| Content Provider | Supreme Court of India |
|---|---|
| e-ISSN | 30484839 |
| Language | English |
| Access Restriction | NDLI |
| Subject Keyword | Arbitration Act s 70 quarry contract extension of time on account of delay or hindrance 1940 |
| Content Type | Text |
| Resource Type | Law Judgement |
| Jurisdiction | India |
| Act(s) Referred | Arbitration Act, 1940 (10 of 1940) |
| Case(s) Referred | Referred Case 0 Referred Case 1 Referred Case 2 |
| Case Type | Appeal |
| Court | Supreme Court of India |
| Disposal Nature | Appeal Allowed |
| Headnote | Arbitration Act, 1940: Respondent- State invited tender for carrying out irrigation works – Appellant quoted the lowest rates and entered into three agreements – Under the agreements, appellant raised 9 claims – Arbitrator rejected claim Nos.6 and 8 whereas he awarded various sums in regard to the other claims – Respondent State filed the applications for setting aside the award under ss.30 and 33 of the Act – Appellant moved suits for making the award decree of the Court under the Act – Certain claims which were awarded by the Arbitrator, however, did not meet with approval of the sub-Judge and he agreed with the respondent-State – High Court found that the arbitration awards were totally unsustainable in view of clause 59 of the Agreement – In the instant appeals, the appellant raised claim no.1, 3, 4, 7 and 9 only – Claim No.1 was made towards extra lead of 4 kms/6 kms - stone and metal – The case of the appellant-contractor was that contractor was to quarry and take stones and metal from a specified quarry which was located at a shorter distance than from where the contractor had to actually quarry the stones and metal and thereafter transport the materials to the work site, which resulted in extra rate and extra expenditure and, therefore, claimed Rs. 15 per cubic meter – Held: Under clause 59 while extension of time on account of delay or hindrance was allowed, any claim for compensation on account of delay or hindrance on account of any cause did not lie – Since Claim no.1 was based on the expenditure which the contractor had purported to incur on this score, he was entitled to difference in the rate – The claim for Rs.15/- per cu.m. was based on abnormal increase in transport charges due to increase in cost of fuel, automobile spare parts etc – If escalated rates are claimed then it may attract the wrath of Clause 59 – The amount must be awarded on the basis of the cost of conveyance being calculated at the rate of Rs.13.75 – The decision of sub-court is sustained exercising power under Art.142 under this claim. Claim No.3 – Non-supply of food grains as per the conditions of the agreement – Under the food for work programme of the Central Government, food grains were to be made available by the respondent and part of the wages of the works was to be supplied by the appellant in food grains as part of the contractual obligation – It was the case of the appellant that the food grains were not supplied though it was available – Consequently, the appellant had to supply food grains to his workers by procuring the food grains at higher prices from the open market – The arbitrator noted the argument of the State that the relevant clause only contemplated making available food grains, if it was available – The arbitrator proceeded to award various sums under the three contracts on the basis that the appellant was constrained to expend money for supplying his workers by purchasing food grains from the open market – Held: In terms of agreement, the appellant was to supply the food grains only if the food grains were made available by the Government – Therefore, it is totally untenable for the appellant to set up a case that attracted by the clause which resulted from the representation and negotiation, he submitted his tender – Appellant was not bound to pay the fair wages to the workers and he was not also liable to offer food grains apart from fair wages – A perusal of the clause would make it clear that what was contemplated was if the food grains were available and supplied, the appellant was to make use of the same, supplied it to the workers ‘in lieu of wages’. Claim No.4 – Reimbursement of short supply of cement – It was the case of the appellant-contractor that in order to achieve progress, he procured cement from outside – The department contended that cement was in fact supplied as per the contract and the contractor was not authorized to purchase cement from outside and further contractor did not produce any vouchers – Department further relied on Clause 10 of the contract which provided that no claim for compensation for non-supply of cement would lie – The arbitrator, however, rejected all the contentions of the department and relied on s.70 of the Contract Act – The non-production of the cement issue register and unstamped receipt by the department led the arbitrator to raise an adverse inference against the department – The arbitrator proceeded to award varying sums under the three contracts – Held: The correspondence between the appellant and the department showed that the officers proceeded on the basis that there was a shortage of cement – Therefore, this appeared to be a case where sufficient cement may not have been supplied to the appellant – The sub-court on the other hand found that none of the correspondence by the officers indicated that the appellant was given permission to buy cement from outside – There was no indication in any of the letters written by the appellant which were the other sources from which he was procuring cement – The most important obstacle for the appellant was the clause in the contract namely, for procuring cement by the contractor, he must maintain ledger and which may be open to scrutiny by the officer as and when demanded – In this case, the appellant did not produce any ledger/voucher showing purchase of cement from other sources – There was no written permission produced to purchase cement from other sources – The fact that there were neither vouchers nor any ledger entries nor bills produced warrant interference with the award – Claim is not accepted – Contract Act, 1872 – s.70. Claim No.7 – Claim on account of stock of materials accumulated by the contractor for work in the project – The claim of the appellant was that he had purchased various materials and stocked at the work site for carrying out the work but the department prevented appellant from carrying out the work and, therefore, the appellant was entitled to the value of the materials which he had collected at his expense – Appellant raised a claim for enhanced compensation – He alleged that there was delay on the part of the respondent on various grounds – This is apart from alleging other factors like breakout of malaria, unfavourable weather and delay in taking decision by the departmental officers, which contributed to escalation in cost – Held: Insofar as the appellant did not use any of the materials to carry out the work and set up the claim only on the basis of assurance which was not admitted, the action of the appellant in purchasing the materials would not result in establishing his claim for compensation – Clause 59 prevents the Court from awarding compensation on account of any factor relating to the delay which may be due to any cause whatsoever – In such circumstances, the appellant did not make out any cause for compensation in regard to this claim. Claim No.9 – Interest of 18% p.a. under the Interest Act – Under Claim No.9 which related to interest at 18% under the Interest Act, the interest was awarded @ 12% p.a. on all claims from the date of the claim petition namely 23.11.1983 – The court took the date on which the arbitrator entered upon the reference as 26.4.1988 and the date of the awards as 23.8.1988, and held that for the said period, the arbitrator did not have the power to grant interest on the amount found due – Therefore, the Court set aside the award of interest for the period 26.4.1988 till 23.8.1988 and in regard to the rest the award of interest was sustained by the Court – Correctness – Held: The arbitrator awarded interest at 12% from the date of the claim but excluded interest from commencement of proceeding till date of award – As long as the agreement between the parties does not prohibit grant of interest and the matter is referred to the arbitrator, arbitrator would have power to grant interest pendente lite – The sub Court was not justified in setting aside interest and the interest as awarded by the arbitrator is restored – Interest. |
| Judge | Hon'ble Mr. Justice K.M. Joseph |
| Neutral Citation | 2019 INSC 406 |
| Petitioner | Sri K. Marappan (dead) Through Sole Lr. Balasubramanian |
| Respondent | The Superintending Engineer T.b.p.h.l.c. Circle Anantapur |
| SCR | [2019] 5 S.C.R. 152 |
| Judgement Date | 2019-03-27 |
| Case Number | 159 |
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