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....of the Court in regard to certain claim. In short, by the impugned judgment the High court found that the arbitration awards were totally unsustainable in view of Clause 59 of the Agreement. 2. A tender was invited on 18.9.1978 by the Respondent-State for carrying out irrigation works. The Appellant having quoted the lowest rates which ranged between about 10-12% less than the standards specified rate, Appellant entered into Agreement No. 10/78-79 on 10/03/1979. Equally, the Appellant entered into Agreement No. 11/78-79 on 10/03/1979. He also entered into Agreement No. 14/79-80 on 28/06/1979. The work was to be completed within 18 months from the date of handing over the possession. It would appear that the site was handed over to the Appellant in regard to Agreement No. 10/78-79 on 16.11.1979. As far as the Agreement No. 11/78-79 is concerned, the site was handed over on 21.4.1979. The site was handed over to the Appellant in regard to Agreement No. 14/78-79 on 28.06.1979. Under the agreements, raising various claims, the Appellant originally filed claim on 28.11.1983 before a panel of three arbitrators. The panel rendered its awards. The awards came to be challenged by the App....
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.... betrayed by the award. It is for the arbitrator to construe the contract and sift the materials before him. His finding on facts cannot be rendered vulnerable in proceedings Under Sections 30 and 33 of the Act. As far as Clause 59 is concerned it is his contention that the said Clause would not stand in the way of the claims as awarded and which are pressed before us being countenanced in law. 6. Per contra learned Counsel for the Respondent would support the judgment of the High Court and would contend that Clause 59 of the agreement would bar the claims canvassed by the Appellant. Before we deal with Clause 59 it is appropriate to appreciate what happened before the arbitrator, the sub-Court and finally in the High Court. PROCEEDING BEFORE THE ARBITRATOR Claim No. I-Extra lead 7. The case of the Appellant was that the Appellant was to quarry and take stones and metal from a specified quarry which was located at a shorter distance than from where the Appellant contractor had to actually quarry the stones and metal and thereafter transport the materials to the work site. This resulted in extra rate and therefore extra expenditure. The claim of the Appellant was Rs. 15 ....
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.... further relied on Clause 10 of the contract. Clause 10 provided that no claim for compensation for non-supply of cement would lie. The arbitrator, however, rejected all the contentions of the department and relied on Section 70 of the Contract Act. The non-production of the cement issue register and unstamped receipt by the department led the arbitrator to raise an adverse inference against the department. The arbitrator proceeded to award varying sums under the three contracts. Claim No. VII 10. Claim No. 7 which is pressed before us related to a claim on account of material accumulated by the Appellant for the work in the project was particularly awarded by the arbitrator. The claim of the Appellant was that he had purchased various materials and stocked at the work site for carrying out the work but the department prevented Appellant from carrying out the work and, therefore, the Appellant was entitled to the value of the materials which he had collected at his expense. The arbitrator after excluding sand awarded certain sums under the 3 contracts. Claim No. IX 11. Finally, under Claim No. 9 which related to interest at 18% under the Interest Act, the interest was a....
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....s far as the claim No. IV is concerned, which related to short supply of cement to the Appellant, the Court set aside the award passed by the arbitrator. 15. It was found inter alia by the Court that the Appellant did not mention the source through which he had obtained the cement. There was no evidence before the arbitrator to show that the Appellant was permitted to bring his own cement and use it in his work. As per the terms of the agreement the Appellant was not allowed to use the cement other than the cement supplied by the Government. There is no evidence before the arbitrator to show any check/measurement taken at the time of alleged use by the Contractor. The tabular statement produced before the arbitrator by the Appellant was found to be only theoretical requirement of the quantity of cement for such work. 16. The contractual provisions were ignored by the arbitrator. In none of the letters written by the officers referred to by the arbitrator in the awards, the Engineers admitted about the alleged use of cement brought from outside by the Appellant. 17. There was no Clause in the contract permitting the contractor to use his own cement and claim reimbursement. ....
