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Chief Engineer, Military Engineer Services, Chennai, represented by V.S.Sampath v/s K.V.Narayanan and another

    O.P.No.341 of 1998

    Decided On, 14 January 2000

    At, High Court of Judicature at Madras

    By, THE HONOURABLE MRS. JUSTICE A. SUBBULAKSHMI

    C.Krishnan, for Petitioner.R.Murari, for Respondents.



Judgment Text

Petitioner the Chief Engineer, Chennai Zone, Military Engineer Services has filed this O.P. to set aside the award passed by the second respondent, MMS Nanda, Chief Engineer sole arbitrator on 21.12.1997.


2. Brief facts leading to passing of the award is stated as follows:


The petitioner and the first respondent entered into an agreement for carrying out some construction work in the track which lies in restricted area listed in Schedule A which was required to be completed within a period of 12 months from 30 the October, 1992. The work was divided into three phases Nos.1, 2 and 3. Phase number 1 pertains to all work required into the officers of MDACCA area and the work had to be completed within four months from the date of handing over the site. Phase No.2 pertains to all work required in MD-ACCN runway crossing and this phase work had to be completed within eight months from the date of handing over the site. Phase No.3 relates to all work required in MT Sec.ATH area and all remaining works and this had to be completed within 12 months form the date of handing over the site. It is also stated in Schedule A that the priorities in respect of roads which are required to be completed than all others will be notified by the G.E. and the same is to be adhered to.


3. The arbitration relates to completion of the incompleted items of work for construction of road and other allied works at NAS Arakkonam. Certain differences arose between the parties. Out of a contract in writing for completion, incompleted item of work for construction of road at NAS Arakkonam pertaining to contract agreement No.CEMZ/ARK/08 of 1992-93 made between the contractor K.V.Narayan and the Chief Engineer, Chennai Zone, M.M.S.Nanda, Chief Engineer was appointed as sole arbitrator and he has passed the arbitration award on 26.12.1997.


4. As against that award, the Chief Engineer, Chennai Zone, as petitioner has filed this O.P. to set aside the award.


5. Counsel for the petitioner/department, submits that the Department disputes with regard to claim Nos.1, 7, 12, 16, 18, 19 and 24. He further submitted that the Department claims in respect of counter claim Nos.2 and 3 and the Department is not pressing in respect of other claims.


6. Claim No.1 relates to payment of incorrect withholding for. rectification of T & P. in bills. The revised amount claimed by the contractor is Rs.4,55,287. The contractor submits that withholding the amount in respect of T & P issued under Credit is incorrect. T & P was issued to the contractor by the department. The department contends that the T & P was issued to the contractor and Schedule are to be returned to the defaulted contractor M/s.RICL and it is the responsibility of the contractor Thiru K.V.Narayan to hand over the machineries in working condition., But, till date, the T & P is not repaired by the contractor and as it is the responsibility of the contractor to hand over T & P to the department in good working condition and as the contractor had not repaired it and handed it over the claim made by the contractor in his claim No.1 is liable to be rejected. The contractor contends that T & P handed over to the contractor was in a dilapidated condition and it was also confirmed by the board of officers constituted by the department and the T & P was brought to working condition after considerable amount was spent by the contractor.


7. Condition 54 of the general conditions of the contract deals with taking over of T & P from the contractor on terminated contract. This condition stipulates that the Government shall be at liberty to hold and retain the machinery which belongs to the contractor and this fact is known to the department. According to the contractor, when the T & P was given to the contractor it was in a dilapidated condition. The contractor states that the department cannot insist for the T & P to be in working condition when they did not hand over it in working condition and the various board. Proceedings go to show that the T & P did not consist essential parts. Various letter correspondence proves that only this contractor rectified the T & P and brought it to working condition. So, the contractor has also spent considerable amount to bring the machinery into working condition.


8. It is the responsibility of the contractor to hand over the machinery in working condition as per para 39D of the contract agreement. It further contends that the decision of the Garrison Engineer is final and binding with regard to the working condition of the T & P items as per the condition of the agreement, at the time of returning the same to the department. The contractor states that the T & P was seen in working condition and as the T & P was handed over withholding the amount was not proper. The arbitrator found that the T & P has been handed over by the contractor in working condition which is established and evident form C.W.Es letter No.87231/666/E8 dated 10th January, 1995 addressed to the Chief Engineer and so, no recovery has to be effected on account of T & P. It further contends that on completion of the work, the contractor has handed over T & P with certain defects and to that effect, the contractor has signed. So, the arbitrator found that the plants have been taken over by the department. So, it is evident that the contractor has also spent some amount to bring the machinery into working condition.


