STATE OF ORISSA Vs. LARSEN AND TOUBRO LIMITED

JUDGEMENT

(1.) This appeal is directed against the judgment dated 27-7-2004 passed by the learned District Judge, Khurda at Bhubaneswar in Arbitration M.J.C. No. 130 of 2002 rejecting the application filed by the appellants under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter called as the 'Act').

(2.) A contract was executed on 30-8-1992 between the parties in respect of three packages for the work "Strengthening and Widening of Sambalpur-Rourkela Road 0.0 km. To 162.931 km". In view of three separate packages three separate contracts were executed. The present dispute relates to package No. S.3 and value of the said contract is Rs. 49,31,95,155.00. Date of commencement pf the work was 20-10-1992 and the same was to be completed within 48 months from the date of commencement. The agreement contained an Arbitration Clause. Undisputedly though the contract work was to be completed within 48 months, the same was completed after 53 months and extension of time had been granted to the respondent for completion of the work. On 1-6- 1997 the respondent issued notice to the concerned Engineer of the appellants-State raising a dispute on the ground that the appellants did not fulfill their part of obligations arid committed breach of contract by providing defective project contract drawing because of incorrect survey, delay in cutting and removing standing trees as well as acquisition of land, etc. Because of such conduct on the part of the appellants there was delay in cdmpletion of the work and accordingly a claim was raised. The appellants rejected the claim for compensation and processed the final bill. The respondent received the final bill amount under protest and invoked arbitration clause on 3-1- 1998. As per the terms of the Arbitration clause the appellants nominated an Arbitrator whereas the Ministry of Surface Transport (Road Wing), Government of India nominated another person as the Chairman of the Committee of Arbitrators. The respondent filed claim petition on 12 items of claim. The Arbitration Committee after hearing did not award anything in repect of Claim Item No. 12, whereas awarded full amount on Claim Item Nos. 3 and 5. Rest of the claim items were partly allowed and the total award amount is Rs. 5,78,80,530.00 with pendente lite and future interest @ 18% per annum.

(3.) The aforesaid award was challenged by the appellants before the learned District Judge, Khurda at Bhubaneswar by filing an application under Section 34 of the Act basically on two grounds. First ground taken is that at the time of extension of time for completion of work the respondent had undertaken that they shall not claim any damages or compensation for the extended period. The other ground taken by the appellants is that majority of claims are extra items and additional payments beyond the scope of the contract and as such they are hit under Clauses 53.1. 53.2 and 53.3 of the agreement as the claimant-contractor did not give notice to the Engineer of the appellants within 28, days after the event giving rise to the claims.