Himachal Pradesh High Court
Parmod Sood vs State Of H.P. And Another on 23 March, 2017
Author: Tarlok Singh Chauhan
Bench: Tarlok Singh Chauhan
IN THE HIGH COURT OF HIMACHAL PRADESH,
SHIMLA.
Arb. Case No. 19 of 2012
.
Reserved on : 15.3.2017
Decided on: 23.3. 2017
Parmod Sood. ...Petitioner.
Versus
State of H.P. and another. ...Respondents.
of
_____________________________________________________________
Coram:
rt
Hon'ble Mr. Justice Tarlok Singh Chauhan, Judge.
Whether approved for reporting? 1 Yes
For the Petitioner: Mr. J.S. Bhogal, Sr. Advocate with
Mr. Himanshu Kapila, Advocate.
For the Respondents: Ms. Meenakshi Sharma, Addl. A.G. with
Mr. J.S. Guleria, Asstt. A.G.
_________________________________________________________
Justice Tarlok Singh Chauhan, Judge:
By medium of this petition under section 34 of the Arbitration and Conciliation Act, 1996 (for short the 'Act'), the applicant has prayed for setting aside of the award made by the Arbitral Tribunal on 5.11.2011.
2. The facts are not in dispute. The parties entered into contract with respect to the execution of the work relating to strengthening of Chandigarh-
1Whether reporters of the local papers may be allowed to see the judgment? yes ::: Downloaded on - 15/04/2017 22:03:32 :::HCHP 2 Mandi-Manali road NH 21 in KM 105/0 to 127/0 (Sh:
Strengthening of existing road pavement in Km.105/0 .
to 127/0) and a formal contract was duly executed between the parties on the standard form of contract adopted by the respondents for such works.
3. The disputes had arisen between the parties of relating to the amounts claimed by the petitioner for execution of works beyond the agreed limits. The same rt were initially referred to the sole arbitration of the Superintending Engineer, Arbitration Circle, HPPWD, Solan, who heard the matter and made an award dated 21.6.2002. The award was challenged by the respondents before this Court by filing Arbitration Case No. 52 of 2002 and vide order dated 5.9.2005, the award was ordered to be set aside. The petitioner preferred an appeal being Arbitration Appeal No. 4 of 2005, but the same was also dismissed by this Court vide judgment dated 18.4.2009. Thereafter, the matter was referred to the sole arbitration of the Superintending Engineer, National Highway Circle, HPPWD, Shimla, who made the award on 5.11.2011.
::: Downloaded on - 15/04/2017 22:03:32 :::HCHP 34. Aggrieved by the aforesaid award, the petitioner has assailed the same on the ground that the .
learned Arbitrator has completely misconstrued and misapplied the provisions of the Contract entered into between the parties, especially the provisions of Clause 12-A thereof and thereby reached a wrong conclusion.
of
5. The respondents have filed reply to the petition wherein it has been averred that various rt clauses of the arbitration agreement, including the one contained in Clause 12-A have been correctly interpreted by the learned Arbitrator as the same was not to be read in isolation but was required to be read in conjunction alongwith the provisions of Clause 12-A of the agreement.
6. I have heard the learned counsel for the parties and have gone through the record of the case.
7. As the outcome of this petition hinges upon the interpretation to be given to Clauses 12 and 12-A of the agreement, it is necessary to reproduce the provisions in entirety and the same read as under:
Clause 12 - The Engineer-in-Charge shall have power to make any alterations in, omissions from additions to or substitutions for, the original specifications, drawings, ::: Downloaded on - 15/04/2017 22:03:32 :::HCHP 4 designs and instructions, that may appear to him to be necessary during the progress of the work, and the contractor shall carry out the work in accordance with any .
instructions may be given to him in writing signed by the Engineer-in-charge, and such alterations, omissions, additions or substitutions shall not invalidate the contract and any altered, additional or substituted work which the contractor may be directed to do in the manner above specified as part of the work shall be carried out by the contractor on the same conditions in all respect on which of he agreed to do the main work. The time for the completion of the work shall be extended in the proportion that the altered, additional or substituted work bears to the rt original contract work, and the certificate of the Engineer- in-charge shall be conclusive as to such proportion. Over and above this, a further period to the extent of 25 per cent of the time so extended shall be allowed to the contractor. The rates for such additional, altered or substituted work under this clause shall be worked out in accordance with the following provisions in their respective order:-
(i) The rates for the additional or substituted work are specified in the contract for the work, the contractors is bound to carry out the additional altered or substituted work at the same rates as are specified in the contract for the work.