9. Counsel for the department submitted that as per para 39D of the agreement, the claim is not arbitrable as the amount due has to be decided by the Garrison, Engineer only. He replies upon the decision in M/s.P.C.Corpn. Ltd. v. Chief Administrator, Dandakaranya Project M/s.P.C.Corpn. Ltd. v. Chief Administrator, Dandakaranya Project M/s.P.C.Corpn. Ltd. v. Chief Administrator, Dandakaranya Project A.I.R. 1991 S.C. 957. The Apex Court, in the above decision has laid down that


?Independent clause in contract providing for dispute over rates of payment and making decision of Superintending Engineer final and as such dispute regarding rates does not fall within arbitration clause.


Relying upon this decision, he submitted that the amount has to be decided by the Garrison Engineer and it is not referable to arbitration. Clause 39D (6) and (7) reads as follows:


?(6) The tenderers are required and it is obligatory to utilise the T & P items for the execution of work and offer suitable lumpsum credit against each item of schedule for its utilisation in the work and returning the same to department in good working condition soon after the completion of work. The decision of Garrison Engineer is final and binding with regard to working condition of the T & P items at the time of returning the same to department. The credit offered by the Tenderer shall be recovered from each RAR payments in proportion to the value of work executed irrespective of the actual utilisation of the T & P items in the execution of work, subject to the condition that the entire amount of credit will be recovered with the pre-final RAR. No separate hire charges or any other charges will be recovered for utilisation of the T & P and the credit offered will be firm irrespective of actual period of utilisation of the T & P and actual amount of work executed.


(7) The tenderers shall note that, no claim of whatsoever account for the utilisation of T & P items in the work will be entertain by department.?


Counsel for the department submitted that the decision of the Garrison Engineer is final with regard to working condition of T & P at the time of returning to the department and also repairs required to make T & P items operational and also for its maintenance, at his own arrangement and cost and it must carried out and the tenderer shall not be allowed to remove the T & P items and it is also the condition that no claim of whatsoever for the utilisation of T & P work will be entertained by the department and so, the contractor is not entitled to this claim. The condition No.3 in para 39D states that all repairs required to make T & P Operational and also its maintenance during execution work shall be carried out by the tenderer at his own arrangement and cost and condition 7 states that the tenderer shall note that no claim of whatsoever amount for the utilisation of T & P will be entertained by the department.


10. So, it is well evident form these conditions that the repairs and maintenance shall be attended by the contractor himself at his own arrangement and cost and the contractor is not entitled to lay any claim on this. So, as per this condition, the contractor cannot lay any claim and the contractor is bound by the agreement entered into between the department and the contractor. By virtue of this condition, the contractor is not entitled to lay any claim over the repairs or maintenance of T & P. The arbitrator has awarded a sum of Rs.1,50,000 to the claimant holding that the contractor has also spent for the repairs and maintenance and as T & P was not in working condition, the contractor had to attend to that and he has spent some amount on that his claim is partially sustained.


11. A perusal of the condition in the agreement proves that repairs required to make the T & P operational and its maintenance had to be met by the contractor at his own arrangement and cost and no claim can be made by the contractor. A perusal of this condition establishes that the contractor is not entitled to claim this amount. The decision of the Garrison Engineer is final and binding with regard to working condition of T & P items. But, as per the conditions in the agreement, the contractor cannot lay any claim as the repairs and maintenance with regard to T & P had to be met only at the own arrangement and cost of the contractor.


12. Counsel for the department submitted that only when there is a flaw apparent on the face of the award or any illegality has been committed, the award can be set aside and the award cannot ordinarily be set aside when there is no ground for setting aside. He relies upon the decision in M/s.Sundarsan Trading Co. v. Government of Kerala M/s.Sundarsan Trading Co. v. Government of Kerala M/s.Sundarsan Trading Co. v. Government of Kerala A.I.R. 1989 S.C. 890 the Apex Court has held that the court cannot interfere when the award for reasons not given by the arbitrator for finding the award. The Supreme Court has observed that reasonableness of the reasons given by the arbitrator cannot be challenged and apparaisement of the evidence by the arbitrator is never a matter which court questions and considers. In M/s.Alopi Parshad v. Union of India M/s.Alopi Parshad v. Union of India M/s.Alopi Parshad v. Union of India A.I.R. 1960 S.C. 588 the Apex Court has held that the award was liable to be set aside because of the error apparent on the fact of the award and the arbitration award can be set aside on the ground of an error apparent on the fact of it when the reasons given for the decision either in the award or any other document incorporated in it are based on legal proposition which is erroneous. But, where a specific question is referred, the award is not liable to be set aside on the ground of error on the face of the award even if the answers to the question is erroneous on that point of law. But the award high ignores express terms of the contract is bad.


