KRISHAN KUMAR MADHOK v. UNION OF INDIA — 1988 DIGILAW 54 (DEL)

Chaudhry ( 1 ) M/s. Krishan Kumar Madhok, Engineers and Builders have filed a petition under Section 20 of the Arbitration Act seeking direction for filing the arbitration agreement in the court and reference of the disputes between the parties to arbitration. It is averred in the petition that in the year 1980 the respondent started the work of (construction of National Museum, Phase II, Janpath, New Delhi) through the agency of a contractor. The work went on for 2 years when the contract was rescinded. In response to fresh tenders in September, 1983 the work was allotted to the petitioners. The work was to commence on 21-3-1984 and was to be completed by 20-9- 1985. Under the terms and conditions of the contract the respondent had to make available the site and also supply drawings of the items of work covered by the contract and had to be done by the contractor. As claimed time was the essence of the contract. The respondents did not fulfil their obligations as the drawings, materials and site was not given in accordance with the terms of the contract. The contract contains an arbitration clause Certain disputes such as short payment for the monumental/decorative stone work which was an item substituted for the agreement item of stone work in plain ashlar ;non-payment of increased price of steel; non-payment of increased price of wood and interest on amount not paid, which had arisen between the parties while the work was going on were referred to the sole arbitration of Shri G. P, Singhal, of the Ministry of Urban Development, Government of of India, New Delhi. The reference is claimed to be still pending. It is further alleged that the respondent continued in its failure to perform its contractual obligation and the petitioner was prevented from completing the work in time. The causes of delay attributed to the respondents are that the cement and drawings for terrace, floor slab, beams triangular portion of the building were not supplied, when terrazo tile flooring had partly been executed, remaining flooring work was stopped on the ground that it had been decided to substitute marble for terrazo tiles. The causes of delay attributed to the respondents are that the cement and drawings for terrace, floor slab, beams triangular portion of the building were not supplied, when terrazo tile flooring had partly been executed, remaining flooring work was stopped on the ground that it had been decided to substitute marble for terrazo tiles. Building plans were not got revalidated from Municipal Committee ; approach of the petitioner s workers to the site of work was stopped either on account of Republic Day Celebrations or some conferences ; false ceiling has also not allowed to be proceeded with. The petitioners expressed their willingness to carry out the work according to the changed specifications provided they were compensated for it in accordance with the terms of the contract. ( 2 ) THAT on 23-11-1987 the respondent instead of issuing instructions to the petitioner to execute the work according to the changed specifications had invited fresh tenders from the outsiders for providing marble flooring, foam concrete partition walls, false ceiling etc. which are items of the contract with changed specifications with the petitioner. It is claimed that this has been done by the respondent by invoking the provisions of clause 13 of the Contract which has no applicability. The action of the respondent is in breach of the contract. It is not open to the respondent to stop the petitioner from carrying out the work in the midst of it and award the same to someone else. This breach has caused tremendous loss to the petitioner besides being entitled to claim damages on account of this breach, the petitioner has a right to complete the work including substituted and extra items which may be necessary for completion of the work. The respondent is trying to hand over the site to another contractor or agency without settling the plaintiff s account. If the respondent is allowed to do so it will result in many complications and multiplicity of legal proceedings as third party interests will also be involved. On the other hand if the calling of the tenders and/or handing over of site is stayed till the petitioner s account is settled, formal charge taken over from them and they are allowed to remove their equipment and material from the site, no prejudice will be caused to them. On the other hand if the calling of the tenders and/or handing over of site is stayed till the petitioner s account is settled, formal charge taken over from them and they are allowed to remove their equipment and material from the site, no prejudice will be caused to them. Under these circumstances it is prayed that the arbitration agreement may be got filed in the Court and the disputes be referred to arbitration. ( 3 ) ALONGWITH this petition the petitioner has filed an application under Section 41 of the Arbitration Act wherein the allegations made in the petition under Section 20 have been reiterated. It has been further alleged that the respondent is acting in a most illegal manner and in outright breach of the contract and is taking steps to award the contract to another contractor. This is being done without settling the bill of the petitioner and taking adequate measurements to enable the payments due to the petitioner. The said measurements are also necessary for determining adequate compensation payable to the petitioner for the breach of contract committed by the respondent. If calling of fresh tenders and banding over of the site is not stayed, irresparable harm and injury will be caused to the petitioner which cannot be adequately compensated for by awarding damages. In these premises ad interim injunction has been prayed for restraining the respondent from calling fresh tenders, receiving tenders, accepting tenders, awarding work to any other agency and dispossessing the petitioner from the site. ( 4 ) THE respondents are contesting the petition. The case of the respondent as disclosed in the reply is that the respondent never failed to perform their part of the agreement and prevented the petitioner from completing the work within the stipulated period. They fulfilled all their obligations in terms of the conditions of the contract. It is alleged that the petitioner can perform the part of the contract except the agreement items 8. 2, 11. 13 and part of the item Nos. 10. 7 and 10. 8 which have been substituted as per clause 12 of the agreement and withdrawn, out of his contract, under clause 13 viderespondent s letter dated 19-51-1987. Fresh tenders for the same alongwith other extra terms have been received and opened on 14-12-1987. Upto January, 1986 the petitioner had executed terrazo tile flooring 3130 Sqm. 10. 7 and 10. 