(ii) If the rates for the additional, altered substituted work are not specifically provided in the contract for the work, the rates will be derived from the rates for similar class of work as are specified in the contract for the work.
(iii) If the rates for the altered, additional or substituted work includes any work for which no rates specified in the contract for the work and cannot be derived from the similar class of work in the contract, then such work shall be carried out at the rates entered in ::: Downloaded on - 15/04/2017 22:03:32 :::HCHP 5 Himachal Pradesh Schedule of rate... of tender minus/plus percentage which the total tendered amount bears to the estimated cost of the entire work .
put to tender.
(iv) If the rates for the altered, additional or substituted work cannot be determined in the manner specified in clauses (i) to (iii) above, then the rates for such work shall be worked out on the basis of the schedule of rates of the district specified above minus/plus the percentage which the total tendered amount bears to of the estimated cost of the entire work put to tender provided always that if the rate for a particular part or parts of the item is not in the schedule of rates, the rt rate for such part or parts will be determined by the Engineer-in-charge to the estimated cost of the entire work put to tender.
(v) If the rates for the altered, additional or substituted work cannot be determined in the manner specified in sub-clause (i) (iv) above, then the contractor shall, within 7 days of the date of receipt of order to carry out the work, inform the Engineer-in-charge of the rate which it is his intention to charge for such class of work, supported by analysis of the rate or rates claimed and the Engineer-in-charge shall determine the rate or rates on the basis of prevailing market rates and pay the contractor accordingly. However, the Engineer-in-charge, by notice in writing, will be at liberty to cancel his order to carry out such class of work and arrange to carry it out in such manner as he may consider advisable. But under no circumstances, the contractor shall suspend the work on the plea of non-settlement of rates of items falling under this clause.
(vi) Except in case of items relating to foundations, provisions contained in sub-clause (i) to (v) above shall ::: Downloaded on - 15/04/2017 22:03:32 :::HCHP 6 not apply to contract or substituted items as individually exceed the percentage set out in the tender documents (referred to herein below as .
"deviation limit") subject to the following restrictions:
a. The deviation limit referred to above is the net effect (allegorical sum) of all additions and deductions ordered.
b. In no case shall the additions/deductions (arithmetical sum) exceed twice the deviation limit.
of c. The deviations ordered on items of any individual trade included in the contract shall not exceed plus/minus 50% of the value of that trade in the rt contract as a whole or half the deviation limit, whichever is less.
d. The value of additions of items of any individual trade not already included in the contract shall not exceed 10% of the deviation limit. Note:- Individual trade means the trade sections into which a schedule of quantities annexed to the agreement has been divided or in the absence of any such divisions the individual sections of the Himachal Pradesh, Public Works Department Schedule of Rates specified above, such as excavation and earth work, concrete, wood work and joinery etc. The rates of any such work except the items relating foundations which is in excess of the deviation limit shall be determined in accordance with the provisions contained in clause 12-A. Annexure - A
a) For buildings plinth level or 1.2 meter (4 feet) above ground level whichever is lower, excluding item for flooring and D.P.C. but including base concrete below the floors.::: Downloaded on - 15/04/2017 22:03:32 :::HCHP 7
b) For abutments piers, retaining walls of culverts and bridges walls of water reservoirs, the bed or floor level.
c) For retaining wall where floor level is not determine 1.2 .
meters above the average ground level or bed level.
d) For roads, all items of excavation and filling including treatment or sub-base and soling work.
e) For water supply lines, underground storm water drains and similar work all items of work below ground level except items of pipe work proper masonry work.
f) For open storm water drains, all items of work except of lining of drains.
Clause 12-A-. In the case of contract or substituted items which individually exceed the quantity stipulated in the contract rt by more than the deviation limit except the items relating tio foundation work which the contractor is required to do under clause 12 above, the contractor shall within 7 days from the receipt of order, claim revision of the rates supporting by proper analysis in respect of such items for quantities in excess of the deviation limit, notwithstanding the fact that the rates for such items exist in the tender for the main work or can be derived in accordance with the provisions of sub-clause (ii) of clause 12 and the Engineer-in-charge may revise their rates, having regard to the prevailing market rates and the contractor shall be paid in accordance with the rates so fixed. The Engineer-in-charge shall, however, be at liberty to cancel as his order to carry out such increased quantities of work by giving notice in writing to the contractor and arrange to carry it out in such manner as he may be considered advisable. But, under no circumstances the contractor shall suspend the work on the plea of non-settlement of rates of items falling under this clause.
