High Court · 2007

IN THE HIGH COURT OF JUDICATURE AT MADRASDated : 07.12.2007Coram :THE HONOURABLE MR.JUSTICE K.RAVIRAJA PANDIANandTHE HONOURABLE MRS.JUSTICE CHITRA VENKATARAMANOriginal Side Appeals Nos.256 and 257 of 2003The Chief Engineer,National Highways,Madras 600 006.Appellant in both the appealsv.1. M/s.Gammons India Ltd., representedby Power of Attorney HolderMr.Swapan Kumar Ghosh, Gammon House, Veek Savarkar Marg, Prabha Devi, Bombay 400 025. ..1st Respondent in OSA.256/03 Gammons India Ltd., Gammon House, Veek Savarkar Marg, Prabha Devi, Bombay 400 025. ..1st Respondent in OSA.257/032. T.P.Ekambaram, Sole Arbitrator, Chief Engineer (Retired) Highways, Rural Works, Chepauk, Chennai 5. 2nd Respondents in both the appealsOriginal Side Appeals under Order 36 Rule 1 of the Original SideRules against the order of the learned single Judge dated 18.04.2001passed in Appln.No.3583/01 and O.Ps. Nos.189 of 1995 and in O.P.No.184of 1996.For the Appellant:Mr.R.Subbiah, Special Government PleaderFor Respondents:Mr.R.Krishnasamy, Senior Counsel, for Mr.R.Venkataraman https://hcservices.ecourts.gov.in/hcservices/ JUDGMENTK. RAVIRAJA PANDIAN, J.O.S.A No.256 of 2003 is filed against the order made in O.P. No.189of 1995 and in application No.3583 of 2001. O.S.A. No.257 of 2003 isfiled against the order made in O.P. No.184 of 1996. The appellant inboth the appeals is the Chief Engineer of National Highways, Chennai.He assails the common order of the learned single Judge of this Courtdated 18.04.2001 made in the above referred to Original Petitionswhereby the learned single Judge dismissed the petition filed by theappellant, i.e., (O.P.No.184 of 1996) filed seeking for the relief ofsetting aside the award dated 30.01.1995 passed by the arbitrator andallowed the O.P. No.189 of 1995 which was filed by the first respondentherein seeking for the relief of passing a decree in terms of the award.2. Mr.Subbiah, learned Special Government Pleader appearing for theappellant contended that though various claims under claims Nos.2, 5(b),6 (A), (B), (C) and 9 (B) were put in issue before the learned singleJudge, in these appeals, claim No.6 (A), (B), and (C) under whichescalation sought for by the first respondent, granted by the arbitratorand confirmed by the learned single Judge is alone put in issue. Hecontended that though the period for completion of the work has alreadybeen over, at the instance of the first respondent herein, the appellantextended the time upto 30.09.1988 for completion of the work with therider that the first respondent could claim escalation upto 20.04.1988only. The said extension has been accepted by the first respondentwithout any demur or protest. Hence, the first respondent cannot claimescalation for the period subsequent to 20.04.1988. The extensiongranted by the appellant could be regarded as terms of the contract. Ifthat be so, as per the terms of the contract, the appellant could claimescalation only upto 20.04.1988 and for the subsequent period the claimcannot be made and the escalation granted by the arbitrator for thesubsequent period from 21.04.1988 to 30.09.1988 is beyond the scope ofarbitration agreement and the grant of escalation by the arbitratorwould amount to misconduct on his part in travelling beyond theagreement. He further contended that it is the discretion of theappellant that while granting the period of extension to restrict theright of the respondent to claim for escalation by fixing the period.Having accepted the extension of time with the restriction of period forclaim of escalation upto 20.04.1988, the escalation claimed by the firstrespondent, granted by the arbitrator and affirmed by the learned singleJudge has to be set aside.3. On the contrary, Mr.Krishnasamy, learned senior counselappearing for the first respondent contended that the terms of thecontract provide for various clauses. The clause pertaining toAdjustment of price variation in materials P.O.L. and labour and wagesprovided that the operative period for this contract shall end on thelast date of completion of period as per clause 1.2 of the tenderdocument or with the last date of the valid period of time extensiongranted by the accepting authorities. The period of extension shall beconsidered in continuation of the original operative period. The saidclause further provided for extension of time granted for any other https://hcservices.ecourts.gov.in/hcservices/ reason whatsoever and other than those specified in the firstrespondent's letters dated 26.11.1982 and 21.02.1983, no adjustment inthe contract price shall be made on account of variation in the price ofmaterials, P.O.L., and labour wages. The letter dated 26.11.1982referred to in the aforesaid clause was the letter of the firstrespondent, wherein under clause A-14 escalation was sought for. The relevant portion read as follows :Clause A.14 Escalation The formula evolved at All India level as suggested by theMinistry of Shipping & Transport (copy enclosed) is acceptable inthis instance subject to the following modifications :1. The operative date shall be the date of initial submission oftender.2. The operative period shall be the time of completion of thework including extension(s) granted due to reasons beyond ourcontrol.4. Thus, the appellant, having