PARADEEP PHOSPHATES LIMITED Vs. PHANI BHUSAN KANUNGO

JUDGEMENT

(1.) THIS appeal (M.A. No. 356/2001) under Section 39 of the Indian Arbitration Act, 1940 is directed against the judgment dated 28.3.2001 and decree dated 11.4.2001 passed by the learned Civil Judge (Senior Division), Bhubaneswar in T.S. No. 387 of 1999 making the award of the umpire the rule of the Court. Simultaneously the appellant has filed Civil Revision No. 125 of 2001 against the aforesaid decision of the learned Civil Judge perhaps apprehending that the appeal might not be maintainable. Since both the matters are directed against the self -same decision of the learned Civil Judge, they were heard together and are disposed of by this common order. For the sake of convenience, the parties to the litigation are hereinafter referred as the employer (appellant) and claimant (respondent).

(2.) THE appellant invited tender for construction of work "Asphaltic over -lay on approach road I and II" inside the compound of PPL Township at Paradeep as per the advertisement dated 19.8.1998. Six contractors including the respondent submitted their tenders. The tender of the respondent being lowest was accepted and the work in question was awarded in his favour by letter of intent dated 30.1.1989 (Ext.3). He started work on 13.2.1989 and completed the same on 30.3.1990. The second phase of work of about 0.66 KMs. relating to the left -over work was again awarded to the respondent by separate letter of intent dated 14.8.1990. This second phase of work was based at the repeat order dated 14.8.1990. The second phase of work was started on 13.11.1990 and was completed by the respondent on 15.2.1991. Difference between the parties cropped up in the matter of escalation of price of certain materials, rise in wages paid to the labourers and enlarged and modified scope of work etc. As they could not be amicably settled between them, the appellant appointed Justice V. Gopalaswamy, former Judge of this Court and the claimant appointed N.K. Misra, former Chief Engineer, as arbitrators. The arbitrators after hearing the parties agreed that the respondent is entitled to extra claim made by him in respect of item No. E -4, E -5, E -7, E -8, E -9, and E -10. The respondent had given up his claim in respect of item nos. E -3 and E -6. The learned arbitrators, however, differed in respect of four items, namely, item Nos. E -1, E -2, E -11 and E -12 necessitating appointment of Justice J.M. Mohapatra, a former Judge of this Court, as the umpire. The umpire in his award dated 21.6.1999, inter alia, awarded as follows : Item No. Main Repeat Order E -1 Rs. 3,17,087.67 Rs. 41,292.71 E -2 Rs. 3,01,253.03 Rs. 39,632.14 E -11 Rs. 54,707.19 Rs. 3,20,562.05 E -12 Rs. 2,10,365.20 Rs. 27,676.00 He has also awarded interest at the rate of 18% per annum on the awarded amount. The aforesaid award, as indicated, was sought to be set aside by the appellant but the learned Civil Judge by the impugned order refused to accede to the prayer.

