Punjab-Haryana High Court
Union Of India And Others vs Puran Chand Diwan And Another on 18 March, 2011
Author: Sabina
Bench: Sabina
CR No. 4217 of 2002 (O&M) 1
IN THE HIGH COURT OF PUNJAB & HARYANA, CHANDIGARH
C.R. No. 4217 of 2002 (O&M)
Date of Decision: March 18 , 2011
Union of India and others ..........Petitioners
Versus
Puran Chand Diwan and another ..........Respondents
Coram: Hon'ble Mrs. Justice Sabina
Present: Mr.Rajiv Sharma,Advocate
for the petitioners.
Mr.Manohar Lal,Advocate
for the respondents
**
Sabina, J.
Puran Chand Diwan filed a petition that the award dated 24.3.1995 passed by the Arbitrator be made rule of the Court. The Senior Sub Judge vide judgment and decree dated 10.8.1998 held as under:-
"In view of my findings on the aforementioned issues, the objection petition of the objector Union of India is partly accepted to the extent that the award Ex.0-2 given by the arbitrator in respect of claim no.1 is not legal and,therefore, the objection petition of the objector in respect of the claim no.1 is accepted and the remaining part of the CR No. 4217 of 2002 (O&M) 2 award Ex-0-2 is made a rule of the court. The contractor would be entitled to get interest @ 12% per annum from the date of decree till payment in respect of the remaining portion of the award. A decree sheet be prepared accordingly and file be consigned to the record room."
Aggrieved by the said judgment and decree,both the sides filed the appeals. Vide judgment and decree dated 27.3.2002, the Additional District Judge allowed the appeal filed by Puran Chand Diwan and dismissed the appeal filed by the Union of India and Others. Consequently, the award passed by the Arbitrator was made rule of the Court. Hence, the present petition by the Union of India and others.
Learned counsel for the petitioners has submitted that as per clause 11 (C) of the agreement executed between the parties, the contractor could not have been granted compensation qua the delay which had occurred on account of extension sought by him to complete the work. In support of his arguments, learned counsel has placed reliance on Ramnath International Construction (P) Ltd. vs. Union of India (2007) 2 Supreme Court Cases 453 wherein it was held that the Arbitrator could not have allowed compensation/damages in view of specific provisions in the agreement i.e. Clause 11(C). There was a specific bar against the award of damages on account of delay. Hence, the Arbitrator had exceeded his jurisdiction.
Learned counsel for the respondents, on the other hand, has submitted that the Arbitrator had the power to grant compensation to the contractor on account of delay in completion of the work allotted to him. Learned counsel has submitted that in M/s Shyama Charan Agarwala & Sons vs. Union of India 1999(1)Arb.LR 483 view had been taken by the Bombay High CR No. 4217 of 2002 (O&M) 3 Court that in view of clause 11(C) (as in the present case ) of the contract neither party to the agreement was entitled to claim compensation or otherwise howsoever arising as a result of extensions granted under conditions (A) and (B) of Clause 11. The Apex Court in Special Leave to Appeal (civil) No.5757/98 filed in the abovesaid case had set aside the judgment passed by the High Court and it was held that there will be a decree also in respect of claim 8 of the award.
Learned counsel for the respondents has further placed reliance on the judgment of the Apex Court in K.R.Raveendranathan vs. State of Kerala and another (1996) 10 Supreme Court Cases 35 wherein the matter was referred to three Judges Bench for decision in view of conflicting views in Hindustan Construction Co. Ltd. vs. State of Jammu and Kashmir (1992)4 SCC217 and Associate Engg. Co. vs. Govt. of A.P. (1991)4 SCC
93. The view taken in Sudershan Trading Co. vs. Govt. of Kerala (1989) 2SCC 38, was approved in Hindustan Construction Company (supra). The three Judges Bench of the Apex Court in K.R.Raveendranathan vs. State of Kerala (1998) 9 Supreme Court Cases 410 approved the view taken in Hindustan Construction Company Ltd. Case(supra).
Clause 11(B) and 11(C) of the contract reads as under:-
11(B) if the works be delayed;-
(a) by reason of non-availability of Government stores mentioned in Schedule `B'; or
(b) by reason of non-availability or breakdown of Govt. Tools and Plant mentioned in Schedule `C';
then, in any such event, notwithstanding the provisions hereinbefore contained, the G.E. may in his discretion grant such extension of time as may appear reasonable to him and the Contractor shall be bound to CR No. 4217 of 2002 (O&M) 4 complete the Works within such extended time. In the event of the Contractor not agreeing to the extension granted by the Garrison Engineer, the matter shall be referred to the Accepting officer (or CWE in case of contract accepted by Garrison Engineer) whose decision shall be final and binding.
© No claim in respect of compensation or otherwise, howsoever arising,as a result of extensions granted under Conditions (A) and (B) above shall be admitted."