accepted in their agreement foradjustment of price variation by referring the letter of the firstrespondent dated 26.11.1982, now cannot wriggle out and contend that theescalation granted is not in accordance with the terms of the contract.The said contention is nothing, but misconstruction of the terms ofcontract. The arbitrator as well as the learned single Judge rightlyrejected the contention which requires no interference of this Court.5. The minimum facts of the case required to be stated for thedisposal of the above appeals proceed as follows :The first respondent and the appellant entered into an agreementdated 15.12.1984 in respect of completing the balance work of a highlevel bridge across Pamban Strait near Rameswaram island in in NationalHighways No.49 in Madurai-Dhanuskodi road for a total value ofRs.10,44,42,000/-. The period of completion of work originally fixedwas for 36 calendar months, i.e., upto 28.02.1987 but the same wasextended from time to time. The work was completed in all aspects andpossession was handed over to the appellant on 30.09.1988. Therespondent sought for certain claims which has been disputed by theappellant. Hence, the matter, as per the arbitration clause containedin the agreement, was referred to the arbitrator.6. Before the arbitrator, the first respondent contractor claimed14 claims. The arbitrator passed an award in respect of claims 2, 3, 5,6 and rejected rest of the claims. In respect of the above said fouritems, the arbitrator awarded a sum of Rs.74,87,913/-. Aggrieved by thesaid award, as aforesaid, the appellant filed O.P. No.184 of 1996 forsetting aside the award. The first respondent filed O.P. No.189 of 1995to pass a decree in terms of the award. The learned single Judgeconsidered the arguments of either parties with reference to each of theclaims and sustained all the four claims and dismissed O.P. No.184 of1996 filed for setting aside the award and allowed O.P. No.189 of 1995thereby granting the decree in terms of the award.7. Heard the learned counsel on either side and perused thematerials available on record. https://hcservices.ecourts.gov.in/hcservices/

8. As stated in the contention of the learned Special GovernmentPleader, the one and only issue disputed before this Court is award ofclaim No.6. Claim No.6 is with regard to payment due on account of (A)Escalation on the original contract value – Rs.68,26,916/- (B)escalation on extra items of work – Rs.4,28,666/- (C) Refund ofdeduction from work bills by way of forfeiture for delay in execution ofwork – Rs.1,00,000/-. 9. It is an admitted case of either side that though originally theperiod of completion of work was 36 calendar months upto 28.02.1987, theperiod of completion of the work was extended upto 30.09.1988. There isno dispute in it. However, the contention of the learned GovernmentPleader that though the period has been extended upto 30.09.1988, in theextension order dated 26.08.1988 itself it has been categorically statedthat the respondent was granted claim of escalation only upto20.04.1988. Hence, the claim made by the respondent for the subsequentperiod from 21.04.1988 to 30.08.1988 cannot be granted, as is againstthe terms of the agreement. The forfeiture of Rs.1,00,000/- from thebill amount for the belated completion of work is also in accordancewith the terms of the contract. The order of the arbitrator directingrefund of the amount is against the concluded contract.10. As per the terms contained in the agreement, the operativeperiod shall end on the last date of completion of the period, i.e., on28.02.1987 or the last date of the valid period of time extensiongranted by the accepting authority. It is also provided that the periodof extension shall be considered in continuation of the originaloperative period. So, the extended period shall be regarded as periodfixed for completion of the work as per the original agreement. If thatbe so, the respondent contractor is entitled to claim the escalationtill the expiry of the extended period. In addition to that theagreement provided that for the extension of time granted for any otherreason whatsoever other than those provided in the Gammon India Limitedletters No.P.-6139 E dated 26.11.1982 and Tm.G 228 dated 21.02.1983 noadjustment in the contract price shall be made on account of variationin the price of materials, P.O.L., and labour wages. Thus, for thereason stated in the first respondent's letter dated 26.11.1982, theappellant agreed for escalation. In the letter of the first respondentdated 26.11.1982 clause A-14 provided for escalation for the period ofdelay over which the respondent/contracted had no control. Then, theone and the only point to be considered is as to whether the extensionof period of escalation sought for was reasons beyond the respondent-contractor.11. The arbitrator recorded a finding that there was delay of twoand half months in the approval of the designs by the Railwayauthorities for the railway span. As getting approval of the designsfrom Railway authorities could be done only by the appellant, the delayon account of this reason could not be put against the first respondentcontractor as he had no control over getting the designs approved. Thusholding, the arbitrator has come to the conclusion that the delay of 2 ½months in obtaining the designs approved from the railway authoritieswas beyond the control of the first respondent/contractor and for thatperiod he was entitled to escalation. https://hcservices.ecourts.gov.in/hcservices/

