CHADALAVADA GOPALA KRISHNA MURTHY Vs. UNION OF INDIA

JUDGEMENT

(1.) Both the C.M.A. and the C.R.P. have been preferred by the contractor questioning the order passed by the civil Court i.e., III Senior Civil Judge, City Civil Court, Secunderabad, in O.S. No.162 of 1998 and O.P. No.10 of 1997.

(2.) Brief facts: The contractor herein was awarded a civil work under agreement dated 31-10-1981 by the respondents- Railways for the work of Construction of a Building for Railway Recruitment Board at Secunderabad. As per the agreement, the work was to be completed on or before 30-4-1982. The value of the work was Rs.3,92,946/- It seems, the work could not be completed by the contractor within the stipulated time. According to the contractor, since there was delay in handing over the site by the Railways by three months and since the drawings could not be given to him within a reasonable time, the work could not be completed within the time stipulated under the agreement. Thereafter, dispute arose between the parties in regard to payment for the work done by the contractor. The matter was referred to the arbitrator on 7-12-1994. The arbitrator, upon entering reference on 23-8-1996, passed an award dated 2-12-1996 in favour of the contractor, awarding a sum of Rs.2,40,108/-. Before the arbitrator, the contractor put forth two claims. Under claim No.l, he contended that due to the delay caused by the Railway administration in supplying drawings, in handing over site, steel, cement etc., the work had to be prolonged for four years, during which period there is steep increase in prices of materials, labour charges etc. So, the contractor claimed that he is entitled for a sum of Rs.2,50,000/-. It is contended by the Railways before the Arbitrator that the period of contract was no doubt extended as contended by the contractor, but since it was extended by invoking Clause 17(2) of the General Conditions of Contract, the contractor is not entitled to claim amounts towards any losses sustained by him due to such extension. But, the arbitrator negatived the version of the Railways in this regard and awarded a sum of Rs.2,14,106/- in favour of the contractor under this head. Before the arbitrator, the respondents- Railways also raised a contention with regard to limitation of the claim made by the contractor. According to the Railways, the claim made by the contractor in the year 1994, i.e., nearly 10 years after the completion of the construction work, is clearly barred by limitation. But, the arbitrator turned down this contention and decided to admit the claim of the contractor. Claim No.2 relates to the final bill with 10% S.D. Under this claim, the arbitrator awarded a sum of Rs.16,002/-. It is the said award which was questioned by the Railways in O.P. No. 10/1997 praying the civil Court to set aside the same. While so, the contractor filed O.S. No.162/1998 under Sections 17 and 29 of the Arbitration Act praying to make the award rule of the Court and to award further interest at 18% from the date of the award till realisation. The civil Court, after conducting an enquiry, passed a common order setting aside the award in respect of claim No.l and making the award rule of the Court in respect of claim No.2. Accordingly, it passed a decree for a sum of Rs.16,002/- with interest at 18% per annum from the date of the decree till realisation. The C.M.A. and the C.R.P. have been preferred by the contractor, questioning the said common order.

(3.) The civil Court disallowed claim No.2 (sic.1) mainly on two grounds. The first ground is that if there is delay in the execution of the work by the contractor and if that delay is due to any of the lapses on the part of the Railways, then the contractor is entitled to seek extension of the time for completion of the work under Clause 17(2) of the General Conditions of Contract and the Railways have the power to take a decision in that regard extending the time, but there is no provision in Clause 17(2) which would enable the contractor to claim damages for such extension of time. So, it was of the opinion that the contractor cannot claim damages under Clause 17(2). The civil Court held that when there is a specific clause in the contract prohibiting the claim for extra costs, the contractor is not entitled to claim damages invoking Clause 17(3). But, the finding of the civil Court is wholly misconceived. It must be pointed out here that the civil Court had utterly failed to properly understand the true meaning of these two clauses. Clause 17(2) deals with extension of time in the event of delays due to any neglect on the part of the Railways or due to any strikes, lock outs, fire, unusual delay in transportation, exceptionally inclement weather, unavoidable casualties or any causes beyond the contractor's control. It is no doubt true that in such cases, the clause does not provide for claiming of any damages by the contractor. But, there is a provision for claiming damages in Clause 17(3), under which the contractor can seek extension of time in the event of any failure or delay by the Railway to either hand over to the contractor the possession of land, or to give the necessary notice to commence the works or to provide the necessary drawings or instructions or any other delay caused by the Railway due to any other cause whatsoever'. This clause specifically says that 'then such failure or delay shall in no way affect or vitiate the contract or alter the character thereof or entitle the contractor to damages or compensation thereof. Before the arbitrator, it was specifically admitted by the Railways that the work was delayed since they received the R.C.C. detailed drawings lately and due to the non-availability of the cement and steel, non-availability of funds, flooring decision. Thus, from the above admission, it is clear that the work could not be completed on account failure on the part of the Railways to provide necessary drawings and instructions, in which case, the contractor is entitled to seek damages as per Clause 17(3). The finding of the civil Court that since there is no clause for damages in Clause 17(2), the contractor is entitled to claim amount, is wholly unsustainable as Clause 17(2) is applicable only if the work is delayed on account of some exceptionally unavoidable and unexpected casualties but if the delay is due to the failure on the part of the Railways either in handing over the site, or in providing the necessary drawings to the contractor, then such cases are governed under Clause 17(3) and the contractor is entitled to claim damages invoking the said clause, but, admittedly, the said bill was not passed for payment by the officials of the Railways. The reason for not passing the bill seems to be that the records relating to the final bill could not be traced in the office of the Railways. Thereafter, after long correspondence, the contractor sought reference of the dispute to an arbitrator. Under the law of limitation (i.e., under Article 137 of the Limitation Act), the contractor is entitled to dispute the amounts drawn in the final bill within a period of three years from the date when the right to apply accrues. The question is as to when exactly such a right to apply accrues to the contractor. In a latest judgment rendered by the Delhi High Court in En Veeka Construction Co. vs. D.D.A. and another1, the Delhi High Court took the view that unless and until the contractor is intimated about the preparation and also about the finalisation of the final bill, the contractor may not be in a position to raise any dispute about the amounts that are mentioned in the final bill as he is not aware as to which of his claims were accepted by the department and which are rejected. Therefore, the right to raise clause. I am, therefore, of the view that the civil Court has misinterpreted the provisions of Clauses 17(2) and 17(3) and erroneously set aside the award. I hold that the contractor is entitled to claim escalation charges by invoking Clause 17(3) and the arbitrator is perfectly justified in awarding the amount under this head.