Union of India through Garrison Engineer v. M/s Pyare Lal and sons & Anr.

learned trial Court 20.10.1997 making Award dated 29.12.1993 as rule of court. In appeal, the order passed by the learned trial Court was modified C.R.No.1602 of 1999 2 and the Award in respect of Claim Nos.1, 3 & 6 were set aside and the Award in respect of remaining Claims was made rule of the Court. The Agency is aggrieved against the Award being made rule of the court in respect of Claim Nos.2 & 5, whereas the Contractor is aggrieved against the Award being set aside in respect of Claim Nos.1, 3 &

The Agency invited tenders for special repairs to O.T.M. accommodation at Chandimandir Cantonment on 17.01.1989. The tender submitted by the Contractor was accepted. The total amount involved in the contract was ` 4,86,684/-. The work was to be completed within six months from the date of commencement of the work. The work commenced on

07.02.1989, but could not be completed on or before 06.09.1989. The period was extended upto 12.03.1990, but the work could not be completed even upto the extended date. The Agency cancelled the contract on

22.05.1990. The remaining work was got executed through some other Contractor. Since the dispute arose between the parties, Shri P.D.Sharma, Superintending Engineer, was appointed as the sole Arbitrator in view of the arbitration clause in the agreement between the parties. The Arbitrator announced his award and awarded the following amount against each Claim: Claim Amount Description of Claim Amount Number 1 2 ` 50,000/- Claimed `1,00,000/- For damages suffered on account of illegal cancellation of contract when the work was in progress For loss suffered on account of non-handling over the dismantled and demolished Materials of building No.T/3776 & Tent Plinths Awarded ` 25,000/- 10,000/- C.R.No.1602 of 1999 3 ` 70,674.18 NIL ` 85,000/- ` 2,00,000/- For balance payment for work done including escalation in wages and cost of materials For work done in buildings not forming part of the contract agreement ` 25,000/- ` 1,00,000/- For reimbursement of damages on account of breach of contract by the Union of India including illegal cancellation, delay in issue of schedule ‘B’ Stores, delay in handing over sites, non-payment for escalation in cost, delay and restrictions in payment of running bills, non-supply of water due to scarcity, non-ordering provisional quantities, delay in measurement underpayments etc. resulting in prolongation of contract period.

For on account of loss suffered due to non-payment and delay of running and final bill For payment of materials and tools and plants. For interest on above amounts unduly withheld @ 18% p.a. For cost of reference to arbitration NIL ` 20,000/- ` 50,000/- ` 75,000/- resulting NIL 12% ` 50,000/- 3 4 5 6 7 8 9 Learned first Appellate Court found that the claim awarded by the Arbitrator under Claim Nos.1, 3 & 6 are, in fact, the claims awarded in the Claim No.5 and, thus, the Arbitrator has no power to allow duplicate claims on the same grounds and reasoning. Learned first Appellate Court also found that the Contractor was paid ` 3,60,089/- for the work done by it, whereas on completion of total work, the Contractor would have got ` 4,86,684/- in lump sum. But the Arbitrator has awarded him ` 2,40,674.18, which is more than the contract amount. Thus, the appeal filed by the Agency was accepted partly.

Learned counsel for the Contractor has vehemently argued that the finding recorded by the learned first Appellate Court that the Contract has claimed Claims on the same account under different heads is incorrect. C.R.No.1602 of 1999 4 It is contended that each of the Claim of the Contractor is separate and distinct and that finding recorded by the learned first Appellate Court is incorrect. On behalf of the Agency, Ms. Shahi argued that the primary claim of the Contractor is on account of delay in handing over the sites, delay in issue of Schedule ‘B’ or for delay in completion of the contract. It is contended that for such delay the Contractor is not entitled to claim any amount in terms of the specific Clause-11 of the General Conditions of the Contract. Reliance is placed upon a judgment of Hon’ble Supreme Court reported as Ramnath International Construction Pvt. Ltd. Vs. Union of India and another AIR 2007 (SC) 509 and on an order passed by this Court in C.R.No.2796 of 2000 titled “M/s Manohar Lal & Sons Vs.

Union of India and others” decided on 03.08.2010. Before preceding further, the relevant clauses of Clause-11 of the Agreement are to be extracted. The said clause reads as under : “11. Time, Delay and Extension – (A) Time is essence of the contract and is specified in the contract documents or in each individual works order. As soon as possible after contract is let or any substantial Works Order is placed and before work under it is begun, the G.E. and the contract shall agrees upon a Time and Progress Chart. The Chart shall be prepared in direct relation to the time stated in the contract documents or the Works Order for completion of the individual items thereof and / or the contract or Works Order as a whole. It shall indicate the forecast of the dates for commencement and completion of the various trade processes or sections of the work, and shall be amended as may be required by agreement between the G.E. and the contract within the limitation of time imposed in the contract documents or Works Order.

If the Works be delayed : C.R.No.1602 of 1999 5 i) ii) iii) iv) by force majeure, or by reason of abnormally bad weather, or by reasons of serious loss or damage by fire or; by reason of civil commotion, local combination of workmen, strike or lockout, affecting any of the trade employed on the work, or v) by reason of delay on part of nominated sub contractors, or nominated suppliers which the contractor has in the opinion of G.E. taken all practicable steps to avoid, or reduce, or, vi) by reason of delay on the part of contractors or tradesmen engaged by Government in executing works not forming part of the contract, or vii) by reason of any other cause which in the absolute discretion of the Accepting Officer is beyond the contractor’s control; then in any such case, the officer hereinafter mentioned may make fair and reasonable extension in the completion dates of individual items or groups of items of Works for which separate periods of completion are mentioned in the contract documents or Works Order, as applicable.