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....t though food grains were available it is not supplied by Government. There is no mention or any evidence in this regard let in on behalf of the contractor. Therefore, it is again the compensation which comes within the bar of Clause 59. 22. In regard to Claim No. IV, the following is the finding by the High court: In the Claim No. 4 the reimbursement of non-supply of cement is again is similar such obligation as the one stated to be in the earlier claim and even on this account, nothing has been pointed out on behalf of the contractor on facts or in details as to how it can be taken out from the claim for compensation as barred under Clause 59. 23. As regards Claim No. I relating to extra lead, the High Court proceeded to hold as follows: The Claim No. 1 relates to extra lead of 4 K.M. for stone and metal is again attributable to the alleged delays, laches and breach on the department as complained by the contractor and therefore, such claim once again amounts to a compensation within the parameters of the bar as provided under Clause 59. Since we have found that the claims under item 2, 5, 3, 4 and 1 ex-facie squarely come under the bar of Clause 59 in vie....
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....ecutive Engineer as to justify an extension of time in consequence thereof, such extension will be granted in writing by the Executive Engineer or other competent authority when ordering such alterations or additions. 26. It is our view that it will not be open to a contractor to claim compensation which arises on account of the fact that the work is delayed or hindrance caused to the work from any cause whatsoever. To demystify this further, it means that should the work be delayed on account of reasons which are attributable either partially or entirely to the employer namely the Respondent herein, the claim for compensation is barred. Equally, the Clause interdicts raising claim for compensation by the contractor if the employer poses hindrance to the work. If work gets delayed on account of the contractor himself, it is axiomatic that he cannot claim compensation as it would amount to a person taking advantage of his own wrong. Delay from any cause cannot found a claim for compensation. It may also happen that the work may get delayed not due to the fault of the employer. There may be natural causes such as natural calamities which may cause delay in carrying out the work. E....
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....volved in the claim is the right to claim compensation by reason of the fact that the Appellant-contractor though had to quarry from the specified quarry under the contract which was located nearer to the work site was compelled to carry out the work of quarrying, both stone and metal, from a quarry located at a greater distance and to transport the same to the work site. The claim is based on the expenditure which the Appellant had purported to incur on this score. Though case of delay within the meaning of Clause 59 is sought to be set up, there is no support sought to be drawn from the second limb of Clause 59 which deals with hindrance to the work from any cause whatsoever. Therefore, we can safely confine our focus on the question whether the claim stands barred by virtue of Clause 59 on account of it arising out of delay. In this case, we must further notice that, in fact, before the arbitrator apparently Clause 59 was not as such pressed or at any rate seriously pressed. Before the civil court, in the counter affidavit filed, the State did not lay store by the said contention. It is in the additional counter affidavit filed that the contention based on Clause 59 was apparent....
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....art and does not affect the decision on the matter referred; or (b) where the award is imperfect in form, or contains any obvious error which can be amended without affecting such decision; or (c) where the award contains a clerical mistake or an error arising from an accidental slip or omission. 32. Section 16 of the Arbitration Act deals with the power to remit the matter. We may straight away Rule out the question of remitting the award having regard to the efflux of time and also improbability the arbitrator being available even otherwise for the purpose of redoing the matter. Coming to Section 15 of the Act, the power available to the Court to modify the award was available inter alia when a part of the award is not referred to arbitration and such part can be separated from the other part and clearly Clause (a) is applicable as it is not the case of either party that the matter relating to the amount to be paid by way of extra lead was not a matter which was referred to arbitration. 33. Under Clause (c), an award can be modified if it contains a clerical mistake or there is an error which arises from an accidental slip or omission. There cannot be any ....
