CHAIRMAN OF THE BENGAL OF TRUSTEES OF THE PORT VISAKHAPATNAM PORT TRUST VISAKHAPATNAM Vs. GURUCHARAN SINGH NEW DELHI

JUDGEMENT

(1.) The petitioner, Chairman of the Board of Trustees of the Port of Visakhapatnam Port Trust, Visakhapatnam, had filed the present O.P. under Section 30 of the Arbitration Act, 1940, hereinafter referred to as "Act" in short, praying for the relief to set aside the award dated 28-2-1991 made by Sri Gurcharan Singh, Umpire, 12, Palam Marg, Vasant Vihar, New Delhi 110057, shown as 1st respondent in the O.P., relating to the work of construction of land based works at Lova Gardens which is C-2 works and marine works and break water construction, which is C-3 works. The Contractor M/s. Continental Constructions Limited, Continental House, 28, Place, New Delhi 110018, is shown as 2nd respondent in the O.P.

(2.) The O.P. was filed in the matter of C.M.A.No.162/80 and C.M.A.No.1189/82. The petitioner, no doubt, had raised several grounds in the main O.P. and also in the supplemental statement to the said O.P. on objections filed by M/s. Continental Construction Limited, the Contractor, hereinafter referred to as "2nd respondent" for the purpose of convenience. Reply also was filed to such objections raised by the 2nd respondent. Initially the Counsel representing the respective parties Sri K. Srinivasa Murthy, representing the petitioner, and Sri V. Rajagopal Reddy, representing the 2nd respondent-contesting party, had advanced arguments relating to the question of limitation and also the question relating to non-filing of an application by the 2nd respondent to make the award the rule of the Court. Subsequent thereto, the Counsel had advanced arguments relating to the merits and demerits of the matter. This court had reserved the matter for judgment and subsequent thereto on verification of records found that certain grounds, though raised, were left untouched by both the Counsel while advancing arguments and hence the matter was again posted For Being Spoken and the respective counsel again had reiterated that they confine to the submissions already made and they are not going to advance any further arguments in relation to the other grounds left untouched any further.

(3.) The petitioner had pleaded that the petitioner wanted to construct land based works at Lova Gardens, which is termed as C-2 works and also for marine work and break water construction, termed as C-3 works, in the Port of Visakhapatnam. It was further pleaded that the petitioner invited tenders for award of C-2 and C-3 contracts at Lova Gardens on 5-8-1970 and as against the tender notice the petitioner received five tenders for C-2 contract and two tenders for C-3 contract and the 2nd respondent is one of them. After accepting the tender of the 2nd respondent, the contract was awarded to the 2nd respondent and the letter of intent was issued on 7-5-1971 and subsequently the agreement was executed on 15-5-1971. The schedule period for completion of C-2 work was 148 weeks and C-2 works was 156 weeks. M/s. Howe India Private Limited, Consulting Engineers, New Delhi, were constituted as Engineers under the said contracts. Clause 44 of the contract provides for extension of time and stipulates that should be the amount of extra work or other special circumstances of any kind whatsoever which may occur, shall fairly entitled the contractor for extension of time for completion of the work and the Engineer shall determine the amount of such extension. On application of the 2nd respondent for grant of extension of the completion period, the Engineer, under Clause 44 of the General Conditions of the Contract, granted two extensions for completion of C-2 and C-3 works upto 30-9-1975 by letters dated 16-12-1974 and 30-12-1975. On the grant of such extensions of time, the 2nd respondent by his letter dated 29-7-1976 preferred a claim with the Engineer for payment of extra overhead and additional expenses to a tune of Rs.2,43,10,961-60 incurred by them in execution of C-2 and C-3 works beyond the original completion dates. The 2nd respondent requested the Engineer to certify the said amount payable under the General Conditions of the Contract to enable the petitioner to make payments there to the 2nd respondent. In reply to the said claim, the Engineer vide his letter dated 2-11-1976 addressed to the Chief Engineer of the petitioner, stated that they are of the opinion that for an experienced contractor it was not possible to foresee in advance the circumstances of delay and therefore there seems some ground for paying compensation to the 2nd respondent. It was further stated by the Engineer that he was not in a position to verify the details of the additional overhead expenses incurred by the 2nd respondent and suggested that the matter be discussed between the petitioner and the 2nd respondent and the quantum of compensation be decided to the mutual satisfaction. In further reply dated 27-1-1977, the Engineer stated that he was not in a position to verify the additional overhead expenses incurred by the 2nd respondent beyond the original completion date and suggested that the matter regarding quantum of compensation may be discussed between the parties and decided to mutual satisfaction. It was pleaded that the letters dated 2-11-1976 and 27-1-1977 do not constitute a decision of the Engineer within the meaning of Clause 67 of the contract. It was further stated that by a letter dated 25-1-1978, the petitioner intimated the 2nd respondent that nothing was payable under the terms of the contract. Being dissatisfied by the said rejection of the claim made by the 2nd respondent, the arbitration clause was invoked and for the determination of the amount payable to the 2nd respondent, one Sri J.S. Grewal, S-288, Panchishila Park, New Delhi, was appointed as their Arbitrator and the petitioner was called upon to nominate and appoint its Arbitrator within 15 days, failing which the Arbitrator appointed by the 2nd respondent should act as the sole Arbitrator. It was further pleaded that there is no dispute referable to arbitration as specified under clause 67 of the conditions of the contract inasmuch as there was no decision by the Engineer. It was further stated that at no point of time, the matter was referred to the decision of the Engineer and hence the very nomination of the Arbitrator is not valid.