All the provisions of the preceding paragraph shall equally apply to the decrease in the rates of items for quantities in excess of the deviation limit, notwithstanding the fact that the rates for such items exist in the tender for the main work or can be derived in accordance with the provisions of sub-clause (ii) of the preceding clause 12 and ::: Downloaded on - 15/04/2017 22:03:32 :::HCHP 8 the Engineer-in-charge may revise such rates having regard to the prevailing market rates."
.
8. The moot question that arises for consideration is: whether the petitioner was entitled to the deviation even though overall deviation was less than 30% being only 14.53% though in individual of items, some of the deviations admittedly exceeded 30%.
9. It is not in dispute and rather admitted by the petitioner that overall deviation in this case is only rt 14.53%, however, he would contend that Clause 12-A clearly provides for payment of market rates in respect of "individual items", which exceed the deviation limit and would further contend that Arbitrator has erroneously and illegally combined and mixed up the provisions of Clause 12 (vi) of the agreement by holding the provisions of Clause 12-A was subject to this proviso.
10. It would be noticed that in so far as Clause 12 of the agreement is concerned, the same does not deal with the deviations of the kind that are subject matter of the instant lis, which otherwise have expressly been provided for in Clause 12-A. The ::: Downloaded on - 15/04/2017 22:03:32 :::HCHP 9 contract in such like cases must be read as a whole and every effort should be made to harmonize the terms .
thereof keeping in mind that the rule of 'contra proferentum' does not apply in case of commercial contract for the reason that a clause in collateral contract is bilateral and has mutually been agreed to of (see: Oriental Insurance Company Limited vs Sony Cheriyanair AIR 1999 SC 3252, Polymat India P Ltd rt and another vs National Insurance Co Ltd and other AIR 2005 SC 286, Sumitomo He Avy Industries Limited vs Oil & Natural Gas Commission Of India, AIR 2010 SC 3400 and Rashtriya Ispat Nigam Limited vs Dewan Chand Ram Saran AIR 2012 SC 2829).
11. As observed earlier, it is Clause 12-A, which specifically deals with deviations in case of contract or substituted items, which 'individually' exceed the quantity stipulated in the contract by more than the deviation limit except the items relating to foundation work, which the contractor is required to do under Clause 12, the contractor is required within 7 days from the receipt of the order, claim revision of the rates ::: Downloaded on - 15/04/2017 22:03:32 :::HCHP 10 supported by proper analysis in respect of such items for quantities in excess of the deviation limit. The .
contract clearly contemplates of deviations in items, which 'individually' or 'jointly' or 'collectively' exceed the limit stipulated in the contract, i.e. 30% and, therefore, the claim of the petitioner could not have of been rejected.
12. In Mehta Teja Singh and Co. vs. Union of rt India, Suit No. 623-A of 1997 decided on 25.11.1980, the Hon'ble Delhi Court was dealing with the similar proposition as involved in the instant case. Therein, the Clause in the contract with the Central Public Works Department provided that the contractor agreed to carry out such deviations as may be ordered upto a maximum of 20% (twenty per cent) at the rates quoted in the tender documents and those in excess of that limit at the rates to be determined in accordance with the provisions contained in Clause 12-A of the tender form. Clause 12-A provided that:
Clause 12-A-. In the case of contract or substituted items which individually exceed the quantity stipulated in the contract by more than the deviation limit except the items relating tio foundation work which the contractor is required to do under clause 12 above, the contractor shall within 7 days from the ::: Downloaded on - 15/04/2017 22:03:32 :::HCHP 11 receipt of order, claim revision of the rates supporting by proper analysis in respect of such items for quantities in excess of the deviation limit, notwithstanding the fact that the rates for such .
items exist in the tender for the main work or can be derived in accordance with the provisions of sub-clause (ii) of clause 12 and the Engineer-in-charge may revise their rates, having regard to the prevailing market rates and the contractor shall be paid in accordance with the rates so fixed. The Engineer-in-charge shall, however, be at liberty to cancel as his order to carry out such increased quantities of work by giving notice in writing to the of contractor and arrange to carry it out in such manner as he may be considered advisable. But, under no circumstances the contractor shall suspend the work on the plea of non-settlement of rates of items falling under this clause. rt All the provisions of the preceding paragraph shall equally apply to the decrease in the rates of items for quantities in excess of the deviation limit, notwithstanding the fact that the rates for such items exist in the tender for the main work or can be derived in accordance with the provisions of sub-clause (ii) of the preceding clause 12 and the Engineer-in-charge may revise such rates having regard to the prevailing market rates."