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....he department as is clear from letter dated 23/11/1982 written by the Executive Engineer to the Superintending Engineer. 38. Appellant drew support from letter dated 23.11.1982 written by the Executive Engineer to the Superintendent Engineer. We may also notice the following statement however in the said letter. After gaining practical experience it has been found possible to utilize this quarry only for major quantities of two contracts of Sri DV. Krishna Reddy & Co., against the total No. of seven works for which the stone from that quarry is proposed to be utilized. The quarry from which the stone is being obtained by Sri K. Marappan is at a distance 3.45 KM MR + 1.447 KM CT. He is obtaining the entire metal and stone totally from this quarry. 39. The sub Court, on the other hand, has found that the assumption made by the arbitrator about Rs. 15/- cu.m. over and above the quoted rates is without any basis. The sub-Court relied on the provisions in the agreement relating to the manner in which the rates were to be derived. The sub Court proceeded to make reference to the Clause in the agreement. The Clause reads as follows: VII. a) Procedure for working....
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....terial of all kinds RR stones and spass as provided in the estimate is Rs. 9.81 per cu.m. which was in accordance with the standard Schedule rate for 2 km. lead. The rate fixed for 6 kms lead was Rs. 15/- over and above the quoted rates of Rs. 8.80 which is arrived apparently after deducting actual rate by which the Appellant had quoted his rates which was nearly 10-12% less than the estimated rates. The result was that the arbitrator gave Rs. 24/- per cu.m. as against Rs. 13.75 which is without deduction. In the written submission before us, the Appellant has not questioned the applicability of the Clause relating to supplemental item in regard to the extra lead. Therefore, we need not be detained by the question whether the provision as such is applicable in respect of claim based on extra lead. If that be so, the question would be whether it is a case whether arbitrator has awarded Rs. 15/- in place of Rs. 13.75 in which case we would be inclined to agree with the Appellant that the award in this regard should be sustained in its entirety. But the question is whether the arbitrator has actually awarded Rs. 15/- cu.m. over and above the amount which the Appellant already received....
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....t is necessary to advert to the actual contractual provisions in relation to supply of food grain. The Clause in one of the contract relating to food grains reads as follows: FOOD GRAINS: 1. The cost of the work is estimated to be Rs. 1,16,15,713/- approximately. Against this estimate 17,500 quintals of wheat at Rs. 115/- per quintal, if available, will be supplied to the contractor for being issued as wages to labourers employed on the work. 2. The tenderer shall bear the transport and other incidental charges for the transportation of wheat from nearest F.C.I. Wheat godown to the site of the work. He shall be responsible for the safe custody and storage of wheat at his own cost and ensure issue to the labourers of the quantity of wheat calculated at a price not exceeding Rs. 1-25 per K.G. in lieu of the amount of wages payable to them. 3. The contractor shall be responsible to produce the Accounts of receipts, distribution etc., of what to the labourers as and when required by the Engineer incharge of the work. 4. The supply of wheat to the contractor for issue to the labourers will be regulated from time to time according to the asses....
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....ld be made only if available and therefore it is not the case of the contractor that though foodgrains were available it is not supplied by the Government. 3. There is no mention of any evidence in this regard let in on behalf of the contractor. It is thereafter that the High Court holds that therefore it is again the compensation which comes within the bar of Clause 59. 46. At first blush, the claim relating to food grain even as understood by the High court does not appear to have anything to do with compensation for delay. The case based on hindrance also does not appear to be made. We shall, however, consider the matter in some detail. 47. The High Court has not adverted to the Clause in the contract under the heading 'negotiation' which we have referred to. Instead the High court has proceeded on the Clause which undoubtedly contemplated supply of food grain only subject to availability. The Clause after the negotiation was carried out however brought about the following changes: In place of wheat, the Appellant agrees to take either wheat or rice and the price at which it was to be supplied to the workers was also stipulated. The other conditio....
