SHEKHAR CONSTRUCTION PVT LTD Vs. STATE OF RAJASTHAN

JUDGEMENT

(1.) This arbitration application under section 11 of the Arbitration and Conciliation Act, 1996 (in short 'the Act of 1996') has been filed by the Applicant for appointment of an independent Sole Arbitrator for adjudication of the disputes and differences arisen between the parties in respect of the Agreement No.2/2003-2004 containing the arbitration Clause 23, of the works of Construction,earthen dam, spillway, wing walls and head outlet sluice of Garada Irrigation Project.

(2.) The brief facts of the case are that the Applicant is registered as AA Class Contractor. The Non-applicant No.2 isued NIT No.2/2002-03 for execution of "Construction of Earthen Dam, Spillway, Wing Walls and Head Outlet Sluice of Garada Irrigation Project" in which the Applicant submitted both technical and final bids. After evaluation of the tenders received, the tender of the applicant, being the lowest, was accepted. The Non-applicant No.2 issued work order dated 27.9.2003. The estimated cost of the work was Rs.370657771/- and the stipulated dates of commencement and completion were 6.10.2003 and 5.10.2008 respectively. Subsequently,Agreement No. 2/2003-04 (Anx.1) was executed. The work was executed as per specifications and completed on 25.3.2010. The rates of G-Schedule were based on the BSR of Chief Engineer, Irrigation Department, Rajasthan, Jaipur effective from May, 2000 where cost of earth was not included in the rates of earth work. The earth works of embankment, road work and other allied works were to be executed by obtaining earth from the Borrow Area specified by the department. Schedule A-4 of construction of materials in the agreement specified that charges on account of royalty is not payable on the material supplied by the Department. It is further specified under the heading SOIL from BORROW AREA that soil required for construction work of dam shall be obtained from the designated Borrow Area Plan. AG Audit has raised the issue of royalty for the earth used in filling of embankment of Dam and Banas sand used for construction works without STP and imposed penalty @ 10 times on the cost of 'royalty amounting to Rs.3,07,05,588/- and Rs.1,13,83,208/- for earth royalty charges and Banas River's Sand royalty charges respectively totalling Rs.4,20,88,796/-.After discussions between the Mining and Irrigation Department, orders dated 8.10.2007 and 11.12.2007 were issued but the Non-applicant No.2 has interpreted order dated 11.12.2007 as prospective. The Nonapplicants have recovered Rs.49,04,187/- from the running bills of the Applicant and further intent to deduct Rs.4,20,88,796/-.

(3.) The Applicant invoked arbitration agreement contained in Clause 23 by submitting application and Cheque which was received on 15.12.2008 (Anx.2) for referring the matter to the Empowered Standing Committee within a period of thirty days. The case of the Applicant was not referred to the Empowered Standing Committee within the stipulated period of thirty days. The Non-applicant No.2 sent letter dated 1.4.2010 (Anx.3) mentioning therein that the Chief Engineer WR Zone, Kota vide No.2565 dated 23.2.2010 referred the claim to the Committee and further denied the claim of the Applicant departmentally on merit and therefore, this arbitration application has been filed.