Madhya Pradesh High Court
Jagjit Singh Anand, Engineer And ... vs State Of M.P. And Anr. on 12 May, 2006
Author: Dipak Misra
Bench: Dipak Misra, U.C. Maheshwari
ORDER Dipak Misra, J.
1. Both these civil revisions being inter-linked and inter-connected were heard analogously and are disposed of by this common order.
2. Civil Revision No. 2044 of 1996 has been preferred by the claimant/contractor and Civil Revision No. 49 of 1997 has been preferred by State of M.P. In the civil revision preferred by the claimant/contractor, challenge is to the certain aspects of the award passed by the M.P. Arbitration Tribunal, Bhopal (in short 'the Tribunal'). In the civil revision preferred by the State, the challenge is to certain claims of the claimant/contractor entertained by the Tribunal.
3. To appreciate the actual scenario in proper perspective, it is apposite to delineate with the facts in a singular compartment. The claimant/contractor was awarded the work for construction of building for Automobile Engineering Course in Jabalpur Polytechnic including sanitary and water supply fittings. The estimated value of the work was Rs. 18.62 lacs. The claimant's tender at 47.47% above the C.S.R. was worked out to Rs. 27.45 lacs. The stipulated period for completion was 24 months including the rainy season which was to expire on 30-4-1989. The work of construction was stopped in August, 1988 though the work was incomplete. Eventually, the contract was rescinded by the Executive Engineer by notice dated 7-6-1989 and the balance work was given to another contractor named J.R. Sama, who completed the work. The claimant in the reference petition brought before the Tribunal questioned the correctness of rescission of contract and put forth the claim of Rs. 2,01,974/- on account of loss of profit and overhead expenses, Rs. 1,05,000/- on account of loss due to idling of labour, machinery and establishment, Rs. 15,080/- on account of loss on materials collected at site due to blockade of funds and wastage, Rs. 1,64,753/- for setting aside penalty (liquidated damages) imposed by the Superintending Engineer and Rs. 15,943/- on account of payment of final bill. In addition, a prayer was made for refund of Earnest Money and Security Deposit after adjusting recovery of secured advance. Thus, the claim was worked out to Rs. 5,02,750/-. The owner State resisted the claim put forth by the contractor/claimant and contended that the rescission of contract was correctly done and balance work was properly withdrawn out of the hands of the claimant for completion by another contractor at the risk and cost of the claimant/contractor. On the basis of above, a counter-claim of Rs. 9,96,243/-was laid.
4. The Tribunal addressed itself whether the execution of work by the claimant/contractor was delayed due to lapses, defaults and breaches on the part of the State. Considering the material brought on record and the evidence led before it, the Tribunal came to the conclusion that there was no appreciable delay in the execution of the work because of the alleged hindrances by the claimant/contractor. The Tribunal further opined that it is not proved that owner/State had ever defaulted in timely supply of cement and work was delayed on that count. The Tribunal addressed itself to the factum of timely supply of detailed working drawings and designs. The Tribunal after referring to the letters Exhibits P-6, P-8 and P-10 and the sequence of operation in relation to construction of a building came to hold that the delay was committed in furnishing all detailed working drawings which delayed commencement of the initial part of the work by two months and seven days. While dealing with the facet of stoppage of work of the claimant in the month of August, 1988, the Tribunal expressed the view that stoppage of work from 12-8-1988 to 25-9-1988 was unlawful as no notice as required under Clause 14 was given. Addressing itself to the issue of rescission, the Tribunal, after referring to number of documents and clauses of the contract came to hold that the rescission was a valid rescission. Thereafter the Tribunal addressed itself to individual claims and came to hold that for the claim Item No. 1, which pertains to loss of profits, the claimant is entitled to Rs. 11,796/- for overhead expenses, Rs. 5,000/- for loss of profits. In regard to the claim relating to idling labour, machinery and establishment, the Tribunal allowed Rs. 5,000/- on the said score. The claim at item No. 3, which relates to loss due to blockade of funds and collection of material and/or their transportation and disposal was rejected in toto. As far as setting aside penalty is concerned, the Tribunal opined that nothing was recoverable from the claimant on account of penalty/liquidated damages. With regard to dues payable on account of final bill, the Tribunal came to hold that the claim of the claimant is not tenable inasmuch as sum of Rs. 3,14,585/- is payable to the petitioner. In this context, the Tribunal came to hold that the claimant is entitled to be paid Rs. 76,042.71 towards the value of unpaid work and escalation, Rs. 22,511/- towards price of steel left by the claimant at the site and appropriated by the State and Rs. 16,401.33 on account of difference of price of tested steel C.T.D. bars and plain bars payable to the claimant. The Tribunal deducted Rs. 1,14,955/- and after adjusting the same, the Tribunal expressed the opinion that the claimant is liable to pay Rs. 1,99,630/- to the respondents/State upon settlement of account of final bill. Eventually, in Paragraph 35 of the award, the Tribunal came to the conclusion that Rs. 1,53,786/- is payable by the claimant.
