NDLI: Chandigarh Construction Co. Pvt. Ltd Vs. State of Punjab & Anr.

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	Arbitration Act Arbitrator Claimant
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 Referred Case 3
Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Allowed
Headnote	Arbitration Act, 1940: Award by arbitrator – Claimant- contractor and opposite party entered into an agreement for construction of Sutlej Yamuna Link Canal and in that regard to carry out earth work, drainage behind lining and cement concrete lining – Estimated cost of project was Rs.31 lakhs and contract amount for the work was fixed at Rs.59.86 lakhs – Claimant raised demand for additional payment on the ground that during execution, the scope of work was considerably increased on account of various decisions by department regarding rebuilding of river banks and changes in the strata encountered during excavation due to incorrect geological data observations by department prior to inviting tender – Demand of additional payment led to arbitral dispute – Arbitrator accepted claim and passed award with 18% interest – Award presented before Sub-judge for making ‘rule of court’ – Opposite party filed objection that no reason was indicated for giving the award – Sub-judge accepted the objection to the extent of rejection of Claim no.1 and reduction of interest to 12% p.a. and in other respects the Award was made ‘Rule of Court’ – First appellate court rejected the claim in toto taking note of Clause 39 of the Contract Agreement which provided that the contractor was required to deliver in the office of the Executive Engineer every month during continuance of the work, the return showing details of extra work done with value of such work and if the details are not indicated, it shall be deemed that the contractor has waived all claims not included in such returns and will have no right to enforce any such claim not so included – In that light since the claim was ultimately found as not included in the monthly statement, the First Appellate Court held that the requirement of the conditions of the contract was not adhered to and set aside the Award of the Arbitrator – High Court also took note of Clause 39 of the contract and declined the claim except claim no.1 – In the instant appeal, it was contended by appellant-claimant that Note 6 to the schedule of work which formed a part of the contract provided that extra or other items of work shall be paid at the rate worked out on the basis of relevant Punjab Common Schedule of Rates Basis Plus Sanctioned Premium at the time of tendering – The difference between the estimated cost of Rs.31 lakhs and contract amount of Rs.59.86 lakhs was the sanctioned premium which corresponded to the overall premium of 93.12% on the work for computing the rates of extra items/quantity or work done – Insofar as the remaining claims, 93.12% would become applicable – It was contended that when the contract agreement is explicit insofar as the value and the difference being the sanctioned premium and the percentage being evident at 93.12%, the decision of the Arbitrator not indicating any further reasons in the Award would not be fatal – Opposite party (State of Punjab), referred to Clause 63 of the contract which provides for reference of the disputes to arbitration – The said clause specified the requirement that all Awards shall be in writing and in case of awards amounting to Rs.1 lakh and above, such Award shall state the reason for the amount awarded – Held: The quantum of the contract amount as against the estimated cost by itself could not have formed the basis to conclude the claim as made by the claimant towards sanctioned premium – Claim No.8 related to the work carried out on Daldal land wherein the soil was marshy and extra construction material was required to complete the work – Arbitrator awarded Rs.19.15 lakhs after indicating the amount for the said work on the same basis and deducting the agreed rate – Clause 39, no doubt, prescribes a method by which the claim is to be put forth in the statement every month – The said requirement will have to be construed as being put in the agreement so as to ensure that the additional work has actually been done, the claim is put forth along with details so that baseless claim is not made at a distant point in time when it will not be possible to determine – Though the Clause also indicates that if such claim is not made, it would amount to waiver, in a circumstance where the claim is ultimately put forth in the forum where an adjudication is made and based on the material if the adjudicating authority is satisfied that the actual work had been done and the contractor being entitled to the extra amount spent by him to carry out the work in an appropriate manner, it would not be just and proper to deny such claim only on the ground that it had not been indicated strictly in the manner as provided in the contract specially keeping in view the nature of work undertaken – When the fact remains that the Daldal land was situated in the area, work was carried out and extra material was used, the claim cannot be rejected outright adopting a technical view of the matter – However, the claim for the extra item will have to be calculated with premium at the same rate of 35.02% over and above the agreed rate and not at 93.12% – Regarding Claim No.16, no reason to interfere with the impugned orders – Further with regard to the interest sought under Claim No.18 in the absence of agreement with regard to the rate of interest, the interest as awarded by the Arbitrator was on the higher side and the First Appellate Court was justified in reducing the same to 12% p.a. – Claimant is entitled to the claim for extra items as put forth under Claim Nos. 2, 3, 8 and 12 by working out the difference of cost on the tender premium at 35.02% – On arriving at the quantum of the amount, the same shall be payable with interest at 12% p.a. in the manner as ordered by the First Appellate Court – Claim No.1 ordered by the High Court is sustained.
Judge	Hon'ble Mr. Justice Ajjikuttira Somaiah Bopanna
Neutral Citation	2020 INSC 187
Petitioner	Chandigarh Construction Co. Pvt. Ltd
Respondent	State Of Punjab & Anr.
SCR	[2020] 2 S.C.R. 825
Judgement Date	2020-02-14
Case Number	867

Sl.	Authority	Responsibilities	Communication Details
1	Ministry of Education (GoI), Department of Higher Education	Sanctioning Authority	https://www.education.gov.in/ict-initiatives
2	Indian Institute of Technology Kharagpur	Host Institute of the Project: The host institute of the project is responsible for providing infrastructure support and hosting the project	https://www.iitkgp.ac.in
3	National Digital Library of India Office, Indian Institute of Technology Kharagpur	The administrative and infrastructural headquarters of the project	Dr. B. Sutradhar bsutra@ndl.gov.in
4	Project PI / Joint PI	Principal Investigator and Joint Principal Investigators of the project	Dr. B. Sutradhar bsutra@ndl.gov.in Prof. Saswat Chakrabarti will be added soon
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9	IDR Setup or Support	Queries related to establishment and support of Institutional Digital Repository (IDR) and IDR workshops	idr@ndl.gov.in

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