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....ompensation as it is not an attractive clause. The Court further found that the arbitrator was carried away by the letters written by the Engineers wherein they have opined that the contractor quoted lesser rates on account of this attractive clause. It would become an attractive Clause only if the Engineers concerned permitted the Appellant to misutilise the grain by selling the food grain by the contractor in the open market. The Appellant is bound to pay fair wages under the contract (It is true that under the contract Clause the Appellant shall not pay less than the fair wages). 49. It is found that department officers misunderstood the food for work in their letters. The arbitrator relied on such letters as if the Engineers are the master to interpret the term of the contract. It was further found that there is absolutely no basis that food grains were in plenty with the Government. The sub Court further finds that the reliance placed by the arbitrator at Exhibit A. 22 for availability was not justified. He referred to Exhibit A. 22 with annexure also. The contention of the Appellant was that he promised to the labourers that he would pay a portion of their wages by way of ....
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....lant will have a claim for compensation on the said count has been missed by the sub Court as also the High Court. 51. The sub-court has proceeded to find that the case of the contractor Appellant that the Clause providing for supply of food grains was an attractive clause, was not correct. We are inclined to agree with the said finding. In the claim filed by Appellant what is stated inter alia is as follows: (ii)............The tender documents provided for supply of wheat at the quantities mentioned above. It also provides that the charges on account of the storage, transportation, the cost of the container as fixed by the Government, and sales tax have to be borne by the contractor. The contract condition also further stipulates that the contractor has to supply the wheat to the labourers consistent with their requirement and at the rates not exceeding Rs. 125/- per quintal. It is also mentioned in the contract that a particular quantity of wheat at Rs. 115/- per quintal, will be supplied to the contractor for being issued as wages to labourers employed on the work. On the representation made by the contractor on this Clause there was negotiation and agreement was ar....
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...., the original tender conditions contemplated supply of wheat at Rs. 115/- per quintal, if available. The Appellant was to supply the food grains only if the food grains were made available by the Government. Therefore, it is totally untenable for the Appellant to set up a case that attracted by the Clause which resulted from the representation and negotiation, he submitted his tender. May be at the time of entering into the contract following his representation and negotiation the Clause was incorporated which provided for supply of rice or wheat and other terms. In other words, at the time when Appellant submitted his tender which may have been lesser than the estimated rate by about 10 to 12%, the negotiated Clause was not there. On this score, the case sought to be built up around the Clause being attractive cannot be accepted. 54. Secondly, as regards the supply of food grains, the Appellant is not correct in having contended that the Appellant was duty bound to supply food grain even if the food grains were not supplied by the department. The sub-Court is correct in concluding that Appellant was duty bound to supply food grains only if it was supplied to him by the departm....
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....e contractor claiming compensation. 57. However, in the contractual provision which we have extracted, we notice that right to claim compensation is reserved to the contractor in case of short supply. But then, the case of the Appellant is not of short supply but of non-supply. The Appellant in his written submission also in paragraph 3 stated as follows: The Agreement at Vol. 3, Pg. 71, 72 refers to this head. At Pg. 72 after the head 'Negotiations' the Clause reads as under: ...In case of short supply of either wheat or rice compared to the quantity of 17,500 quintals, I shall have claim for compensation on this account. 58. Further, it is relevant for us to notice the discussion by the arbitrator regarding the quantum of compensation. The arbitrator relies upon the Statement No. 3 appended to claim No. III wherein he has shown the prevailing rate of rice in the open market during the period November 1979 to October 1982. The amount which he has paid for the labourers for purchase of food grain on the basis of rates in the open market, the price of food grain payable to labourers for purchase of food grain as per the agreement condition and the ext....