13. The contractor claimed the determination of the rates of certain items for the quantities in excess of the deviation limit, under Clause 12-A above. The Government did not agree with the contractor's contention and relied upon sub-clause (vi) of Clause 12 of the said contract which was as follows:-
"Except in cases of items relating to foundations, provisions contained in sub-clause (i) to (v) above shall not apply to contract or substituted items as individually exceed the percentage set out in the tender documents (referred to ::: Downloaded on - 15/04/2017 22:03:32 :::HCHP 12 herein below as deviation limit), subject to the following restrictions:
a. The deviation limit referred to above is the net .
effect (allegorical sum) of all additions and deductions ordered.
b. In no case shall the additions/deductions (arithmetical sum) exceed twice the deviation limit.
c. The deviations ordered on items of any individual trade included in the contract shall not exceed of plus/minus 50% of the value of that trade in the contract as a whole or half the deviation limit, whichever is less.
rt d. The value of additions of items of any individual trade not already included in the contract shall not exceed 10% of the deviation limit. Note:- Individual trade means the trade sections into which a schedule of quantities annexed to the agreement has been divided or in the absence of any such divisions the individual sections of the Himachal Pradesh, Public Works Department Schedule of Rates specified above, such as excavation and earth work, concrete, wood work and joinery etc.
14. It was held that in spite of condition of the deviation limit and the determination of the rates of the quantity in excess of the said deviation limit under Clause 12-A, which itself makes a mention of the excess in the quantities beyond the deviation limit in individual items, application of sub-clause (vi) of Clause of the contract would not be justified. It was further ::: Downloaded on - 15/04/2017 22:03:32 :::HCHP 13 held that while reading the provisions of sub-clause (vi) of Clause 12, it would be obvious that the various .
percentage of the quantities of the individual items of the trade could have been ascertained only after the completion work and till then the rates for the quantities in excess of the deviation limit obviously of cannot be determined. It was held that it was not the intention of the Clauses providing for the deviation limit rt and the determination of the rates of quantities in excess of the said deviation limit under Clause 12-A.
15. The factual and legal aspect of this case is not different from the one as referred in Mehta Teja Singh case (supra). Thus, the case being squarely covered deserves to be allowed and award to this extent requires to be set aside.
16. However, learned Deputy Advocate General would strongly contend that this Court while deciding objections against the award would not act as a court of appeal and interference is permissible only when the findings of the Arbitrator are arbitrary, capricious and perverse or when the conscience of the Court is shocked and lastly when the illegality is not trivial but ::: Downloaded on - 15/04/2017 22:03:32 :::HCHP 14 goes to the root of the matter. It is further contended that this Court will not interfere because another view .
is possible. It is the Arbitrator who is master of quality and quantity of evidence while drawing arbitral award, therefore, it was found that the arbitrator's approach is neither arbitrary nor capricious, the Court should loath of to interfere.
17. In support of his contention, learned Deputy Advocate rt General has referred judgments of the Hon'ble Supreme Court:
to the following
i) Associate Builders vs. Delhi Development
Authority, (2015) 3 SCC 49 and
ii) Navodaya Mass Entertainment Limited vs. J.M. Combines, (2015) 5 SCC 698
18. Obviously, there can be no quarrel with the proposition of law as expounded by the Hon'ble Supreme Court in the aforesaid cases. However, as already observed earlier, the question involved in this case is squarely covered by the judgment rendered by the Hon'ble Delhi High Court in Mehta Teja Singh case (supra). Moreover, once the Arbitrator fails to apply the relevant clause of the agreement, then ::: Downloaded on - 15/04/2017 22:03:32 :::HCHP 15 perversity is obviously writ large. The claim raised by the petitioner has wrongly been denied to him by the .
learned Arbitrator.
19. In view of what has been stated hereinabove, I find merit in the petition and the same is accordingly allowed and the award made by the Arbitral Tribunal of comprising of Superintending Engineer, NH Circle, HPPWD, Shimla Solan dated 5.11.2011 is set aside and rt the Arbitral Tribunal is directed to reconsider the claim of the petitioner in the light what has been observed above coupled with the material available on record.
Since the claim is pending for nearly two decades, it is expected that the learned Arbitral Tribunal shall proceed to decide the same as expeditiously as possible and in no event later than 30th June, 2017. The parties to bear their own costs.
(Tarlok Singh Chauhan), Judge.
23.3. 2017 *awasthi* ::: Downloaded on - 15/04/2017 22:03:32 :::HCHP