UNION OF INDIA Vs. SUPREME CONSTRUCTION

JUDGEMENT

(1.) THIS petition under Section 30 of the Arbitration Act, 1940 has been filed by the Petitioners challenging the Award dated 29th December, 1995 of the sole Arbitrator Shir S. K. Ahuja, Chief Engineer, copy of the Award has been attached to the petition at Exhibit-A. A contract was entered into between the respondents and the petitioner for the construction of telephone exchange building at Ulhasnagar. As per agreement No. 14/pt (B-V)/1981-82 dated 26th November, 1981 entered into between the parties, the respondents were required to complete the construction work within 18 months. The work commenced on 11th December, 1981 and was actually completed on 31st December, 1983. The respondents applied for extension of time and the same were granted under Condition No. 5 of the general conditions of contract forming part of the contract. The final bill was prepared as per the terms and conditions of the contract and an amount of the final bill was paid to the respondents. According to the petitioners, no further amount remained due and payable. The respondents received the payment under the final Bill under protest. Disputes arose between the parties and the matter was referred to the Arbitration. Initially sole Arbitrator Shri Surendranath, Superintend-ing Engineer was appointed by letter dated 1st Jan. 1989. Shri Surendranath resigned from the arbitration by letter dated 22nd March, 1991. Thereafter one shri Chakravarthy, Chief Engineer was appointed as sole Arbitrator by letter dated 10th April, 1991. This Arbitrator vacted his office and resigned from the arbitration on 10th October, 1991. Thereafter one Shri J. Pal, Engineer (Arbitration) was appointed as sole Arbitrator by letter dated 22-1-1992. He also resigned on 10th December, 1993. In his place the present Arbitrator Shri S. K. Ahuja was appointed as a sole Arbitrator. The Arbitrator entered upon reference on 17th January, 1994 and parties filed their pleadings. The respondents had filed a statement of claim on 29th June, 1987. As many as 18 calims were made for a total amount of Rs. 11,84,677. 54 ps. In reply to the statement of claim, the petitioners filed their counter statement denying the claims. The parties were heard by the Arbitrator. The Award was given on 29th December, 1995. It was served on the petitioners on 5-1-1996. In the Award the claim of the Respondent has been allowed to the extent of Rs. 3,09,261. 46 out of the total claim of Rs. 11,84,577. 54.

(2.) I have heard the Counsel for the parties and perused the Award with the aid of the Counsel. Counsel for the petitioner has restricted the challenge to the Award with regard to claims Nos. 1, 9, 11, 15 and 18. With regard to claim No. 1, it is to be noticed that the amount awarded is Rs. 938. 57 against the claim of Rs. 91,015. 51. A perusal of the Award shows that the claim has been partly allowed after hearing arguments advanced by the parties. After discussing the various points raised, the Arbitrator has found it fit to award only an amount of Rs. 938. 57 ps. This Court is unable to see any error apparent on the face of the record for setting aside the Award with regard to Claim No. 1.

(3.) THE main challenge in the petition is with regard to claim No. 9. This claim as set out in the statement of claim is as under : "we submit that the work was awarded to us on 26-11-1981 with the date of commencement to be reckoned as 11-12-1981 and specifying a period of 18 months for its completion. Accordingly the stipulated date of completion of the work was 10-6-1983. We submit that due to the various delays, hindrances and breaches of contract on the part of the respondents from time to time, the work could not be completed by the stipulated date of completion of 10-6-1983. The work prolonged beyond that date and was ultimately completed by us on or about 31-12-1983. We submit that during the prolonged period of construction 10-6-1983 to 31-12-1983 or period of 2/3 months, the prices of materials and labour had gone up considerably higher than those prevalent at the time of our tender and/than what we had contemplated while working out our tendered rates. We had to incur considerable extra expenditure in the prolonged period of contract due to increase in prices of materials and labour which we need not have incurred if the work was allowed to be completed by the originally stipulated date of completion of 10-6-1983. We submit that as well had to incur this extra expendiutre due to the delays, hindrances and breaches of contract on the part of the respondents from time to time, we are entitled to be compenstated for the same by the Respondents. We claim an amount of Rs. 3,00,000/- as compensation on this account from the Respondents and pray that the learned Arbitrator may be pleased to award the same to be paid us by the Respondent. A perusal of the above shows that the claim is with regard to the delay in completion of the contract due to the hindrances and breaches of contract committed by the petitioner from time to time. It is claimed that the said work could not be completed on 10th June, 1983 and was in fact completed on 31st December, 1983. During this period of 6 months the prices of material and labour charges had gone up considerably higher than those prevailing at the time of the tender. Thus the respondents had claimed compensation in the sum of Rs. 3 lakhs. After considering the evidence placed on the record by the parties and after hearing the parties, the Arbitrator has granted only a sum of Rs. 1,40,352 against claim No. 9. According to the Counsel for the petitioner, these findings arrived at by the Arbitrator are beyond the compensation permitted under the contract. Counsel has relied upon clause 10 (c) of the conditions of contract which were applicable with regard to rate, tender and contract for works in the Post and Telegraph Department, Civil Engineering Wing. This document sets out the conditions under which the contracts have to be awarded in the Department of Posts and Telegraphs. A perusal of this clause shows that if during the progress of the work, the price of any materials incorporated in the works or wages of labour increases as a direct result of coming into force of any fresh law or statutory rule or order, then the amount of contract is to be accordingly varied, provided, the increase payable is not attributable to delay in the execution of the contract within the control of the contractor. Any such increase in wages as a result of coming into force any fresh law is not to exceed 10 per cent of the wages previling at the time of the tender. Counsel for the petitioner does not claim any infringement of the above provision. He, however, submits that the Award has been given totally contrary to what is provided as under in clause 10c.