5. While dealing with the counter-claim of the respondents/State, the Tribunal held that the counter-claim straightway being filed before the Tribunal was not entertainable except with regard to those claims of the respondents/State which were taken up by the claimant himself in the reference petition, for instance, for determination of the amount of final bill, the Tribunal opined that the claimant having himself raised the disputed about the amount of final bill and having invited the Tribunal to decide certain claims of the respondents/State in that connection, the Tribunal cannot but decide those claims for fully and properly adjudicating the dispute for final bill brought by the claimant. Eventually, the Tribunal directed that the claimant would pay to the respondents/State a sum of Rs. 1,32,030/- with interest thereon at the rate of 12% per annum from the date of reference petition, i.e., 21-8-1989 till realisation and nothing should be recovered from the claimant on account of any penalty/liquidated damages.
6. We have heard Mr. V.R. Rao, learned Senior Counsel for the claimant in Civil Revision No. 2044 of 1996 and Mr. S.K. Yadav, learned Deputy Advocate General for the respondents/State. It is submitted by Mr. Rao that the Tribunal has grossly erred by deciding the claim of the respondents/State with regard to the final bill on a feeble foundation that had the petitioner raised the issue, the same could be entertained as it is not a part of the counter-claim. Learned Counsel further submitted that rejection of claims of the claimant on other heads is not substantiated by acceptable reason and therefore, requires to be resettled with a further stipulation that the amounts claimed by the claimant are allowable with interest.
7. Mr. S.K. Yadav, learned Deputy Advocate General for the State per contra submitted that the Tribunal has totally erred in concluding that the rescission of contract was not justified and the State was not entitled to recover the amount from the claimant on account of any penalty/liquidated damages. Learned Counsel for the State supported the award with regard to the final bill that the Tribunal has properly dealt with the issue and no fault can be found with it. It is urged by him when the Tribunal has itself recorded a finding that there was no unreasonable delay on the part of the State, it should have held that the rescinding of contract is totally justified. Mr. Yadav propounded that the Tribunal exceeded in its jurisdiction and erred in holding that there was delay of two months an seven days in furnishing all detailed drawings and designs. As such the finding inheres a basic contradiction in it. Learned Counsel further put forth that the finding with regard to unlawful stoppage of the work for specific period is contrary to material on record and unsustainable as it exposits perversity of approach. Mr. Yadav submitted that the Tribunal has completely fallen into error in rejecting the claims put forth by way of counterclaim barring the one that has been dealt with.
8. First we shall deal with the findings of the Tribunal regarding delay, stoppage of work and rescission of contract. Before the Tribunal, various kinds of irregularities committed by the respondents/State were highlighted. The Tribunal while dealing with the factum of default relating to timely furnishing of lay out, has analysed the documents and has come to the conclusion that the lay out was given within 27 days of the date of work order which fell within the preparatory period of 30 days from the date of issue of the work order. The Tribunal has referred to Clause (2) of the contract agreement and on that basis, expressed the opinion that there had not been any unreasonable delay, though Mr. Rao, learned Counsel for the claimant has assailed the same on the ground that there has been delay of 27 days and that finding should have been recorded in favour of the claimant, in our considered opinion, the same does not deserve acceptance as Clause (2) of the agreement covers the preparatory period.
9. As far as default relating to non-shifting of cover all electric lines is concerned, the Tribunal referred to the evidence of the Executive Engineer (D.W. 1) and found that there was nothing on record to reject his testimony and if his evidence is accepted, there was hindrance in that regard. On scrutiny of the said analysis, we find the said finding is neither against the material brought on record nor there is any kind of unreasonableness. It is supported by justifiable reason. Hence, we do not find any fault with the same.
10. As far as the default relating to supply of cement is concerned, the Tribunal has referred to evidence of the claimant (Exs. P-30, P-32 and P-33) and has arrived at the conclusion that there was no such delay in supply of cement which prevented the work. The Tribunal also referred to cement stock register while arriving at the said conclusion.
