UNION OF INDIA Vs. SUPRIYA KUMAR SAHA

JUDGEMENT

(1.) The petitioner Union of India filed the application under Section 34 of the Arbitration and Conciliation Act through the General Manager, Eastern Railway under the Ministry of Railways thereby questioning the award passed by the learned Arbitrator on 15th June, 2007. The petitioner issued the open tender in the month of May, 1996 being Tender No. 8/96-97. In response to that open Tender the respondent submitted his quotation in the prescribed form sold by the Railway Administration on 23rd May, 1996. The value of the said Tender was Rs.1 crore according to the notice of invitation of Tender 8/96-97. After some negotiations took place by and between the parties the offer of the respondent was accepted for a sum of Rs.84,90,009.20P. The acceptance of said offer was communicated by a letter bearing No. 222-S/I/W-II dated 14th May, 1997. Thereafter a formal agreement in writing was signed by the respondent on 22nd August, 1997 and was issued on 9th September, 1997 being No. 146/T/I was entered into by and between the parties. The Railway Administration duly employed the respondent for construction of additional platform with provision of 24 coaches including all ancillary works at Sealdah at the rate of and on the said terms and conditions contained in the said agreement. For the purpose of execution of the said works the respondent employed various skilled and unskilled men and labour force and arranged requisite machineries and equipments after receiving the letter of acceptance dated 14th May, 1997.

(2.) There were some reciprocal obligation i.e. to hand over the site free from all encumbrances, site plan and full drawing and necessary materials, etc., to give timely decision and render necessary assistance as and when required, to maintain law and order problems and to ensure of every payment of running account bills in time by taking proper measurement. The period of completion of work was 15 months. It was alleged that due to latches on the part of the Railways authorities the work could not be completed within 15 months and the same was prolonged for another seven and half months. The respondent issued letters regarding the reasons for non-completion of the aforesaid work within the stipulated period and letters were duly received by the Railway Administration. In the aforesaid letter the respondent explained why the work was delayed and could not be completed and also demanded expenses, loss of profit, extra expenses and other miscellaneous expenses which are incurred by the claimant due to default and/or latches from the part of the petitioners. The respondent also issued two letters dated 15th March, 1999 and 28th April, 1999 for price escalation. Although, a letter was issued by the petitioner on 17th June, 1999 requesting the respondent to be present at the site to witness the measurement for finalisation of bills, the respondent attending the site for witnessing the measurement did not find anyone on behalf of the petitioners at the site and the respondent wrote a letter to the official of the Railway Administration on 2nd July, 1999 which was duly received. Subsequently, several representations were made by the respondent to the Railway Administration for finalisation of the bills and also requested to give time for completion of the balance agreemental work. But no steps were taken by the respondent. By a letter dated 17th August, 2000 the Railway Administration communicated the respondent that the contract of the above work has been closed, duly approved by the competent authority without showing any reason and/or cause thereof. The balance agreemental work was assigned to the other contractor without intimating respondent. Which according to the respondent is contrary and arbitrary to the general principles of law as well as violating the principle of Indian Contract Act, 1872. It was claimed that within the extended period i.e. 28th January, 1999 the respondent completed his part of work and also extra work and new items within full and final satisfaction of the Railways. It is alleged that after completion of the aforesaid agreemental works and extra works and new items about two and half years passed but the Railway Administration neither released the balance principal amount of Rs.3 lakhs along with 2 lakhs for new items and extra work nor released the security deposit nor settled the loss and damages including price escalation of the respondent. The respondent raised a dispute/claim for a sum of Rs.69,32,887 along with interest up to 20th October, 2001. The demand raised in the letter dated 22nd October, 2001, wherein the respondent demanded a settlement of the said disputes and differences in terms of the Clause 62 of the general condition forming part of the contract and in default refer the same before the arbitration in terms of the arbitration agreement contained in the aforesaid Clause 62 of the general condition of the contract.

(3.) Even in spite of receipt of such letter for more than a month, the petitioners did not appoint any Arbitrator nor they could take any step to appoint any Arbitrator in accordance with the aforesaid arbitration agreement. Since the Railway Administration fail to appoint Arbitrator as per written request made on 22nd October, 2001, the respondent being dissatisfied with the aforesaid conduct on the part of the petitioner, filed an application under Section 11 of the Arbitration and Conciliation Act, 1996 before this Honble High Court on 8th December, 2001 being A.P. No. 302 of 2001. By and under order dated 14th August, 2001, the Honble Mr. Ashok Kumar Mathur the then Chief Justice passed an order appointing the learned Arbitrator who has passed the impugned award which is under challenged in the instant petition. Mr. P. S. Basu, learned Counsel appearing for the petitioner submitted that according to the contract, the completion period was to expire on 13th August, 1998. Since the respondent could not complete the work within the original contractual period, the time to complete the said work under the contract was extended from time to time and upto 31st March, 1999. Yet the respondent could not complete the work. Mr. Basu, submitted that the construction of additional platform as per the contract was very urgently required in order to meet the demand and to cater to the adequate train services for the passengers. It was submitted that in spite of requests and reminders made both in writing and also verbal the respondent could not make any progress of the work even within the extended period and upto the date of the last extension till 31st March, 1999.