Gujarat High Court
Shree Sipral Construction Corporation vs State Of Gujarat & 2 on 6 May, 2014
Author: Ks Jhaveri
Bench: Ks Jhaveri, A.G.Uraizee
C/SCA/6794/2014 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 6794 of 2014
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE KS JHAVERI
and
HONOURABLE MR.JUSTICE A.G.URAIZEE
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1 Whether Reporters of Local Papers may be allowed to see
the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the
judgment ?
4 Whether this case involves a substantial question of law as
to the interpretation of the Constitution of India, 1950 or any
order made thereunder ?
5 Whether it is to be circulated to the civil judge ?
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SHREE SIPRAL CONSTRUCTION CORPORATION....Petitioner(s)
Versus
STATE OF GUJARAT & 2....Respondent(s)
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Appearance:
MR HK PARMAR, ADVOCATE for the Petitioner(s) No. 1
MR. ALPESH H PARMAR, ADVOCATE for the Petitioner(s) No. 1
GOVERNMENT PLEADER for the Respondent(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE KS JHAVERI
and
HONOURABLE MR.JUSTICE A.G.URAIZEE
Page 1 of 8
C/SCA/6794/2014 JUDGMENT
Date : 06/05/2014
ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE KS JHAVERI)
1. By way of this petition, the petitioner has challenged the order passed by the Executive Engineer, Road and Building Department, Nirman Bhavan, Sardarbag, Junagadh dated 2/4/2014 whereby order of recovery of Rs. 43,98,631.84/ was made and the same was directed to be paid by the petitioner within ten days.
2. Brief facts of the present petition are that on 22/10/2010, the respondent authorities issued public invitation inviting contractors to bid for carrying out the work of widening and strengthening of VisdavadarDhari Road S.H.96 between Km. 42/00 to 63/4 (Standard Two Lane). The Respondent authority accepted the offer of the petitioner for various amounts subject to certain conditions so as to deposit various amount within ten days. On 26/10/2010, upon fulfilling the conditions of deposit as required by the respondents, they issued work order in favour of the petitioner. Thereafter, the work was carried out by the petitioner in the presence and under the supervision of Executive Engineer i.e. the Respondent no. 3 or his subordinates. The Deputy Executive Engineer, R&B has prepared Final bill and has issued a Completion Page 2 of 8 C/SCA/6794/2014 JUDGMENT Certificate in final bill which was checked and approved by the Executive Engineer. In spite of that, the respondent has issued letter of recovery of Rs. 43,98,631.84 alongwith penal interest.
3. Learned Counsel Mr. H.K.Parmar appearing for the petitioner has placed reliance on the order passed by the Division Bench of this Court on 5/2/2014, whereby the Division Bench of this Court has not entertained the writ petition as an alternative remedy is available to the petitioner but the stay has been granted in favour of the petitioner.
4. He has relied upon the decision of the Apex Court in case of J.G.Engineers Private Ltd Vs. Union of India and Anr reported in (2011) 5 SCC 758 more particularly para nos. 10, 17 & 18, which are reproduced as under:
"10.A civil court examining the validity of an arbitral award under Section 34 of the Act exercises supervisory and not appellate jurisdiction over the awards of an Arbitral Tribunal. A court can set aside an arbitral award, only if any of the grounds mentioned in Sections 34(2)(b)(i) and (ii), or Section 28(1)(a) or 28(3) read with Section 34(2)(b)
(ii) of the Act, are made out. An award adjudicating claims which are "expected matters" excluded from the scope of arbitration, would violate Sections 34(2)(a)
(vi) and 34(2)(b) of the Act. Making an award allowing or granting a claim, contrary to any provision of the contract, would Page 3 of 8 C/SCA/6794/2014 JUDGMENT violate Section 34(2)(b)(ii) read with Section 28(3) of the Act.
17. Clauses (2) and (3) of the contract relied upon by the respondents, no doubt make certain decisions by the Superintending Engineer and EngineerinCharge final/final and binding/final and conclusive, in regard to certain matters. But the question is whether clauses (2) and (3) of the agreement stipulate that the decision of any authority is final in regard to the responsibility for the delay in execution and consequential breach and therefore exclude those issues from being the subject matter of arbitration. We will refer to and analyse each of the 'excepted matters' in clauses (2) and (3) of the agreement to find their true scope and ambit :
(i) Clause (2) provides that if the work remains uncommenced or unfinished after proper dates, the contractor shall pay as compensation for everyday's delay an amount equal to 1% or such small amount as the Superintending Engineer (whose decision in writing shall be final) may decide on the estimated cost of the whole work as shown in the tender. What is made final is only the decision of the Superintending Engineer in regard to the percentage of compensation payable by the contractor for everyday's delay that is whether it should be 1% or lesser. His decision is not made final in regard to the question as to why the work was not commenced on the due date or remained unfinished by the due date of completion and who was responsible for such delay.