As per clause 70 of the agreement executed between the parties, all disputes between the parties to the contract shall be referred to the sole arbitrator of an officer appointed by the authority mentioned in the tender documents.
In the present case, the question that requires consideration is only qua claim no.1 of the award which reads as under:-
S Brief description of claim Findings Award r. amount of claim N o "For reimbursement of Damages/Losses claim `2,22,265.00 suffered on account of Deptt's serious partly
breach of the contract including delay in sustained handing over of sites and issue of Schedule `B' stores, revision in layout, numerous changes in scope of work, delay in giving decisions, obstructions/hindrances caused by other agencies, delay in placing work orders for provisional lumpsum items and Prime cost sum items etc. resulting in abnormal prolongation of the contract period.
1 Amount of claim Rs.3,34,530.00 Admittedly, the award passed by the Arbitrator is a non-speaking award.
Learned counsel for the petitioners has placed reliance on the view taken by the Apex Court in Ramnath International Construction (P) Ltd.case CR No. 4217 of 2002 (O&M) 5 (supra). The Apex Court had placed reliance on the view taken in Associated Engg.Co. case (supra),whereas, the learned counsel for the respondents has argued that the view taken by the Apex Court in Associated Engg. Co. case(supra) was not approved by three Judges Bench of the Apex Court in a later decision.
The legal position, after going through the judgments relied upon by the learned counsel for the parties, that emerges is that there were two views expressed by the Apex Court qua similar dispute in question. The Apex Court in Associated Engg. Co. case (supra) had held that no compensation could be allowed qua any delays or any hindrances caused by any Department in view of the specific available bar in this regard. The said view was relied upon by the Apex Court in Ramnath International Construction (P) Ltd. case(supra). The matter was referred to three Judges Bench. In the said case, it was ordered by the Apex Court as under:-
"After spending considerable time in this case on the question of law, namely, whether the arbitrator had exceeded his jurisdiction in awarding the amount in question, the counsel on either side placed reliance on Sudarsan Trading Co. v. Govt. Of Kerala and to the contra position, the counsel appearing for the State of Kerala placed reliance on Associated Engg. Co. v Govt. of A.P. Prima facie, we are of the view that the view in these two decisions are mutually conflicting. Shri A.S.Nambiar, learned Senior Counsel has placed reliance on Hindustan Construction Co. Ltd. v. State of J &K in which the ratio in Sudarsan Trading Co. v. Govt. of Kerala was practically approved. Sudarsan Trading Co. case was not brought to the notice of the Court in Associated Engg. Co. case. But however, in view of the apparent CR No. 4217 of 2002 (O&M) 6 conflict of the abovesaid decisions, we deem it expedient that the matter may be referred to a three Judge Bench for decision. The Registry is directed to post this matter before a Bench comprising three Hon'ble Judges."
Thereafter, the matter was listed before three Judges Bench of the Apex Court. In the said case, it was held as under:-
"1.Special leave granted.
2.The learned counsel for the appellant points out that the question in issue in the present appeals is squarely covered by the decision of this Court in Hindustan Construction Co. Ltd. v. State of J&K. In particular, it drew our attention to para 10 of the judgment and the portion extracted from the decision in Sudarsan Trading Co. case wherein it was said that by purporting to construe the contract the Court could not take upon itself the burden of saying that this was contrary to the contract and, as such, beyond jurisdiction. That is exactly what the Court has done in the instant case. Therefore, the issue stands covered by this decision and the learned counsel for the respondents could not in the face of this decision argue otherwise.
3.In the result, we allow these appeals and set aside the impugned order of the Division Bench of the High Court with no order as to costs."
Thus, the view taken by the Apex Court in Hindustan Construction Co. Ltd. was approved. Similarly, in M/s Shyama Charan Agarwala & Sons case (supra), the Bombay High Court had taken the view that once the extensions CR No. 4217 of 2002 (O&M) 7 were covered under clause (B) (similar clause in the present case) of the agreement then under clause 11(C) (similar clause in the present case) neither party was entitled to claim compensation. The Bombay High Court was dealing with claim No. 8 of the statement of the claim filed by the Contractor before the Arbitrator. In appeal filed by the Contractor before the Apex Court, vide order dated 07.09.1998, it was held as under:-
"Delay condoned.
Special leave granted.
In view of the decision of this Court in K.R.Ravindran Vs. State of Kerala (1996)(10)SCC 35, the appeal is allowed and the impugned judgment and order of the High Court is set aside. There will be,therefore, a decree also in respect of claim No. 8 of the award."
Thus, the question involved in this case is no longer res integra. The Apex Court has held that the Arbitrator could award the claim sought by the contractor on account of damages/losses suffered on account of delay. In these circumstances, no interference by this Court is called for.
Dismissed.
( Sabina ) Judge March 18,2011 arya