M/s Manohar Lal & Sons v. Union of India & Ors.

First Appellate Court whereby an Award dated 30.12.1990 in respect of Claim No. 11 awarding a sum of Rs.3,00,000/- was set aside as the said claim was found to be beyond the terms of the agreement. The petitioner herein was awarded contract for provision of external Electrical / Mechanical services at Chandigarh. The date of commencement of the contract was fixed as 26.12.1984 and completion as 25.4.1985. There was delay in handing over the site to the petitioner and the petitioner after completion of work raised a dispute. Such dispute was referred to the sole arbitrator. The said arbitrator has given his award 30.12.1990 awarding, inter alia, a sum of Rs.3,00,000/- under claim No. 11. The claim reads as under:- Civil Revision No. 2796 of 2000 2 On account of reimbursement of damages suffered on account of breach of contract by Deptt including later handing over of site, issue of Schedule 'B', stores, change in site, delay / non payment of RARs, not giving artificial load for testing, abnormal delay in finalisation of Dds and rates, refusal to issue completion on physical completion and ordering retesting of D.G. Sets, repeatedly resulting in prolongation of contract period. Rs.3,00,000/- An application filed by the petitioner for making the said Award as “Rule of the Court” was allowed by the learned trial Court on 16.12.1992. However, in appeal, Award in respect of Claim No. 11 was set aside finding it contrary to the terms of agreement particularly clause 11(C) of the same. Therefore, after setting aside amount awarded against Claim No. 11, the rest of the Award was made “Rule of the Court”. Learned counsel for the petitioner vehemently argued that the respondents have delayed handing over of the site to the petitioner inasmuch as it was handed over on 27.04.1985 i.e., after expected date of completion of work as

25.4.1985. It is further pointed out that delay in handing over site was extended first by letter dated 17.08.1995 extending the time for carrying out the work from

26.4.1985 to 31.10.1985 and subsequently vide letter dated 31.03.1989, the time for completion of work was extended from 1.11.1985 to 30.06.1986. It is, thus, contended that since in terms of the agreement, the time was essence of the contract and the respondents themselves have delayed in handing over the site, therefore, the learned first appellate court has erred in law in setting aside Claim No. 11 while making Award the “Rule of the Court”. The relevant clause dealing with delay in handing over the site etc. is clause 11 of the agreement. The said clause reads as under: - Civil Revision No. 2796 of 2000 3 “ 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: i) ii) by force majeure, or by reason of abnormally bad weather, or iii) by reasons of serious loss or damage by fire or; iv) 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 constractors, 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. xx xx xx xx xx B. If the works be delayed: Civil Revision No. 2796 of 2000 4 a) 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. 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”. Learned counsel for the petitioner has relied upon judgments of Supreme Court reported as Karam Singh Lal vs. Union of India, JT 2001(10) SC 577 and M/s Associated Construction vs. Pawanhans Helicopters Pvt. Ltd, 2008(16) SCC 128 and contend that the respondents are bound to compensate for the delay in handing over the site. Therefore, the amount awarded by the Arbitrator cannot be said to be beyond jurisdiction. On the other hand, learned counsel for the respondents has relied judgment of Supreme Court reported as Ramnath International Construction (P) Ltd vs. Union of India, (2007) 2 SCC 453 to contend that compensation awarded to the contract for the loss suffered by him due to the delay caused by the employer is in derogation of the provisions of the contract and hence not sustainable. In Karam Singh Lal's case (supra), the Court found that the Court cannot proceed to determine whether the conclusion is right or wrong in the Civil Revision No. 2796 of 2000 5 conclusions of an Arbitrator arrived at by certain process of reasoning. It is not open to the Court to attempt to probe into mental process by which the Arbitrator reaches his conclusion where it is not disclosed by the terms of his Award. The Court found that it is difficult to discern particularly when the claim is for a sum of Rs.31,365/- and the award made is only to the extent of Rs.32,907/-. Therefore, the Court found no reason to interfere with the Award rendered. In M/s Associated Construction's case (supra), the Court relying upon clause 43 of the agreement held that in commercial transactions all situations cannot be visualized. The positive and unchallenged finding in the aforesaid case was that the delay in the execution of the work was occasioned on account of reasons attributable to Pawanhans. Therefore, it found that it cannot be said that the Award of the Arbitrator was so unconscionable that it requires interference. The aforesaid judgments arise out of cases where there is no corresponding provision like clause 11 (C) of the contract agreement as in the present case. 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, Civil Revision No. 2796 of 2000 6 therefore, the petitioner is not entitled to compensation on account of delay in completion of the work. The judgment in Ramnath International Construction (P) Ltd's case (supra) deal with identical clause 11 as in the present case and Supreme Court held as under:- “ 12. Clause (C) provides that where extensions have been granted by reason of the delays enumerated in Clause (A) which were beyond the control of the contractor, or on account of the delays on the part of the employer specified in Clause (B), the contractor is not entitled to make any claim either for compensation or otherwise, arising in whatsoever manner, as a result of such extensions. After enumerating certain delays, sub-clause (viii) of Clause (A) specifically mentions delay on account of any other cause beyond the control of the contractor. The causes for delays specified in clause A, thus, encompass all delays over which the contractor has no control. This will necessarily include any delays attributable to the employer or any delay for which both the employer and the contractor are responsible. The contract thus provides that if there is any delay, attributable either to the contractor or the employer or to both, and the contractor seeks and obtains extension of time for execution on that account, he will not be entitled to claim compensation of any nature, on the ground of such delay, in addition to the extension of time obtained by him. Therefore, the claims for compensation as a consequence of delays, that is claim 24 of Hangar Contract and claims 13 to 16 of Road Contract are barred by clause 11(C)” In view of the judgment in Ramnath International Construction (P) Ltd's case (supra) and in terms of clause 11 (C ) of the contract agreement, the petitioner has been rightly found to be not entitled to compensation under Claim No. 11. Learned counsel for the petitioner has further argued that the Civil Revision No. 2796 of 2000 7 respondents have not led any evidence before the learned trial Court in support of the objections filed and, therefore, the Award in respect of Claim No.11 cannot be set aside. The said argument is not tenable for the reason that such objections do not require any evidence. It is in terms of the contract agreement, the respondents have alleged that Claim No. 11 is not sustainable. There is no dispute in respect of the terms of the agreement or the fact that there was extension granted by the respondents. Even if no evidence has been led by the respondents, it does not bar the jurisdiction of the Court in examining the claim of the petitioner to find out whether such claim is within the jurisdiction of the Arbitrator. Another argument raised by the learned counsel for the petitioner is that the objections raised by the respondents were beyond the period of limitation. However, such plea was given up not by the learned counsel for the petitioner before the learned trial court. Now the petitioner cannot be permitted to raise such argument in revision. In view of the above, I do not find any patent illegality or material irregularity in the impugned order passed by the learned First Appellate Court warranting interference by this Court in exercise of its revisional jurisdiction. Learned Counsel for the petitioner submitted that the petitioner has received the payment of such amount including the interest thereon. Therefore, the petitioner is granted three months time to deposit the amount disbursed to him but in the event of the petitioner failing to deposit the amount, the respondents shall be entitled to seek restitution of the amount disbursed including interest thereon in accordance with Law. Dismissed with the above directions. August 03, 2010 ( HEMANT GUPTA ) JUDGE