(B) (a) If the works be delayed : by reason of non availability of Government stores shown in Schedule ‘B’ or (b) reason of non availability or breakdown of Govt. Tools and Plant listed in Schedule ‘C’ Then, in any such case notwithstanding the provisions hereinbefore contained, the G.E. may in his discretion grant such extension of time as may appear reasonable to him, and the contractor shall be bound to complete the Works within such extended time. In the event of the contractor not agreeing to the extension granted by the Garrison Engineer, the matter shall be referred to the Accepting Officer (or C.W.E. in case of contract accepted by Garrison Engineer) whose decision shall be final and binding. C.R.No.1602 of 1999 6 (C) No claim in respect of compensation or otherwise, howsoever, arising, as a result of extensions granted under conditions (A) and (B) above shall be admitted.” A perusal of the brief description of the Claims reproduced above would show that Claim No.3 is for balance payment for work done including escalation in wages and cost of materials.

Similarly, Claim No.5 is in respect of reimbursement of damages on account of breach of contract including illegal cancellation, delay in issue of schedule ‘B’ Stores, delay in handing over sites, non-payment for escalation in cost, delay and restrictions in payment of running bills, non-supply of water due to scarcity, non-ordering provisional quantities, delay in measurement of work resulting in underpayments etc. Claim No.6 is again on account of loss suffered due to non-payment and delay of running and final bill. Therefore, Claim Nos.3, 5 & 6 are on account of delay in issuances of schedule ‘B’ stores, handing over sites, escalation in wages and cost of materials on account of delay or loss suffered on account of non-payment of escalation in cost and delay and restrictions in payment of running bills. Clause 11(c) of the Contract agreement prohibits compensation or otherwise as a result of extension granted under clauses (a) and (b) of Clause 11 of the Contract.

A perusal of the statement of claim further shows that the Contractor was granted extension in completion of project. Once, the Contractor has been granted extension in completion of project, therefore, by virtue of Clause 11 (c) of the Contract Agreement, the Contractor cannot claim compensation for delay in completion of the work. Not only the Contractor has claimed the amount on account of delay under Claim Nos.3, 5 & 6. Though the Contractor has claimed balance payment for the work done including escalation of wages under Claim No.3, but since the Arbitrator has given C.R.No.1602 of 1999 7 consolidated award under Claim No.3, it is impossible to determine the amount awarded to the Contractor for the balance work or for escalation of wages. Therefore, being the consolidated amount the entire claim is liable to be set aside. Similarly, under Claim No.5, the Contractor has claimed reimbursement of damages on account of breach of contract and delay of schedule ‘B’ etc.

Even the amount determined under Claim No.5 is not determinable as to how much amount is towards breach of contract and how much amount is towards delay in issuance of schedule ‘B’ stores. Therefore, the entire claim is liable to be set aside. The learned first Appellate Court has set aside Claim Nos.3 & 6 alone being duplicate claims, but in fact Claim No.3, 5 & 6 all relate to delay in completion of the work and, thus, compensation is not payable under any of these heads. This is the view taken by this Court in M/s Manohar Lal’s case (supra) relying upon the judgment referred to by the learned counsel for the Agency, wherein it was held to the following effect : “However, in the present case, the Arbitrator has given Award claim wise. Claim No.11 as reproduced above primarily falls within the scope of Clause (B) or Clause (A)(vii) of condition No.11 of the contract agreement. Claim No.11 is specifically in respect of compensation on account of delay in handing over site and other ancillary matter.

Such delay in handing over site falls within clause 11(C) of the contract which contemplates that no compensation shall be admissible to the contractor. Clause (C) of the agreement is specific and is to the effect that no claim in respect of compensation or otherwise arising as a result of extensions granted under conditions (A) and (B) shall be admitted. It is the terms of the agreement which has to be kept in view while considering the claim of the contractor. Since the contract agreement specifically prohibit compensation on account of delay falling in clauses (A) and (B) of clause 11 of the agreement, therefore, the petitioner is C.R.No.1602 of 1999 8 not entitled to compensation on account of delay in completion of the work.” The argument of the learned counsel for the Contractor that such amount is not claimed in none of the other claims, therefore, the reasoning given by the first Appellate Court that the Contractor has claimed same amount under various claims is not sustainable.

Claim No.1 is for damages on account of illegal cancellation of contract when the work was in progress. I am of the opinion that the finding recorded by the learned first Appellate Court that amount claimed under Claim No.1 is also amount claimed under different heads, is not sustainable. The Contractor has not claimed damages on account of illegal cancellation of contract under any other head. In view of the said fact, the order passed by the learned first Appellate Court not making the Award as rule of court in respect of Claim No.1 is not sustainable. Therefore, both the revisions are partly accepted. Award of the Arbitrator in respect of Claim Nos.3, 5 & 6 is set aside, whereas the Award dated 29.12.1993 is ordered to be made rule of court in respect of Claim Nos.1, 2 and 8 only. The Contractor shall be entitled to interest at the rate of 12% from the date of decree till realization as well. With the said observations, both the revision petitions stands disposed of.

26.10.2010 Vimal (HEMANT GUPTA) JUDGE