Andhra HC (Pre-Telangana)
A.P. Housing Board Rep. By Regional ... vs M. Ranga Rao And Ors. on 7 August, 1995
Equivalent citations: 1996(2)ALT247
ORDER Neelam Sanjiva Reddy, J.
1. All these Civil Miscellaneous Appeals and Civil Revision Petitions are filed against the orders of V Additional Judge, City Civil Court, Hyderabad, passed on 28-4-1992 in O. Ps. No. 467, 468, 469, 472, 471, 466, 473, 470, 475 and 474 of 1990, These cases can be conveniently disposed of by a common order as the parties are same and the points that arise for consideration are same or similar.
2. In all these matters, Andhra Pradesh Housing Board represented by its Regional Housing Engineer (Executive Engineer), Mahabubnagar ('Housing Board' for short) is the appellant or the petitioner, M. Ranga Rao, Contractor ('Contractor' for short) is the first respondent; and Hon'ble Sri Justice K. Punnayya, Retired Judge, High Court of Andhra Pradesh, sole arbitrator ('arbitrator' for short) is the second respondent. The following agreements were entered into between the contractor and the Housing Board for constructing the houses at Nagarkurnool, Mahabubnagar District:
(i) Agreement No. 19/RHE/MBNR/DIVL/82-83 dated 25-6-1982 for construction of 70 LIG-I Houses under Group-III.
(ii) Agreement No. 20/RHE/MBNR/DIVL/82-83 dated 25-6-1982 for construction of 70 LIG-I Houses under Group-IV.
(iii) Agreement No. 17/RHE/MBNR/DIVL/82-83 dated 25-6-1982 for construction of 32 LIG-I Houses under Group-I.
(iv) Agreement No. 21/RHE/MBNR/DIVL/82-83 dated 25-6-1982 for construction of 70 LIG-I Houses under Group-V.
(v) Agreement No. 18/RHE/MBNR/DIVL/82-83 dated 25-6-1982 for construction of 64 LIG-I and 26 LIG-II Houses under Group-II.
3. All the works under the agreements had to be completed within one year from the date of agreement, but they were completed after more than a year beyond the agreed period. The contractor and the Housing Board blame each other for the delays in execution of the works beyond the contract period. The contractor requested the Housing Board to compensate the loss sustained by him on various accounts due to the delays caused by the Housing Board. The Housing Board denied its liability to compensate in view of the terms of the agreement and further that the contractor was himself responsible for the delays caused in the execution of the works.
4. In the process of resolution of their disputes under the Arbitration Act ('Act' for short), the second respondent was appointed as sole arbitrator who after giving opportunity to both sides, passed the awards on all the disputes arising out of the above five agreements separately and subsequently gave reasons for the awards on the directions of the lower Court.
5. The contractor filed O.Ps.No. 467, 469, 471, 473 and 475 of 1990 under Section 17 of the Act to make the awards rule of the Court. The Housing Board filed O.Ps. No. 468, 472, 466, 470 and 474 of 1990 under Sections 30 and 33 of the Act to set aside the awards or modify them under Section 15 of the Act or remit them to the arbitrator for reconsideration. The learned Additional Judge passed common orders on 28-4-1992 in the two O.Ps arising from each of the agreements entered into by the contractor and the Housing Board, accepting the awards of the arbitrator and consequently allowed the petitions filed by the contractor and dismissed the petitions filed by the Housing Board in terms of the award. He also awarded interest at the rate of 8% per annum from the date of the decrees to the date of realisation. The Housing Board, aggrieved by the said orders of the learned Additional Judge, preferred the present Civil Miscellaneous Appeals and the Civil Revision Petitions.
6. The arbitrator opined that non-supply of cement and steel by the Housing Board caused delays in completion of the works and consequent loss to the contractor on different counts and he also accepted the other claims of the contractor. The arbitrator awarded compensation towards the loss sustained for labour, machinery and equipment kept idle, towards the increased cost for the work done beyond the agreement period, towards refund of excess recoveries made from bills due to difference in the theoretical and actual weights, towards balance payment for fabrication and placing of steel in position, towards refund of excess recovery of cement, towards overhead expenditure incurred beyond the agreement period, and towards wrongful recovery of cement transportation as claimed by the contractor. He further allowed compensation on the above claims assessing it on the basis of interest payable at 18% per annum. Interest at 18% per annum from the date of award till the date of decree or payment was also allowed.