13. But, in the present case, with regard to the above claim, since the contractor has not acted as per the contract, the award can be set aside and as such things were not considered as the award ignores express terms of the contract, the award is bad and it is liable to be set aside. So, I find that the petitioner is entitled to succeed in respect of this claim and the award passed by the arbitrator with regard to claim number one is set aside.


14. Counter claim No.2 relates to cost of repairs of T & P to bring it to working condition. The arbitrator has found that counter claim No.2 is merged with claim No.1 and as the T & P has been handed over in working condition, no recovery has to be effected from the contractor. The petitioner has succeeded in claim No.1. Accordingly, this counter claim is rejected.


15. With regard to claim number seven, the contractor has claimed the refused amount of Rs.11,62,970,70. The contractor/claimant submitted that the contractor M/s.RICL had executed defective WBM and premix carpet and the premix carpet provided by was also not level and it was wavy in the surface and as the surface was undulated, the department ordered to provide an additional thickness of ACWC on tope to have level surface and to rectify this, power balance has to be adjusted constantly to make good extra depression and to bring ACWC surface to plane level taking into consideration the required consolidated minimum thickness of 30 mm and as such the cost involved in these stretches are much higher than the quoted rate. The claimant further submitted that in spite of AGES remarks that depression in the road surface in within the tolerance limit of 5 mm as per the specification laid down in clause 6.2.11 of page 138 of the C.A. But, still the road surface should be absolutely plain and this was accordingly complied with and the various orders and completion certificate go to prove that the rectification has been carried out by the claimant. So, the claimant states that irregularity in the surface of the road was not due to the default of the contractor and as the rectification was carried out by the contractor, the claim made by the contractor under this item has to be allowed.


16. The Department states that in respect of this claim, as per the provisions of clause 6.2.11, any irregularity exceeding 5mm in finished surfaces shall be corrected irrespective of the exceeding layers over which Asphalitic concrete wearing course has to be laid and having quoted the rate and accepted the conditions of the contract, the contractor cannot claim additional payment for ACWC and the award is liable to be set aside.


17. The arbitrator, has found that the additional thickness was executed by the contractor which was not specified and the patches in ACWC due to defective under layer of premises carpet was executed by the claimant and accordingly, he has sustained part of the claim and awarded a sum of Rs.5,20,000.


18. Counsel for the petitioner/department submitted that as per para 6.2.11 any irregularity exceeding 5 mm shall be rectified and corrected. So, as per the agreement, the rectification has to be done by the contractor and the contractor is not entitled to claim.


19. Para 6.2.11 of the agreement states that,


?Consolidation of asphalitic concrete in wearing course shall be carried out all as specified in clause 6.2.9 hereinbefore except that the initial or breakdown rolling shall be done with pneumatic tired rollers and thereafter with 8-10 tonne 3 wheeled rollers. The finished surface of wearing course shall be tested with a straight edge 3 mm long. Placed anywhere in any direction on the surface. The gap shall not be exceeding 5 mm between the bottom of the straight edge and the surface of binder course along with the straight edge. Any irregularity exceeding 5 mm shall be rectified/corrected.


The condition in the agreement states that any irregularity exceeding 5 mm shall be rectified and corrected by the contractor. The claimant emphatically states that to rectify the undulation, power blade has to be adjusted constantly to make god extra depression and to bring ACWC surface to plane level taking into consideration the required consolidated minimum thickness of 30 mm and as such the cost involved was more than the quoted rate. So, the claimant states that only as the department ordered to provide additional thickness of ACWC to level the surface undulation varies form 20 mm to 30 mm and this has cost has occurred due to pressure of the department and so, he must be paid that amount.


20. As per the condition in the agreement, any irregularity exceeding 5 mm shall be rectified and corrected. The contractor is bound by the agreement and he has to do work only as per the agreement. So, for the additional amount incurred by the contractor, he is not entitled to claim. Accordingly, this claim is disallowed. Even though counsel for the claimant objects to interference of the award passed by the arbitrator, as observed by me with regard to claim No.1, since the award ignores express terms of the contract, the award in respect of this claim is also liable to be set aside and accordingly it set aside.


