.

(2.) The disputes between the parties arise out of a contract for the work of construction of CTC-III for CRPF at Mutkhed, District Nanded S/H : external water supply line awarded by the Respondents, who were originally claimants before the sole arbitrator, to the Appellant, who was the Respondent in the arbitration reference. It is the case of the Respondent employer that the Appellant contractor having been unable to secure completion of the work by the stipulated date and thereby having rendered himself liable for action under Clause 3 of the General Conditions of Contract applicable to the subject contract, the Engineer-in-charge had an option of rescinding the contract and giving the contract to another contractor to complete. It is the case of the Respondent that accordingly, the contract was rescinded and the work was entrusted to another contractor under sub-clause (vi)(c) of Clause 3 of the General Conditions and that in such a case, the Appellant contractor was liable to bear expenses incurred by the department in excess of the expenses, which would have been paid to the Appellant under the original contract if the whole work was executed by him. The notice in this behalf for rescinding the contract and entrusting the original contract work to another contractor was given on 18 November 1996. It is the case of the department that the work, which was at the risk and costs of the Appellant, was got completed by the Respondent through this alternate contractor on 16 June 1999, whereupon the Appellant became liable to bear and pay expenses incurred by the Respondent in excess, as aforesaid. The sole arbitrator appointed in the matter by the persona designata under the contract, namely, Chief Engineer (WZ-II), CPWD, Nagpur, awarded the Respondent's claim in the sum of Rs.22,55,206/- and rejected the Appellant's counter claim. The learned arbitrator also awarded simple interest at the rate of 9% per annum from 18 June 1999 till payment or realisation and also costs of Rs.5000/-. This award was challenged by the Appellant before the District Court of Nashik in an arbitration petition under Section 34 of the Arbitration and Conciliation Act, 1996. The learned District Judge rejected the petition with costs. That order has been challenged before this Court in an appeal under Section 37 of the Arbitration and Conciliation Act, 1996.

(3.) At the hearing of this appeal, the following two submissions were advanced by learned Counsel for the Appellant :