(3.) KEEPING the aforesaid legal position in view, let me proceed to examine the award item wise. Claim item Nos. E -1 and E -2 : As both the claims in respect of the original contract as well as the repeat order are based on the same ground advanced by the respondent, they are dealt with analogously. As regards item No. E -1 the respondent claimed that he should be paid extra for preparation of surface and laying of tack coat in respect of BOQ -2. Similarly in respect of item No. E -2 his claim was that he should be paid extra for preparation of surface and laying of tack -coat in respect of BOQ -4. The umpire after discussing the rival contentions of the parties in paragraph -22 of the award recorded his finding as follows : "From the foregoing discussions, I would hold that all the conditions of the DTCN (Ext.47) would be deemed to have been incorporated in the agreement (Ext.44) and this would mean that the two impugned clauses would also be deemed to have been included in Ext.44. The claimant is, therefore, entitled to separate payments for the extra item E -1 and E -II." The question that arises for consideration is whether this Court can interfere with the aforesaid finding recorded by the umpire. There is no dispute that the letter of intent was issued to the respondent on 30.1.1989. Ext.3 is the letter of intent wherein it was stated as follows : "This is our Letter of Intent subject to signing of contract to award you the work of asphaltic overlay on Approach Road No.I and II as per terms and conditions of the said tender stipulations on your offer no.nil date 26.9.1988 and subsequent discussion dated 4.11.88....." On 21.3.1989 the appellant sent two sets of draft contract for obtaining signature of the respondent in token of acceptance. The respondent on receipt of the same signed the draft contract and sent the same to the appellant in due time. It may be noticed that there was some negotiation between the parties relating to raising of valuation of the contract to Rs. 54,94,380.00 from Rs. 48,05,000.00. In Ext. 11 it was clearly stated that all other terms and conditions as stated in the tender and agreed to between the parties as per the LOI remained unaltered. In letter dated 7.12.1989 (Ext.15) the appellant stated that they were not inclined to incorporate the impugned clause (b) with regard to separate payment for surfacing and for providing tack coat. There is no dispute that the appellant accepted the offer of the respondent given in his tender document (Ext.47) in regard to all the terms and conditions incorporated in Ext.47. Therefore, it goes without saying that separate payment for preparation of surface and tack coat had also been accepted by the appellant. Had the appellant any objection to it, it could have clearly asked for deletion of the impugned two clauses in the contract. The umpire also noticed that in Ext.4 dated 2.3.1989 in which the draft contracts were sent to the respondent, there was no mentioned regarding deletion of the impugned clauses in the contract. Having considered the above, the umpire again recorded a finding which is necessary to be extracted. ".....On a careful perusal of these two pare -award documents, which were called for from the respondent during the hearing of the cases, there is nothing to indicate that the claimant had given up his claim in regard to the impugned items for extra payment son account of providing surface and tack coat." The umpire also noticed that the draft contracts were signed by the respondent in March, 1989 but the appellant took a long time to sign the same which was done in December, 1989. The umpire held that the contract between the parties was concluded on 30.1.1989 on which date the appellant accepted the offer of the respondent by the Letter of Intent. In my opinion, signing of the contract does not alter the terms and conditions mentioned in the Letter of Intent Ext.3. The agreement is a formal deed of contract. Although there has been mention of "subject to signing of the contract", both the parties agreed that Ext. 44 is a formal deed of contract. It is not disputed that the contract comes into being on acceptance of the offer. The Letter of Intent (Ext.3) clearly signifies the assent of the appellant to the offer made by the respondent. The umpire also addressed himself whether the offer of the respondent put -forth in his DTCN (Ext.47) when accepted by the Letter of Intent (Ext.3) concludes the contract between the parties or whether the formation of the contract was deferred till signing of the agreement by both parties. It is relevant to note here that in Ext.3, the Letter of Intent, the appellant had clearly stated that it awarded the work in question as per the terms and conditions of the tender stipulation in the offer dated 26.9.1988, and subsequent discussion dated 4.11.1988. It is true that there was mention of the expression "subject to signing of the contract". But in my opinion, such statement does not change and alter the position indicated in the Letter of Intent (Ext.3). The signing of the agreement between the parties is a formal event which took place at a later stage. To repeat, the Letter of Intent (Ext.3) which was the basis of the contract had accepted the terms and conditions mentioned in the tender Ext.47. In Ext. 2 there is mention of discussion held on 4.11.1988. Those discussions were recorded in writing and were marked as Exts. R -1 and R -2. In neither of the document, there is any mention either expressly or by implication that the respondent had given up the two impugned clauses contained in Ext. 47 with regard to his entitlement to receive payment on extra items. The umpire also took into account the correspondences which rested between parties with regard to the impugned clauses. Both the parties had held discussion on 18.4.1991 and the respondents objections were discussed and a memorandum was prepared (vide Ext.R -41). Ext. 24 is another document of January -February, 1992 wherein the appellant recommended for payment to the respondent a sum of Rs. 7,78,116.10 with regard to nine items of claims made by the respondent which included the first two items (E -1 and E -2).