YELLURU MOHAN REDDY Vs. RASTRIYA ISPATHNIGAM LIMITED VISAKHAPATNAM

JUDGEMENT

(1.) THIS civil revision petition raises a question of importance regarding the scope of arbitration clauses which also contains sub-clauses excluding certain matters from the purview of arbitration and also a question relating to the application of Section 8 (2) of the Indian Arbitration Act, 1940 (hereinafter referred to as the Act).

(2.) THE facts of the case are as follows :--THE petitioner entered into a contract with the respondent. THE Visakhapatnam Steel Project, on 31-3-1986. Earlier the petitioner was awarded the work on 30-12-1985 in a sum of Rs.6,15,750/- and the work was to be completed in four months. It appears from the counter that certain meetings took place between the petitioner and the respondent on 7th, 21st and 28th March, 1986 and a revised programme has fixed up in which the petitioner agreed to complete the work by the end of May, 1986 which would mean that there will be a delay of one month in the completion of the work, it is the case of the petitioner that he could not proceed with the work inasmuch as contrary to an alleged assurance a reservoir was allowed to get filled up with water by the respondent and that the trenches which were dug by the petitioner got filled up with water and therefore it became impossible, to proceed with the contract without involving additional expenditure. THE petitioner therefore addressed a letter on 26-5-1986 (Ex. A-1) stating that he had excavated 27000 cubic meters as against 15000 cubic metres and covered a length which was short of 3 KMs. out of the total length to be covered. He stated that unless the water is bailed out it is impossible to excavate the soil. Extra cement is required. As in spite of the request to amend the agreement to include the additional work and additional expenditure, the same was not done, he is not able to proceed further. This being not a matter covered by the special conditions which could be disposed of by the Engineer, the petitioner requested that the rate for excavation of the earth and pitching be enhanced by 50% over the original rate or in the alternative, the petitioner may be given water free area after dehydration is made by the respondent. THE Deputy Chief Engineer (Civil) sent a letter, Ex. A2, dated 4-6-1986 which does not refer to Ex. A1. He stated that the work was awarded on 30-12-1985 for completion in four months, that in spite of the revised schedule it was not completed even by May, 1986, that the petitioner did not mobilise his resources and had stopped work already for 10 days. THE petitioner was requested to resume work and complete it at the earliest. Otherwise the work will be got completed at the petitioner's risk. THE same officer after receipt of Ex. A1 sent a further letter on 11-6-86 (Ex. A3) to the petitioner stating that the allegation that the site condition has become altered on account of the filling up of the water is incorrect. Under the General Conditions no change in unit rate is admissible for any variation in quantities-that the petitioner has not completed the work according to the revised schedule and did not even complete 25% of the pitching work. THE item of earth work in the bill already included the so-called additional work. THE cement consumption now claimed is contrary to the petitioner's letter dated 23-12-1985. THE road is, in fact, dry. THE claim for extra rate is accordingly rejected. Before receipt of Ex. A3 the petitioner wrote Ex. A4 dated 14-6-86 stating that the contents of Ex. A2 have surprised him. THE petitioner was ready and willing to proceed with the work if the points raised in Ex. A1 are answered. In reply the Deputy Chief Engineer wrote a (letter) on 16-7-1986 as per Ex. A5 that the progress of work was poor in spite of 8 letters and therefore it is clear that the petitioner failed to complete the work and has abandoned the site. THErefore, on being satisfied with the certificate of the Engineer, the respondents were giving 7 days notice under Clause 14(1) of the General Conditions and thereafter the work will be entrusted to another contractor and suitable action taken, against the petitioner. THE petitioner replied on 22-7-1986 as per Ex. A6 that there is a "dispute" pending which arose in regard to the non-settlement of the issue of change of rate on account of the respondents allowing water into the reservoir. THE petitioner therefore requested the dispute to be referred to arbitration 'as mentioned in his earlier letter'. THE petitioner gave one week's notice for appointment of arbitrator and then filed the present O.P. on 23-8-1986 u/S. 8(2) of the Act seeking appointment of an arbitrator. In para IV of the O.P. it is stated that the cause of action arose on 28-5-86 when the petitioner wrote to the Engineer in charge to 'decide the dispute' and give final certificate and when the latter gave the final certificate and again when the respondent sent the letter Ex. A5 dated 16-7-1986. In the body of the petition it is stated that the Engineer did not reply and that being a departmental Engineer the petitioner is not agreeable for a decision by the Engineer. It is stated that under Clause 16(2)(d) of the agreement the petitioner can move the arbitrator if he is dissatisfied with the Engineer.

(3.) THE Court below held that the alleged assurance is not incorporated in the contract, that in fact as per Ex. A-1 notice the petitioner wanted to execute a fresh contract with new rates, that the contract was not placed before the Court but that the respondents placed the General Conditions and clause 16.2(c) before the Court and that unless there is a clause in the contract entitling a higher rate the petitioner cannot make any claim. THE Court said that there is some force in the plea that the question of amending the rate in the contract or entering into a fresh contract, is outside the purview of the contract. It also held that Ex. A-6 does not amount to 15 days clear notice contemplated by the last para of Sec. 8(2) of the Act. On these grounds the O. P. was dismissed.