11. As far as the timely supply of detailed work drawings and designs is concerned, the Tribunal; expressed the opinion that supply of detailed work drawings and designs during the course of working is not per se illegal unless it results in an impediment causing loss to the contractor. If the detailed work drawings and designs are not supplied at the proper time and such default delays the progress of the work, which the contractor would have otherwise achieved, the same does become actionable. Keeping the aforesaid in view, the Tribunal in Paragraph 8 of the award, came to hold as under:
8. It is however true that the first set of detailed working drawings about foundation were made available to the contractor after a delay of 2 months and 7 days from the end of the preparation period, ie., from 30-4-1987. There was admission made to that effect in the letter of the E.E., Ex. P-14, dated 6-10-1987 written to the contractor. In this letter, it was stated that the drawings for foundation were made available to the site in-charge on 7-7-1987. This would work out to a period of 2 months and 7 days from 30-4-1987. It was stated in this letter that the delay of 2 months and 7 days would be considered for extension of time. That may be so, but the fact remains that delay was committed in the furnishing of the details drawings, which delayed the commencement of the initial part of the work by 2 months and 7 days. This was the only delay, which was proved against the respondents.
The said analysis, to us, appears to be just and proper. Hence, the submission of Mr. Yadav, learned Counsel for the respondents/State that there has been no delay in supply of detailed work drawings about foundation is unacceptable.
12. As regards the stoppage of work of the claimant, the Tribunal referred to letter dated 10-8-1988 (Ex. D-12) written by P.W.D. Secretary to the Chief Engineer (Central Zone), P.W.D. Jabalpur directing the latter to get the work stopped as early as possible because of the complaint received by the Government that the construction has been done within building line of a National Highway and without approval of Town and Country Planning and of Municipal Corporation, Jabalpur. The Executive Engineer, P.W.D. Jabalpur was in Bhopal when the order was passed. He was informed about the orders of the Government and on return from Bhopal to Jabalpur on 12-8-1988, he intimated the claimant to stop the work until further orders. The Tribunal did not believe the petitioner that the work was stopped on 6-8-1988 but it was stopped on 12-8-1988. The Tribunal further held that stoppage of work from 12-8-1988 was not done by any notice in writing as per Clause (14) but by notice dated 26-9-1988 (Ex. P-38) written by the Engineer-in-Charge to the claimant. The Tribunal expressed the view that there has been sufficient indication as per Ex. P-38. Thereafter, in Paragraphs 10 to 12, the Tribunal expressed the view as under:
10. The stoppage continued till 8-2-1989, when on that date the E.E. wrote letter, Ex. P-50, to the contractor, directing him to re-start the work. The entire stoppage from 12-8-1988 to 8-2-1989 was for a period of less than 6 months. Had the stoppage continued for more than 6 months, it could have been considered in terms of Clause 14 as 'permanent stoppage' and the contractor would have been then at liberty to determine the contract, if he so desired. Such a contingency did not arise in the present case. Since the stoppage, as already stated, did not continue for more than 6 months, the contractor in the present case could not have been chosen to determine the contract.
11. Part of stoppage from 12-8-88 to 25-9-88 was unlawful, since no notice in writing under Clause 14 was given. It was only on 26-9-88 that notice in writing under Clause 14(Ex P-38) was given by the Engineer-in-Charge, making stoppage lawful from that date. The delay of 1 month and 13 days from 12-8-88 to 25-9-88 because of unlawful stoppage would be attributable to the respondents in computing compensation.
12. Concluding the entire discussion on delays due to lapses, defaults and breaches on the part of the respondents, it may be stated that the work was delayed by 2 months and 7 days due to non-supply of detailed working drawings and for 1 month and 13 days due to unlawful stoppage of work directed by the Engineer-in-Charge.
On a scrutiny of the aforesaid reasoning, we find they are valid as documents have been properly discussed and clauses of the agreement have been properly interpreted. Accordingly we concur with the said finding recorded by the Tribunal.
13. Mr. Rao, learned Counsel for the claimant has been critical about the conclusion pertaining to rescission of the contract. The Tribunal has dealt with the same at length in Paragraphs 13 to 17. Eventually in Paragraph 17, the Tribunal has observed that 30 days notice as required by Clause (3) of the contract-agreement had been given before rescission was done and hence there had been valid rescission. In view of the analysis made by the Tribunal, we are obliged to state that the said finding is unimpeachable.