12. The arbitrator, on the basis of the materials, was of the viewthat there was delay of three months due to replacement of bearings inspan Nos.1 to 14. The replacement of the bearings was carried out bythe third party agency. The respondent could repossess the area for thepurpose of construction work only after the completion of the work ofreplacement of bearings 1 to 14. In that process, there was a delay ofthree months. This delay could not be attributable to the respondentcontractor and could only be regarded as 'beyond his control', which hasbeen accepted for escalation under the terms of the agreement. Thus,the respondent was entitled to have 5½ months (2½ and 3) for the purposeof claiming escalation. On that basis the claim made by the firstrespondent was granted. 13. The learned single Judge, in his order in paragraph 12, hassummarized that for a period of five months and ten days, the appellanthas refused escalation cost. The appellant has also imposed a fine ofRs.1,00,000/- for not finishing the work within the time frame as perthe terms of the contract. The learned single Judge has concurred withthe reasoning of the arbitrator as he was also of the view that thedelay of 5½ months was beyond the control of the respondent and as perthe terms of the agreement the contractor was entitled to escalation forthat period. 14. The contention of the learned Special Government Pleader thatthe extension granted upto 30.09.1988 with the restricting the firstrespondent's claim for escalation upto 20.04.1988 could be treated asterms of the contract and as such, the claim for the subsequent periodcannot be made, in our view, has to be rejected in view of theadjustment of price variation clause contained in the agreement whichis, already referred above, to the effect that the extension periodwould tantamount to be the end of the operative period and theescalation could be granted for the delay caused by the reason beyondthe control of the contractor. 15. Having regard to the terms of the agreement, which provides forextension of time and also escalation till the extended period byregarding the extended period as the original contract period, thecontention of the learned Special Government Pleader as to therestriction of the escalation period upto 20.04.1988 by the unilateralletter, cannot prevail over the terms of the agreement and thus cannotbe a reason to non suit the respondent-claimant for claiming theescalation charges. The learned Special Government Pleader cited thedecision of the Supreme Court in the case of Food Corporation of Indiav. Chandu Construction, (2007) 4 MLJ 73 (SC) to contend that the Courtcan set aside the award of the arbitrator if the award was contrary tothe unambiguous terms of the contract or where the clear stipulation inthe contract are ignored or if the arbitrator misdirected ormisconducted himself. The facts narrated above speak for themselves.The unambiguous terms of the contract in respect of the adjustment ofprice variation in material P.O.L., and labour wages with whichreference has been made in this judgment on more than two occasions, therespondent contractor is entitled to escalation till the extended https://hcservices.ecourts.gov.in/hcservices/ period. When such unambiguous terms are available in the contract, thejudgment rather strengthens the case of the respondent only and it doesnot advance the case of the appellant in any way.16. In the absence of any contention that the arbitrator hasmisdirected himself or misconducted himself or misconducted theproceedings, the Court cannot set aside the award of the arbitratorinvoking sections 30 or 30(a) of the Arbitration Act of 1940. Thejurisdiction of the Court under section 30 of the 1940 Act to set asidethe award was limited to the grounds stated in the section vide Union ofIndia v. Jain Associates, (1994) 4 SCC 665. The learned SpecialGovernment Pleader tried to persuade the Court by repeating the argumentthat the arbitrator ignored the specific terms of the letter ofextending the period of completion upto 30.09.1988, which would amountto travelling beyond the terms of the contract. We have alreadyrejected the contention by giving reasons with reference to theadjustment of price variation clause. It is also trite to say thatwhen there is an express term in the agreement, the Court cannot find onconstruction of the contract an implied term inconsistent with suchexpress terms. On the basis of the adjustment of price variation clausethe contention of the learned Special Government Pleader to regard theletter restricting the escalation dated 20.04.1988 as implied terms ofthe contract cannot be accepted. 17. For the reasons stated above, the appeals are dismissed. Nocosts.mfSd/-Asst.Registrar/true copy/ Sub Asst.RegistrarTo,1. The Sub Asst.Registrar, Original Side, High Court, Madras.2. T.P.Ekambaram, Sole Arbitrator, Chief Engineer (Retired) Highways, Rural Works, Chepauk, Chennai 5. +4 ccs to M/s.R.Venkataraman, Advocate Sr.Nos.72343(2 copies)& 72344(2 copies)AKR(CO)DCP/17.12O.S.As.Nos.256 & 257 of 2003