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....ks about 1000 to 1200 workers working daily at each work and the rates for food grains in the local market was increasing day by day. According to the arbitrator, there is correspondence that abundant quantity of food grains was available but no adequate arrangements were made to supply the food grains to the contractor. In the letter written by the Chief Engineer to the State Secretary, he notes the case of the Appellant that the Appellant has quoted lesser rates relating to supply of food grain at stipulated issue rates. The quantum in the three contracts is noted as also the rate and the amount, the value in rupees is noted. The Superintending Engineer has agreed that the food grain could not be supplied since allotment was not received even though there is stipulation in the agreement to supply food grain if available. The aspirations of the Appellant could not be fulfilled, it is stated. It is noted that the price structure of various materials is increased from the date of tender i.e. 10.11.1978. In relation to wheat it is shown an increase of 147%. There is an increase in the case of rice to the extent of 178%. This letter is written on 30.11.1982 Exhibit B-7. 60. First l....
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....sume relevance when Appellant receives food grains from the department and distributes. But at the same time the Appellant is putting up the claim for compensation and that too a claim which runs into a fairly large sum. There would certainly be material to evidence the actual purchase and further actual supply to the workers or payment as alleged. Even assuming everything that the Appellant says is correct about the fact of the negotiated settlement, there is virtually no material except the Appellants statement that the Appellant paid for the price of food grains to the workers. Further, the claim involves payment of price of rice at escalated rates for period beyond the contract also and it invites the wrath of Clause 59. We would therefore think that the award of the claim by the arbitrator cannot be sustained. CLAIM No. IV 64. As regards, claim No. 4 is concerned, it arises from alleged short supply of cement. First of all, we have to find as to whether it is hit by the embargo contained in Clause 59 and also advert to the finding of the High Court. In this regard, the High Court holds that the obligation is similar in nature to the earlier claim, namely, claim No. 3 and....
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....ough the quantity has not been issued and in the last bill, more quantity was given representing part reimbursement. The letters of the Department were also found to support the case of the Appellant. Referring to the objection in the counter that no vouchers were produced by the Appellant, it was brushed aside as immaterial as it is found that it is proved that he was bringing cement from other sources to complete the work except a small quantity under Agreement No. 14. Reliance is placed on Section 70 of the Contract Act. The argument without a plea in the counter by the Government pleader that the Appellant was saving cement out of the quantity supplied by the Department was found untenable on the basis that engineers would not have permitted it. As far as, Clause 10 of the Agreement prohibiting any claim for compensation for non-supply or delayed supply, the arbitrator found that Appellant is only asking for return of cement brought by him and used in the construction on the assurance of the Department that it will be reimbursed. In total 3790 metric tonnes of cement were found to be brought by the Appellant. Rejecting the claim of the Appellant for market rate and applying the....
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....ne. However, the important aspects which weighed with the Sub-Court are contained in the following provisions relating to the scarce materials like cement. It reads as follows: The contractor is expected to use the scarce materials like cement and steel as per the theoretical requirements shown above. A Schedule of quantities of important materials like steel cement etc., required for execution in accordance with the requisite specifications is appended hereto for which recovery will be affected. If these materials drawn according to a Schedule are short used, the excess quantity so drawn should be returned to the Department in good condition and no payment will be made to the contractor therefore. If they are not so returned to the department, their cost will be recovered at the market rate prevailing at the time of supply or the issue rate whichever is greater plus storage charges plus sales tax if leviable. If materials are drawn in excess of theoretical requirements indicated in the appended schedule, the excess quantity should be returned to the Department in good condition. If they are not so returned to the Department their cost will be recovered a....
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....d get only Rs. 95/-. 72. The next question is the effect of the other provisions which we have quoted. We have already noted that there are theoretical requirements in regard to the use of cement. It is not unnatural for the Department to prescribe for the theoretical requirement. This is to ensure that it is used exactly as per the theoretical requirement so that the structure on the one hand is built in a safe manner and at the same time nothing in excess is used so as to avoid wastage of scarce material. There are three situations which are contemplated. In the first situation, it is provided that if materials are drawn according to the Schedule and are short used then the excess quantity is to be returned to the Department in good condition and for the same the contractor will not get any payment. Furthermore, if the short-used material is not returned to the Department, their cost will be recovered at the market rate or at the issue rate which is greater plus wastage charges and sales tax. An example which we may take, would be if the requisite specifications is that 10 metric tonnes of cement is to be drawn and he draws 10 metric tonnes but he actually used only 8 metric t....