8 which have been substituted as per clause 12 of the agreement and withdrawn, out of his contract, under clause 13 viderespondent s letter dated 19-51-1987. Fresh tenders for the same alongwith other extra terms have been received and opened on 14-12-1987. Upto January, 1986 the petitioner had executed terrazo tile flooring 3130 Sqm. leaving a balance quantity of 4730 Sqm. the cost of this balance quantity as per agreement is Rs. 5. 20 lacs, as against this the amount of the substituted item of marble stone flooring works out to Rs. 30 lacs. The agreement amount of the work of plaster of pans ceiling with wooden frame for 2620 Sqm. is Rs 4. 50 lacs. As against this plaster of parts false ceiling now proposed to be substituted with iron frame is Rs. 15 lacs. Due to this heavy change, it was considered desirable to get this work of false ceiling done through fresh tenders. Fresh tenders have been invited for the following items of work : 1. Marble stone flooring ; 2. Foam Concrete partition walls ; 3. False ceiling ; 4. Deck insulation. Out of the above items, item No. 2 and 4 are new items and have no bearing whatsoever on the contract of the petitioner; As regards items No. 1 and 3 above these are the substituted items against agreement items No. 8. 2, 10. 7, 10. 8 and 13. 7. In terms of clause 12 of the agreement the department may direct the contractor to execute the substituted items. But the amount of the substituted items was as large as 45 lacs as against the corresponding agreement amount of the relevant items of Rs. 9. 70 lacs. The amount involved being high it was considered desirable to get the work done by floating new tender for these substituted items. It has been denied that the petitioner has a right to complete the work of the substituted items. The petitioner could have submitted tenders for the substituted and extra items alongwith other tenderers if he so wished. His tenders would have also been considered with the tenders of others. The claim of the petitioner regarding damages has been denied. Any amount due to the plaintiff in terms of the contract would be paid in due course. Up-to-date measurements of work as on 31-12-1987 have since been recorded. His tenders would have also been considered with the tenders of others. The claim of the petitioner regarding damages has been denied. Any amount due to the plaintiff in terms of the contract would be paid in due course. Up-to-date measurements of work as on 31-12-1987 have since been recorded. It is stated that the petitioner has still to do the remaining work costing about Rs. 30 lacs. It has been further denied that the disputes mentioned by the petitioner in Schedule-A items 1, 3, 4 and 5 are covered by the arbitration clause. Regarding the disputes raised by the petitioner at S. No. 2, 6 and 7 of the schedule the respondents have no objection if they are referred for arbitration in terms of the arbitration clause. ( 5 ) THE respondents are also contesting the application of the petitioner under Section 41 of the Arbitration Acton the grounds mentioned in the reply to the petition under Section 20 of the Arbitration Act. It is also stated that the respondents have already invited tenders for the substituted/extra items from various contractors and tenders were opened on 14-12-1987. The decision for finalisalion of the tenders is yet to be taken. After completion of formalities the contractor will be given the site to do the jobs. The petitioner has no right to withhold the site of the work for the substituted items and extra items which are to be given to another contractor. No complication or multiplicity of legal proceedings would arise. The petitioner is at liberty to remove his equipments from the site which is meant for substituted and extra items of work and the respondents have no objection to that. In case the petitioner has suffered any loss or damages he can seek aibitration in terms of the agreement. ( 6 ) I have heard the learned counsel for the parties and have given my thoughtful consideration to the matter involved. ( 7 ) THE case set up by the petitioner is that the respondents instead of issuing instructions to the petitioner to execute the work according to the changed specifications invited tenders from tenderers regarding marble flooring, foam concrete partition walls, false ceiling etc. which are items of the contract with changed specifications with the petitioner. This amounts to breach of the contract. which are items of the contract with changed specifications with the petitioner. This amounts to breach of the contract. It is not open to the respondents to stop the petitioner from carrying on the work in the midst of it and award the same to someone else. I have considered the contention of the petitioner. Assuming for the sake of arguments, though not admitting, that the respondents are committing, breach of the contract by awarding the substituted items to somebody else the petitioner cannot restrain them from doing so. If according to the petitioner it amounts to breach of contract the petitioner can claim damages. The petitioner cannot insist and force the respondents to award him the contract regarding the items of the changed specifications. The respondents have not directed the petitioner to stop the work in respect of the other items which according to the agreement he is to complete. In my opinion the plaintiff has not been able to establish a prima facie case regarding his claim that the work of the substituted items must be given to him and to none else. The respondents cannot be restrained from awarding the work of the substituted items to someone else. As already said if the awarding of work of substituted items amounts to breach of contiact the plaintiff has a remedy under the agreement for claiming damages. ( 8 ) THE other contention of the petitioner is that the respondents should not be allowed to award the contract regarding the substituted items to somebody else unless the measurements of the work done by the petitioner are taken and the payment made to the petitioner. The respondents have stated that the work done by the petitioner upto 31-12-1987 has already been measured. The petitioner is still doing the work on the site. 1 do not think that it is essential and necessary to get the work done by the petitioner measured at this stage. The items of the work for which fresh tenders have been invited are quite independent and are not at all connected with the items of work which are being carried on by the petitioner. ( 9 ) IN view of the discussion above 1 do not find any force in the application of the petitioner under Section 41 of the Arbitration Act (. l. A. No, 9249/1987) for the grant of the interim relief. ( 9 ) IN view of the discussion above 1 do not find any force in the application of the petitioner under Section 41 of the Arbitration Act (. l. A. No, 9249/1987) for the grant of the interim relief. Consequently the relief claimed in the application is declined with no order as to costs. The interim stay granted on 11-12-1987 is vacated.