(ii) Clause (2) also provides that if the contractor fails to ensure progress as per the time schedule submitted by the contractor, he shall be liable to pay as compensation an amount equal to 1% or such Page 4 of 8 C/SCA/6794/2014 JUDGMENT smaller amount as the Superintending Engineer (whose decision in writing shall be final) may decide on the estimated cost of the whole work for everyday the due quantity of the work remains incomplete, subject to a ceiling of ten percent. This provision makes the decision of the Superintending Engineer final only in regard to the percentage of compensation (that is, the quantum) to be levied and not on the question as to whether the contractor had failed to complete the work or the portion of the work within the agreed time schedule, whether the contractor was prevented by any reasons beyond its control or by the acts or omissions of the respondents, and who is responsible for the delay.
(iii) The first part of clause (3) provides that if the contractor delays or suspends the execution of the work so that either in the judgment of the Engineerin Charge (which shall be final and binding), he will be unable to secure the completion of the work by the date of completion or he has already failed to complete the work by that date, certain consequences as stated therein, will follow. What is made final by this provision is the decision of the EngineerinCharge as to whether the contractor will be able to secure the completion of the work by the due date of completion, which could lead to the termination of the contract or other consequences. The question whether such failure to complete the work was due to reasons for which the contractor was responsible or the department was responsible, or the question whether the contractor was justified in suspending the execution of the work, are not matters in regard to which the decision of Engineerin Charge is made final.
(iv) The second part of clause (3) of the agreement provides that where the contractor Page 5 of 8 C/SCA/6794/2014 JUDGMENT had made himself liable for action as stated in the first part of that clause, the EngineerinCharge shall have powers to determine or rescind the contract and the notice in writing to the contractor under the hand of the EngineerinCharge shall be conclusive evidence of such termination or rescission. This does not make the decision of the Engineerin Charge as to the validity of determination or rescission, valid or final. In fact it does not make any decision of EngineerinCharge final at all.
It only provides that if a notice of termination or rescission is issued by the EngineerinCharge under his signature, it shall be conclusive evidence of the fact that the contract has been rescinded or determined.
(v) After determination or rescission of the contract, if the Engineerin Charge entrusts the unexecuted part of the work to another contractor, for completion, and any expense is incurred in excess of the sum which would have been paid to the original contractor if the whole work had been executed by him, the decision in writing of the EngineerinCharge in regard to such excess shall be final and conclusive, shall be borne and paid by the original contractor. What is made final is the actual calculation of the difference or the excess, that is if the value of the unexecuted work as per the contract with the original contractor was Rs.1 lakh and the cost of getting it executed by an alternative contractor was Rs.1,50,000/ what is made final is the certificate in writing issued by the EngineerinCharge that Rs.50,000 is the excess cost. The question whether the determination or rescission of the contractor by the EngineerinCharge is valid and legal and whether it was due to any breach on the part of the contractor, or whether the contractor could be made liable to pay such excess, are not issues on which Page 6 of 8 C/SCA/6794/2014 JUDGMENT the decision of EngineerinCharge is made final.
18.Thus what is made final and conclusive by Clauses (2) and (3) of the agreement, is not the decision of any authority on the issue whether the contractor was responsible for the delay or the Department was responsible for the delay or on the question whether termination/rescission is valid or illegal. What is made final, is the decisions on consequential issues relating to quantification, if there is no dispute as to who committed breach. That is, if the contractor admits that he is in breach, or if the arbitrator finds that the contractor is in breach by being responsible for the delay, the decision of the Superintending Engineer will be final in regard to two issues. The first is the percentage (whether it should be 1% or less) of the value of the work that is to be levied as liquidated damages as per day. The second is the determination of the actual excess cost in getting the work completed through an alternative agency. The decision as to who is responsible for the delay in execution and who committed breach is not made subject to any decision of the respondents or its officers, nor excepted from arbitration under any provision of the contract."
5. We have heard learned counsel appearing for the petitioner at length and in great detail. We have also perused the documents on record.
6. Considering the facts of this case and the fact that an alternative remedy is available to the petitioner, it will not be appropriate for us to entertain this writ petition or grant any stay.
Page 7 of 8C/SCA/6794/2014 JUDGMENT However, it will be open for the petitioner to revive the same in case if the Tribunal refuse to grant any stay against the order of recovery.
7. Hence, there is no substance in the present petition. The same is dismissed accordingly.
(K.S.JHAVERI, J.) (A.G.URAIZEE,J) *asma Page 8 of 8