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....a matter which must be substantiated with reference to other material. 76. But there are two situations which can arise. Cement may be available with the Department and the Contractor draws only lesser quantity than provided in the specifications which is based on technical requirements. In such a case, undoubtedly the Clauses which we have adverted to would apply. What however would be the position if cement is not available and consequently the Contractor is not supplied and he is not in a position to draw cement. In such a scenario also, will it be a case of drawal of cement by the Contractor which is less than the specified quantum? It would be so, but it may have different implications. 77. At this juncture, we may look at the correspondence which may throw light. In the letter dated 30.06.1979 written by the Appellant to the Executive Engineer, we find there is no mention even about the inadequate supply of cement. Next letter is dated 26.07.1980. This is a letter where reference is made to all the three contracts. There is a reference in this letter no doubt about the purchase of cement from other sources. He seeks return of the cement so that extra quantity of cement ....
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....r dated 30.11.1982 written by Chief Engineer to the Special Secretary to Government, Irrigation Department, it is inter alia stated: It is a fact that there was a difficulty in procuring the cement for this project. Overall shortage of cement and the possibilities of securing the full requirement of cement being bleak, the contractor could not be forced to increase the rate of progress which he was capable of managing. The shortage of cement was felt continuously from the starting of the work till to-day. 80. From the correspondence, it would appear that the officers proceeded on the basis that there is a shortage of cement. Therefore, this appears to be a case where sufficient cement may not have been supplied to the Appellant. However, it is to be remembered under Clause 10 of the agreement no right to compensation lies for short supply of cement. Here the case of the contractor Appellant which is accepted by the arbitrator is that this is not a case where compensation for short supply of cement is made by the Appellant. All that the Appellant is seeking is to be given, is the quantity of cement, which he brought from other sources or the monetary equivalent. 81. W....
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....was already taken. The second aspect is arbitrator finds that as the unstamped receipt and the cement issue register though called for by the Appellant was not produced, adverse inference must be drawn. If the matter as alleged is not denied or is admitted then it may not be necessary to adduce evidence to prove the same. This principle is equally applicable before the arbitrator as it is before the court of law. Perhaps it is all the more applicable in the case of proceedings before an arbitrator. 84. We are in one sense handicapped by the fact that the Appellant has not produced the counter affidavit filed by the State before the arbitrator. It is true that if the case pleaded by the State amounts to admission that the cement was brought from outside by the Appellant and the matter was only regarding the measurement to be carried out that may give the impression that the arbitrator particularly having regard to the non-production of the unstamped receipt and cement issue register despite being called for had some justification for coming to the conclusion that the Appellant had procured cement from outside. Then the further question would be the only quantity of cement which w....
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.... will be permitted to carry out the work and therefore, since he has spent money for the same, he must get the amount which is claimed for having spent on the material. We are of the view that insofar as the Appellant has not used any of the materials to carry out the work and sets up the claim only on the basis of assurance which has not been admitted, the action of the Appellant in purchasing the materials cannot result in establishing his claim for compensation. It is to be noticed that the Appellant raised a claim for enhanced compensation. He alleged that there was delay on the part of the Respondent on various grounds. This is apart from alleging other factors like breakout of malaria, unfavourable weather and delay in taking decision by the departmental officers, which contributed to escalation in cost. Correspondence was exchanged with the Executive Engineer and the Superintending Engineer, the Superintending Engineer and the Chief Engineer and finally between the Chief Engineer and the Government. It appears that at that stage Appellant invoked the arbitration Clause and a panel of arbitrators gave their award. In fact, the work itself was stopped. Clause 59 prevents the C....