STATE OF PUNJAB Vs. CHAHAL ENGG AND CO

JUDGEMENT

(1.) THE State has come up in first appeal against the order of the trial Judge rejecting the objections to the award dated 14/08/1987 and making it rule of the Court.

(2.) IN order to resolve the dispute arising in this case, it is necessary to give backdrop of the case. The respondent (hereinafter called 'Contractor') in response to the tender notice submitted its tender which was accepted. Contract agreement dated 19/04/1984 was executed by the parties. Relevant clauses of these documents read thus :- (A)(i) Sealed lump sum tenders based on the tenderer's own design are invited on behalf of the Governor of the State of Punjab for construction of AQUEDUCT across Sirsa Nadi Sutlej Yamuna Link Canal (Punjab). (ii) Tenderers shall quote for the entire work. (iii) Memorandum :- (a) General description Construction of AQUEDUCT across Sirsa Nadi Sutlej Yamuna Link Canal (Punjab) (b) Estimated cost Rs. 5 Crores (c) Earned Money Rs. 5 lakhs (d) Security deposit 10 per cent (e) Percentage, if any, to be deducted from the bills. 5 per cent (f) Time allowed for the work from to commence. 18 calendar months. (Extract from Tender Notice). (B)(i) The lump sum tender shall be inclusive of all expenses for proper and entire completion of the work and shall among other things include all taxes, tolls, octroi, royalties, patent rights etc. The tenderer shall be responsible for furnishing detailed designs and working drawings. Further he shall obtain technical approval of the Chief Engineer for each of the components of the Aqueduct before carrying out the work. The set of drawings accompanying Notice INviting Tender are only tentative, and cannot be quoted as a basis for contractor's bid or any claim for extra over his bid for the complete work. (ii) General INstructions : The tender along with N.I.T. and post-tender correspondence up to date of acceptance together with the letter of acceptance thereof shall constitute a binding contract between the successful tenderer and the department and shall form the foundation for the rights and obligation of both the parties.(Extract from INformation and INstructions for Tenderers). (C)(i) Purpose of Drawings and Specifications and Conformance thereto : The contract drawings read together with the contract specifications are intended to show and explain the manner of executing the work and to indicate the type and class of materials to be used. The works shall be carried out in accordance with the directions of Executive Engineer in accordance with the drawings and specifications which form part of the contract and in accordance with such further drawings, details and instructions as may, from time to time, be given by the Executive Engineer. It shall be the responsibility of the Contractor to promptly bring to the notice of the Executive Engineer any error or discrepancy in the contract documents and obtain his orders thereon. Only stated dimensions are to be taken and not obtained from scaling the drawing. IN case of any discrepancy between the description of items in the schedule of quantities and the specifications, the latter shall prevail, in case any feature of the work is not fully described and set forth in the drawings and specifications, the Contractor shall forthwith apply to the Executive Engineer for further instructions, drawings or specifications. (ii) Modifications : The Executive Engineer may order modifications at any time before the completion of the work. No modification shall be made unless so ordered. For all modifications, the Executive Engineer will issue revised plans, or written instructions or both. Any modification in original specifications, drawings, designs and instructions shall not invalidate the contract and the same shall be carried out by the Contractor on the same conditions in all respects on which he be agreed to do the main work and the same rates as specified in the tender for the main work. (iii) Settlement of Disputes : If the Contractor considers any work demanded of him to be outside the requirements of the contract, or considers any drawings, record or ruling of the Executive Engineer on any matter in connection with or arising out of the contract or the carrying out of work to be unacceptable, he shall promptly ask the Executive Engineer in writing, for written instructions or decision. Thereupon the Executive Engineer shall give his written instructions or decision within a period of thirty days of such request. Upon receipt of the written instructions or decision the Contractor shall promptly proceed without delay to comply with such instructions or decision. If the Executive Engineer fails to give his instructions or decision in writing within a period of thirty days after being requested, or if the Contractor is dissatisfied with the instructions or decision of the Executive Engineer, the Contractor may within thirty days after receiving the instructions or decision appeal to the Superintending Engineer who shall afford an opportunity to the Contractor to be heard and to offer evidence in support of his appeal. This officer shall give a decision within a period of sixty days after the Contractor has given the said evidence in support of his appeal. If the Contractor is dissatisfied with this decision, the Contractor within a period of thirty days from receipt of the decision shall indicate his intention to refer the dispute to arbitration, failing which, the said decision shall be final and conclusive. (iv) Arbitration : All the disputes or differences in respect of which the decision has not been final and conclusive shall be referred for arbitration to a sole arbitrator appointed as follows : Within thirty days of receipt of notice from the Contractor of his intention to refer the dispute to arbitration the Chief Engineer shall send to the Contractor a list of three officers of the rank of Superintending Engineer or higher, who have not been connected with the work under this contract. The Contractor shall within fifteen days of receipt of this List select and communicate to the Chief Engineer the name of one officer from the list who shall then be appointed as the sole arbitrator. If Contractor fails to communicate his selection of name, within the stipulated period, the Chief Engineer shall without delay select one officer from the list and appoint him as the sole arbitrator. If the Chief Engineer fails to send such a list within thirty days, as stipulated, the Contractor shall send a similar list to the Chief Engineer within fifteen days. The Chief Engineer shall then select one officer from the list and appoint him as the sole arbitrator within fifteen days. If the Chief Engineer fails to do so the Contractor shall communicate to the chief Engineer the name of one officer from the list, who shall then be the sole arbitrator. The arbitration shall be conducted in accordance with the provisions of the INdian Arbitration Act, 1940 or any statutory modification thereof. The arbitrator shall determine the amount of costs of arbitration to be awarded to either parties. Performance under the cotract shall continue during the arbitration proceedings and payments due to the Contractor shall not be withheld unless they are the subject matter of the arbitration proceedings. All award shall be in writing in case of awards amounting to Rs.1.00 lakh and above, such awards shall state the reasons for the amount awared. Neither party is entitled to bring a claim to arbitration if the arbitrator has not been appointed before the expiration of thirty days after defect liability period. If the arbitrator so appointed is unable or unwilling to act or resigns his appointment or vacates his office due to any reasons whatsoever, another sole Arbitrator shall be appointed as aforesaid. The arbitrator so shall be deemed to have entered on the reference on the date he issues notice to both the parties fixing the date of first hearing. Arbitrator may, from time to time, with the consent of the parties enhance the time for making and publishing the award. The arbitrator shall give a separate award in respect of each dispute or difference referred to him . The venue of arbitration shall be such place as may be fixed by the arbitrator in his sole discretion. The fees, if any, of the arbitrator shall, if required to be paid before the award is made and published, be paid half and half by each of the parties. The costs of the reference other than arbitration fees shall be settled at the discretion of the arbitrator. The award of the arbitrator shall be final and binding on both the parties. This contract shall be governed by the INdian laws for the time being in force. (Extract from General Conditions of Contract.)

(3.) THE Contractor himself altered the nature of the original Aqueduct which was Hammer Head Type of Structure with long cantilever on either side with Neoprene bearing pads, since with the original pre-liminary designs, he could not ensure fulfilment of the condition laid down by the department while accepting that design. THE arbitrator put the onus for the change in the Aqueduct on the department ignoring the fact that the previous design was only conditionally accepted by the department. After holding. the department responsible for the change in the design of the Aqueduct, he came to the conclusion that the value of the original lump sum contract was fixed for Hammer Head Type of Structure with long cantilever on either side and since the Aqueduct was altered to