14. The next issue that arises for consideration is whether the Tribunal was justified in law in entertaining the claim put forth by the respondents/State while dealing with the claim of the claimant for final bill. The Tribunal has expressed the opinion that amount of Rs. 1,99,630/- is payable by the claimant. Be it noted the Tribunal has not treated it as a counter-claim on the ground that the claimant himself had invited the Tribunal to adjudicate the claim relating to final bill and hence, the counter-claim in that regard would be entertained. In this context, we may refer with profit to the Full Bench decision in the case of Ravi Kant Bansal, Engineers & Contractors v. Madhya Pradesh Audyogik Kendra Vikas Nigam (Gwalior) Limited, C.R. No. 675 of 1988, decided on 7-4-2006 : 2006(2) M.P.H.T. 264 : 2006 Arb.W.L.J. 311 (MP), wherein the learned Chief Justice, speaking for the Full Bench referred to Section 7-B of the Act and eventually in Paragraphs 10 and 11 expressed the opinion as under:
10. These provisions of Sub-section (5) of Section 7 and Sub-section (1) of Section 7-B of the Adhiniyam would equally apply to reference of a dispute made by a party in a claim petition as well as reference made by the opposite party in a counter-claim. Hence, the Tribunal may reject a reference of dispute in a counter-claim made by the opposite party summarily for reasons to be recorded if it is so satisfied in exercise of its powers under Sub-section (5) of Section 7 of the Adhiniyam. Similarly, the Tribunal shall not admit the reference of the dispute made in a counter-claim if as stated in Sub-section (1) of Section 7-B of the Adhiniyam, the dispute raised in the counter-claim has not been referred for decision of the Final Authority in terms of the works contract or the reference petition in the counter-claim to the Tribunal has not been made within the period of limitation mentioned under Clause (b) or the Provision thereto under Sub-section (1) of Section 7-B of the Adhiniyam. In the Division Bench judgment of this Court in P.K. Pande (supra), the Tribunal had permitted the counter- claim because it was within the period of limitation and the Division Bench accordingly held that by permitted a counter-claim or reference the Tribunal had not in any manner violated any of the provisions of the Adhiniyam or the Regulations. But in a case where the Tribunal finds that there is an express prohibition in the Adhiniyam to admit a reference, the Tribunal cannot admit such a reference in violation of the express provisions of the Adhiniyam.
11. We are, therefore, of the considered opinion that the Tribunal cannot entertain or admit a counter-claim if the dispute raised in the counter-claim filed by the opposite party has not been referred to the Final Authority in terms of the works contract or where it has been referred to the Final Authority but the counter-claim has not been filed before the Tribunal within the period of limitation as provided in Clause (b) or the proviso to Clause (b) of Sub-section (1) of Section 7-B of the Adhiniyam.
The Tribunal, in Paragraph 37 has expressed the view as under:
37. There are decisions of this Tribunal also on the above point. Where no notice of the counter-claim was earlier served by the department upon the contractor, but the counter- claim was straightway brought by the department before the Tribunal, it was held that no dispute having arisen, the counter- claim was not entertainable by the Tribunal. See Vasu Builders v. State of M.P., Ref. Case No. 70/90, decided on 3-4-96 and also Jairamdas Wadhwani v. M.R.S.T.C. Ltd., Ref. Case No. 15/88, decided on 31-7-89. It is an admitted fact that notice of the counter-claim was not previously served upon the contractor in the present case and the counter-claim was straightway brought before this Tribunal. We hold that dispute having not come into existence, the counterclaim straightway filed before this Tribunal was not entertainable, except with regard to those claims of the respondents, which were taken up by the petitioner himself in this reference petition, for instance, to determine the amount of the final bill. The petitioner having himself raised the dispute about the amount of his final bill and having invited the Tribunal to decide certain claims of the respondents in that connection, this Tribunal cannot but decide those claims for fully and properly adjudicating the dispute for final bill brought by the petitioner. The counter-claim stands partly allowed in this sense in so far as certain claims given in the counterclaim were allowed.
If the aforesaid conclusion of the Tribunal is tested on the anvil of the decision of the Full Bench rendered in the case of Ravi Kant Bansal (supra), we do not have the slightest hesitation in holding that the said conclusion is manifestly erroneous and demonstrably unsustainable. The Tribunal could not have dealt with the same and awarded the amount in favour of the respondents/State.
15. In view of our aforesaid analysis, Civil Revision No. 49 of 1997 preferred by the State is dismissed and the Civil Revision No. 2044 of 1996 preferred by the claimant is allowed in respect of claims relating to overhead expenses, loss of profit, loss due to idling labour and the same has to be paid to the claimant with interest at the rate of 6% per annum from the date of filing of the reference petition. As far as final bill is concerned, the claimant has put forth claim for Rs. 15,943/-. After adjusting the recovery of secured advance as worked out in the final bill, the Tribunal has accepted that in a different way but it has dealt with the counter-claim of the State, that is why the amount has not been paid. As the claimant has prayed for grant of Rs. 15,943/-, we are inclined to think the same has to be allowed if the finding of the Tribunal is accepted. Thus, total claim awardable in favour of the claimant is Rs. 27,699/-. In the circumstances of the case, there shall be no order as to costs.