KARNAIL SINGH Vs. PUNJAB MANDI BOARD

JUDGEMENT

(1.) This is an appeal that has been filed under Section 37 of the Arbitration and Conciliation Act , 1996 (for short 'the Act') seeking to challenge the order passed by the Additional District Judge, Chandigarh, dismissing the objections of the appellant filed against the award dated 18.1.2011 passed by the Arbitrator.

(2.) In brief, a few facts that need to be noticed for proper adjudication of the case, are that construction work of Microsoft Academy at Senior Secondary School, Phase 3B-1, S.A.S. Nagar,Mohali, was allotted to the appellant by respondent No.1 on 12.7.2007. However, an agreement was entered regarding the construction work on subsequent date i.e. 5.6.2008. The work was to be completed within a period of six months from the date of allotment i.e. 12.7.2007. Pursuant to the said agreement, the appellant started construction on 17.10.2007 and completed construction work upto the plinth level. However, the work was stopped on the asking of the Director General School Education as the drawings of the building to be constructed were to be revised. On account of the fact that the construction work was not completed within the specified time, the Executive Engineer by order dated 9.5.2008 imposed penalty under Clause 2 of the Agreement. The appellant challenged the action of the Executive Engineer before the Superintendent of Engineer, who vide his order dated 11.12.2008 held that the penalty cannot be imposed upon the appellant as the delay in completion of work could not be attributed to the contractor, appellant herein. Respondent No.1 herein allotted the work to some other contractor and forcibly took the possession of the assets of the appellant from the site of construction. On account of this fact, the appellant suffered huge losses and consequently raised a claim before respondent No.1 for appointment of an Arbitrator. On appointment of an Arbitrator, the appellant raised six claims, as would be reflected in the award so passed. The Arbitrator by his award dated 18.1.2011 rejected the claims of the appellant, which was challenged by way of objection petition under Section 34 of the Act before the Additional District Judge, Chandigarh, who too dismissed the same. Aggrieved against the dismissal of the claim petition and the objection petition, the instant appeal has been filed.

(3.) Mr. Anupam Singla, learned counsel appearing on behalf of the appellant, would contend that after allotting the work to the appellant, as per the allotment letter dated 12.7.2007, the appellant could not complete the work on account of the fact that the land that was provided was not free from encumbrances since there were trees and sewerage line passing through the area earmarked for construction of building. Moreover, it is an admitted fact that the appellant herein was asked to stop work since the Director General Education wanted to make changes in the building plan and make the building 4-5 storey, whereas the work that was allotted to the appellant was for construction of a two storey building. It is argued that the appellant had addressed a letter dated 10.1.2008 to respondent No.1 herein, which is available on the record as Annexure Ex. P5, in which it has been clearly been requested for closure of the agreement and to make the payment against the work done and extra financial burden being borne by the appellant on account of idle period since the work had been stopped on account of the revision in the building plan being made. It is also submitted that another letter dated 10.1.2008 had been written by the appellant, which is available on the record as Ex. P6, wherein the appellant had mentioned that construction work had been stopped as per the order dated 22.11.2007 passed by the Director General, Sarv Shiksha Abhiyan. In the letter addressed, it was stated that the time to complete the construction was going to expire on 12.1.2008, but no action had been taken on his previous letter. It was also requested that in case construction was to commence, he be given further time to complete the construction and if not the payment be made of the work already done by him. It was also requested that that the financial loss suffered by the appellant be assessed and paid to him. It is also argued that the Arbitrator has acted capriciously in ignoring the said letters. It is also argued that the Arbitrator has illegally ignored claim No.1 of the appellant asking for compensation for breach of contract of the agreement by taking over the work site without terminating the agreement. It is argued that the letter dated 10.1.2008 Exs. P5 and P6 were never acceded to and without terminating the agreement work could not have been allotted to a third party. It is argued that the Arbitrator instead of deciding whether the appellant would be entitled to the claim has held that the penalty imposed by the Executive Engineer for non-completion of work seems to be on the higher side and has reduced the same, which was not the issue to be decided by him. The imposition of penalty by order dated 9.5.2008 has already been settled by the Superintendent of Engineer, who, vide his order dated 11.12.2008, had opined that the penalty was not sustainable and, thus, argued that the award of the Arbitrator ought to be set aside.