GOVERNMENT OF ANDHRA PRADESH Vs. V SATYAM RAO

JUDGEMENT

(1.) C.R.P. No/ 2460/1993, filed by the .Government of Andhra Pradesh, arises out of the Judgment and decree in O.S. No. 82/1991 on the file of the Subordinate Judge, Karimnagar. That suit was filed under Section 14(2) of the Arbitration Act praying the Court to make the award dated 8-8-1991 passed by the sole arbitrator a Rule of the Court. The suit was decreed. C.M.A. No. 891/1993 arises out of the application filed by the Government of A.P. in the same Court under Sections 30 and 33 of the Arbitration Act to set aside the award. The said application, i.e. O.P. No. 65/1991 was dismissed by the learned Subordinate Judge, Karimnagar. The respondent-contractor was awarded a contract to execute the work-- Lining to Kakatiya Canal from KM 215 to 218, K.S.R.J. Project. The value of the work as per the contract was Rs. 35,55 lakhs which is less than the estimated value by 18%. The respondent entered into an agreement with the Superintending Engineer, I. and P.O. Construction Circle, Huzurabad, on 23-11-1981. A supplemental agreement was also entered into in March, 1982. The time for completion of the work was 12 months from the date of handing over the site. The site was handed over on 1-1-1982. The performance of contract got prolonged much beyond the stipulated period, mainly because the flow of water was not stopped by the Department. The respondent-contractor sent a letter on 26-12-1986 intimating the fact that he was closing the contract. This was followed by another letter dated 14-10-1987 (Ex. C-30) treating the contract as null and void and demanding settlement of his accounts, including compensation payable for the breach of contract. The Department itself sent a communication to the petitioner on 29-1-1990 that the contract was being closed without levy of penalties. In the meanwhile, the disputes were referred to a panel of arbitrators. Later on the respondent filed O.P. No. 58/1988 wherein he prayed for the appointment of sole arbitrator. The Court by its order dated 20-8-1990, appointed Sri R. L. Raju, retired Chief Engineer, P.W.D., as sole arbitrator in the place of the panel of arbitrators. The learned arbitrator entered on the reference on 1-12-1990 and passed the award on 8-8-1991. An amount of Rupees 13,89,343/- was awarded towards various claims with interest thereon at 24% p.a. from the date of award to the date of realisation. A sum of Rs. 50,000.00 was awarded towards costs. The particular of claims and the amounts awarded are as follows: The claim under head 'B' was laid towards compensation/damages/interest in respect of the amounts claimed under head 'A'. The compensation amount claimed under head 'B' was arrived at by calculating 24% interest from the date on which the payments were alleged to be due. The arbitrator wherever he awarded the amount under head 'B' restricted the same from 14-10-1987 i.e., when reference for arbitration was sought. The counter-claim of the appellant viz., for recoveries on various accounts was negatived.

(2.) THE learned Government Pleader Mr. Ramalingeswara Rao appearing for the learned Advocate-General has broadly attacked the award on the ground that the arbitrator acted without jurisdiction by going beyond the terms of the contract in making his award under various items and committed legal errors apparent on the face of the award. It is his contention that the award should have been set aside by the learned Subordinate Judge.

(3.) BOTH sides have tried to draw support from the decisions of the Supreme Court and of this Court which we shall refer to at the appropriate juncture. We shall now proceed to deal with the claims one by one excepting those which remained uncontested.