7. It is seen from the record that the following contentions, among others, were raised on behalf of the Housing Board before the learned Additional Judge: The claims of the contractor on account of loss sustained for labour, machinery and equipment kept idle are not maintainable either on facts or in law. There is no material to establish that the delays were caused due to non-supply of cement and steel resulting in keeping idle the machinery, equipment and labour. The contractor could only ask for extension of time. There is absolutely no record to show that the extension of time was granted because of lapses on the part of the Housing Board. The claim towards increased cost for the work done beyond the agreement period is contrary to the terms of agreement. There was no delay in payment of bills. Measurement books, bills submitted by the contractor and payments made establish this fact. The cement supplied by the Housing Board has to be used only for the purpose of construction of houses for which the agreement was executed and not for other constructions. Therefore, the claim on account of recovery of excess cement issued cannot be sustained. Claim on account of expenditure incurred on overheads beyond the agreement period also cannot be sustained as the work was executed beyond the agreement period because of delays on the part of the contractor in execution of the work. AH the main claims are interlinked and the contractor alone was responsible for the delays. All the claims are not supported by any reliable evidence. Mere statements without details and without any documentary evidence to prove the same cannot form the basis for the claims. As per P.S.37 of the Andhra Pradesh Detailed Standard Specifications ('APDSS' for short), the contractor shall erect and maintain at his own cost temporary weather-proof sheds at such places and in a manner approved by the Executive Engineer for keeping materials under cover. The contractor shall also provide and maintain at his own expense such temporary fences, guards, bridges and roads as may be necessary for execution of his contract work or for safeguarding or accommodating the public. Any diversion of cement supplied by the Housing Board, for the works which the contractor was bound to do at his expense, was liable to be recovered from the bills. P.S. 59 of APDSS dealing with delays and extension of time, disentitles the contractor to claim any compensation on account of delays or hindrances to the work from any cause whatever except in the circumstances stated therein. The reasonable extension of time shall be allowed by the Executive Engineer or by Officer competent to sanction the extension for unavoidable delays due to causes beyond the control of the contractor. In view of P.S. 59 of APDSS, the contractor is entitled for extension of time on justifiable grounds and not for compensation.
8. P.S. 69 of APDSS bars the contractor's claim to interest or compensation. Some of the claims made by the contractor and accepted by the arbitrator are contrary to P.S. 69. The claims of the petitioner are not tenable in view of Condition No. 6 which reads as follows:
"Cement and steel will be supplied by the Board in sufficient quantities as and when required, as consistent with the out-turn of the work. The Department shall not however be held responsible for any loss i.e. likely to occur to the contractor on account of delay in supply of steel and cement. In the case of such delay, the contractor will only be eligible for suitable extension of time."
and Condition No. 7 which reads as follows:
The Contractor cannot hold the Department responsible for any damage on account of delay in supplying the materials, if any proposed to be supplied departmentally."
9. Sri T. Anantha Babu, learned senior counsel for the Housing Board referred to the case Ch. Ramalinga Reddy v. Superintending Engineer, 1994 (5) SCALE 67 wherein it was observed:
"17. Claim 13 was for "payment of extra rates for work done beyond agreement time at schedule of rate prevailing at the time of execution". The arbitrator awarded the sum of Rs. 39,540/-. Clause 59 of the A.P, Standard Specifications, which applied to the contract between the parties, stated that no claim for compensation on account of delays or hindrances to the work from any cause would lie except as there in defined. The claim falls outside the defined exceptions. When extensions of time were granted to the appellant to complete the work, the respondents made it clear that no claim for compensation would lie. On both counts, therefore, Claim B was impermissible and the High Court was right in so holding."
10. Learned senior counsel for the Housing Board referred to the cases Secretary, Irrigation Department, Government of Orissa v. G.C. Roy, and Secretary to Government of Orissa v. Raghunath Mohapatra, for the proposition that when the terms of the agreement prohibit payment of interest, the arbitrator has no power to award interest pendente lite.
11. Sri T. Anantha Babu, learned senior counsel for the Housing Board contends that the impugned judgments are no judgments in the eye of law for the reasons that the learned Additional Judge disposed of these cases in a superficial manner without any worthwhile application of mind. The court below was duty bound to examine the reasons assigned by the arbitrator. The manner of their disposal makes a mockery of remedy under Section 33 of the Act and the impugned judgments are liable to be set aside on this ground alone and to be remanded to the lower court for disposal according to law.