21. Claim No.12 relates to provision of water. In view of non supply of water by the department the contractor incurred a sum of Rs.1,63,608. The contractor submits that water was required to be supplied by the department for construction under condition No.11 and in spite of repeated reminders, the department did not supply water. So, the contractor had to make alternative arrangement for supply of water and as the expenditure had been incurred by the contractor, the claim has to be allowed.


22. The department contends that recovery has been effected as per the condition of the contract only and the contractor having taken water from the empty land is bound to pay as per the contract agreement. The department also admits that water was not supplied to the contractor and the contractor has made his own arrangements in obtaining the required water. Condition 11.1 of subject condition states that water will be supplied by MES and shall be paid by the contractor at Rs.3,75 for every 1000 rupees worth of work done priced at contract rate. The condition of the agreement was not complied with and water was not supplied and the contract was breached. Provision of supply of water is an accepted condition and water ought to have been provided by the department. The water is required and is essential for carrying out the work. The condition states that if the water supply By MES is likely to be intermittent, the contractor will be permitted to dig bore wells in empty land. Water, if supplied, is to be charged at the rate stipulated This clause will not apply,. So, the contention that there is condition for supply of water and as it was also agreed by the department, water was not supplied and the contractor must make his own arrangement in obtaining the required water for carrying out the work. There must be supply of water as per the agreement. The water was not supplied to the contractor. The department not only did not supply the water, but recovered charges from the final bill. As the contractor himself made his own arrangements for supply of water, the department cannot recover the amount. The arbitrator, on consideration of relevant records, partly allowed the claim of the contractor and awarded a sum of Rs.78,000. The award passed by the arbitrator in this aspect is perfectly justified and it is not liable to be set aside.


23. Claim No.16 relates to additional work ordered and executed, but payment note

made. The contractor claimed the revised amount of Rs.17,38,519. The arbitrator awarded a sum of Rs.6,30,000. The contractor has given details for the various works executed by him, but payment not done and he has classified it under seven items.


24. Counsel for the petitioner/department submits that the contractor has stated seven items of work executed by him under seven heads and each head must be given details for the claim and as no detail with regard to each head has forth come, the contractor is not liable to the amount, He relies upon the decision in State v. M/s.Associated Engineering Enterprises, Hyderabad State v. M/s.Associated Engineering Enterprises, Hyderabad State v. M/s.Associated Engineering Enterprises, Hyderabad A.I.R. 1990 A.P. 294, wherein the Andhra Pradesh High Court has laid down that awarding in toto by allowing the claim without specification of the amount under each sub heads is not sustainable. The department submits that the claims are only after thought and not based on any ground.


25. The claimant states that additional work was ordered which was executed, but payment was not made. The arbitrator has partly sustained the claim and awarded a sum of Rs.6,30,000 in total without specifying the amount under each sub heads.


26. The additional work has been detailed under seven sub-heads. But there is no specific mention under the sub-heads with regard to the work done by the contractor and the liability of the claim in that aspect. As the award has been passed without specifying the amount under each sub-heads, applying the principles laid down by the Andhra Pradesh High Court in State v. M/s.Associated Engineering Enterprises, Hyderabad State v. M/s.Associated Engineering Enterprises, Hyderabad State v. M/s.Associated Engineering Enterprises, Hyderabad A.I.R. 1990 A.P. 294, to be set aside this claim is not sustainable and it is liable to be set aside.


27. Items 18 and 19 relate to additional expenditure due to working in a dangerous situation and extra cost due to delayed and piecemeal handing over the site. The contractor claims revised amounts under claim No.18 a sum of Rs.1,92,128,69 and under claim No.19 a sum of Rs.5,48,833. The arbitrator has awarded a sum of Rs.2,88,0000 towards both the claims.


28. Counsel for the petitioner submits that as per the conditions of the contract, the respondent is not entitled to this claim.


29. The contractor has claimed this amount stating that he was forced to work under dangerous condition with high tension and low tension cables and that the site was not handed over at one time and there was delay in passing the plan and instruction.


30. The department contends that the contractor being a reputed contractor knows this fact and he was not kept in darkness regarding running of ground cables at the site and he having failed to take note of that during his inspection of the site before quoting, the claim at a later date is not maintainable. The department contends with regard to claim No.19 that the contract being a risky and costly one, only piecemeal work can be given and the copy of working drawing and contractual specification with its instruction were supplied on 3rd November, 1992 and so, there is no delay in passing of the plan and instruction and at no point of time, the work was suspended by the department and it is also evident from the works diary and so, the contractor is not entitled to claim.


31. The contractor submits that the contract is silent regarding existence of high tension cable in the alignment of route and cable routing was not indicated by the cable indicators and they were also not shown in the site plan and the area was criss-crossing with these cables and while executing the work, not only the cable was damaged but also the workmen were hurt because of this dangerous condition, and they refused to work and they were enticed by offering higher pay and other incentives and the work was required to be carried out in dangerous situation and the contractor was entitled to higher rate for the work done in that situation. So, the contractor states that he had to incur extra cost. The department states that the rates quoted by the contractor includes also its contingencies.


32. The arbitrator has found that the respondent has not denied the obstructions and hindrance at site, but not brought out at the tender stage and so, the contractor is entitled to part of the claim. The contractor also makes his claim due to delayed and piecemeal work and non supply of plan and instruction in time due to default of the department. The contractor further submits that there was suspension of work during non-availability of store and also when the department was not able to decide the remedial action. The arbitrator analysed all these aspects with regard to the hindrance and obstruction. The arbitrator found that the contractor cannot include in his rates for such hindrance and inconvenience when he does not know in which direction the obstruction will emerge and accordingly, the arbitrator sustained the claim of the contractor partly and awarded a sum of Rs.2,88,000 for claim Nos.18 and 19. I see no ground to set aside that award since the arbitrator has analysed it fully and no illegality is found in passing this award. Accordingly, the award in respect of claim Nos.18 and 19 is sustained.


33. The claimant has made under claim No.24 the revised amount of Rs.2,53,851,09. The contractor submits that though the condition of the contract stipulates payment of final bill within six months from the date of receipt of the bill there was delay in payment of the final bill and so, the contractor is entitled to demand damages due to delay.


34. The department contends that as per condition 64 of IAFW-2249 of the general conditions of the contract, payment of bills of contract should be made within six months where there is no dispute in the bill submitted by the contractor. Counsel for the department submits that there was a dispute in the final bill and so, payment of the amount within six months does not arise and so, the claimant is not entitled to damages.


35. The arbitrator has found that there is delay in payment of final bill and it is evident from the bills submitted.


36. As per the bill, the service was completed on 31.10.1994. The Bill was submitted by the contractor on 18.4.1995. The bill was passed by the Engineer in Charge to GE on 20.4.1995. It was passed

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by GE to CWE for technical check on 23.11.1995. After technical check it was passed by CWE to GE on 1.7.1996 and it was passed by GE. to UA on 15.10.1996 and the UA passed it to CDA on 1.2.1997 and then it was returned by CDA to GE for resubmission on 21.4.97 and the bill is not yet passed by CDA. 37. Counsel for the department submitted that the bill was passed by the engineer within sic months, but it was not yet passed by the CDA and the payment of final bill will be within six months from the date of receipt of the bill i.e., final payment ought to have been made within six months from 18.4.1995. 38. The general condition states that payment shall be made within six months where there is no dispute in the bill submitted by the contractor. Even though there is any dispute in the bill, what are eligible amount, the contractor is entitled ought to have been considered and the bill ought to have been passed. The Bill submitted in 1995 was returned for re-submission in the year 1997. The arbitrator has considered this aspect and partly sustained the claim and awarded a sum of Rs.1,25,000 to the claimant. Even though there is any dispute, there is inordinate delay and the bill is not yet settled and so, the award passed by the arbitrator under this claim is not liable to be set aside. 39. The department claims counter claim No.3 expenditure for watch and ward. Counsel for the department submitted that watch and ward were posted to safeguard the property and this amount has to be given to the department and this claim was wrongly dismissed. 40. The department was not expected to have watch and ward. As per the agreement, the contractor has to carry out the work and only the contractor has to make his own arrangements. 41. Counsel for the department submitted that only as a safety measure, the department provided watch and was and this amount has to be recovered from the contractor and the claim was wrongly dismissed by the arbitrator. 42. Condition No.6 of the agreement states that the contractor shall provide necessary watch and ward for the materials lying at site to avoid loss or theft or damage and nothing extra is payable in this regard. The condition in the agreement states that it shall be the responsibility of the contractor with regard to materials in the site. So, it is the duty of the contractor to provide watch and ward and the department was not expected to provide. The claim was rightly dismissed by the arbitrator. Nothing warrants interference of this Court in this claim. The award passed by the arbitrator for this claim is sustained. 43. In the result, the award of the arbitrator is set aside with regard to claim Nos.1, 2, 7 and 16 and with regard to other claims, the award is sustained, The O.P. is partly allowed.
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