12. Sri P. Ramachandra Reddi, learned senior counsel for the contractor though did not support the manner of disposal of the cases by the lower court, strongly supported the findings of the arbitrator on the grounds that the findings are based on sound reasoning and evidence, both oral and documentary, and that awarding compensation on different counts was not contrary to law. He referred to a decision of this Court in V. Raghunadha Rao v. State of Andhra Pradesh, 1988(1) ALT 461 wherein K. Ramaswamy, J. as he then was, held that the opening part of the first Sub-clause of Clause 59 and the supplementary specifications of APDSS relieving the liability of the State are arbitrary and unjust. In L.I.C. of India v. Consumer Education & Research Centre, 1995 (3) SCALE 627 = 1995 (3) ALT 46 (D.N.) a Division Bench of the Supreme Court of which K. Ramaswamy, J is one, reiterated the above position of law by observing thus:
"46. In V. Raghunndha Rao v. State of A.P. and Ors., 1988 (1) ALT 461, the Andhra Pradesh High Court considering the constitutionality of Clauses 11, 29, 59, 62(b) and 73, the A.P. Standard Specifications on the anvil of Articles 14, 19(1)(g), the dotted lines contract entered by the petitioner therein under Article 298 and declared Clause 73 an arbitration clause of reference to officers that dealt with the contractor as arbitrary and ultra vires of the Constitution.
47. It is, therefore, the settled law that if a contract or a clause in a contract is found unreasonable or unfair or irrational one must look to the relative bargaining power of the contracting parties. In dotted line contracts there would be no occasion for a weaker party to bargain or to assume to have equal bargaining power. He has either to accept or leave the services or goods in terms of the dotted line contract. His option would be either to accept the unreasonable or unfair terms or forego the service for ever. With a view to have the services of the goods, the party enters into a contract with unreasonable or unfair terms contained therein and he would be left with no option but to sign the contract."
13. Sri P. Ramachandra Reddi, learned counsel for the contractor cited the decision in Subhash Aggarwal Agencies v. Bhilwara Synthetics Limited, (D.N.) for the proposition that the confirmatory order by the appellate authority need not again set out reasons in an appeal against the reasoned award by the arbitrator. This decision has no application to the instant case as the lower court is not the appellate authority passing the confirmatory order.
14. We would first consider the contention of Sri T. Anantha Babu, learned senior counsel for the Housing Board, that the impugned judgments are no judgments in the eye of law and are liable to be set aside. Section 2(9) of Code of Civil Procedure defines 'Judgment' as follows:
" 'Judgment' means the statement given by the Judge on the grounds of a decree or order."
Order 20 Rule 4(2) dealing with Judgments reads thus:
"Judgments of other Courts shall contain a concise statement of the case, the points for determination, the decision thereon, and the reasons for such decision."
15. In Aziz Ahmed Khan v. I.A. Patel, the Full Bench of this Court dealt with Order 20 Rule 4(2) of Civil Procedure Code regarding pronouncement of judgment and decree of the court. The Bench held as follows:
"7. ... One of the important functions of the trial court is to settle all necessary issues whether of fact or of law, arising out of the pleadings. If a question is raised that the suit is not maintainable under certain provisions of law, the court cannot afford to lose sight of this material proposition which goes to the root of the matter. It has to necessarily frame an issue in that behalf".
It was further held as follows:
"8....... Whereas a judgment shall contain a concise statement of the case, the points for determination and the decision thereon, we search in vain for any of these essentials in the impugned judgment. It is no judgment at all. The provisions of Rule 4(2) have a set purpose. The form is designed to ensure that while pronouncing the orders or judgment's the Courts do not act mechanically. They should apply their minds to the facts of the case and the points at issue and give a reasoned judgment thereon so that not only their own conscience may be satisfied but also the litigants should have satisfaction that all their evidence has been evaluated and their contentions and arguments duly considered. This is of vital importance inasmuch as the whole edifice of confidence of the litigants in Courts is built upon the quality of judgments. The Courts, therefore, have to necessarily take care that their judgments conform to the provisions of law and are products of sound reasoning."
16. A perusal of the impugned judgments makes it clear that appropriate points or issues necessary for the just decision of the case were not formulated and reasons for accepting the awards and making them rule of the court were not given. The impugned judgments do not reveal that the learned Additional Judge applied his mind to the facts of the case and points at issue and consequently failed to give reasoned judgments. The High Courts have always condemned even administrative orders affecting the rights of the parties where they are non-speaking orders and such orders are liable to be set aside. For the aforesaid reasons, we accept the contention of Sri T. Anantha Babu, learned senior counsel for the Housing Board that the impugned judgments were disposed of by the learned Additional Judge in a superficial manner, without applying his mind, considering the contentions of either side, formulating points for decision and assigning any reasons for the decision. In view of this finding, we are inclined to remand the matters to the lower court for disposal according to law. Therefore, there is no need to consider the other contentions raised.
17. In the result, all the Civil Miscellaneous Appeals and Civil Revision Petitions are allowed and the impugned orders under appeals and revisions are set aside and all these matters are remanded to the lower court for disposal according to law with further directions that the parties be given opportunity to file their objections by 7th September, 1995, to dispose of the cases as early as possible, at any rate by the end of February, 1996 and the security given by the contractor before this Court shall continue till the final disposal of the O.Ps and subject to orders of the learned Additional Judge. In the circumstances of the case, parties to bear their own costs.