STATE OF M. P. v. GOURISHANKAR RAWAT & CO. — 1995 DIGILAW 334 (MP)

ORDER R. S. Garg, J. - This civil revision has been filed under Section 19 of the M.P. Madhyastham Adhikaram Adhiniyam, 1983, by the State of M.P., being aggrieved by the award dated 3.2.1990 passed in referred case No. 77/87, by the Arbitration Tribunal. 2. Brief facts leading to the case are that the non-applicant's tender was accepted and an agreement No. 14/DL/1983-84 was entered into between the parties. The said contract was for a sum of Rs. 11,35,840/-. The work order, Ex. P-2, was issued by the State on 24.11.1983 and the date of completion of the work, as per agreement, was four working months only. The contractor had undertaken the work of construction of an earth dam from Ch. 17 to Ch. 22 of upper Chandia tank, district Sagar. The claimant, feeling aggrieved by the acts and omissions of the State filed a reference case No. 77/87 before the Arbitration Tribunal for the recovery of Rs. 10,41,940/-. 3. The claimant submitted that the respondent failed to deliver the whole of the site immediately after the agreement and the State failed to obtain the requisite sanction of the forest department for submergence of the forest land in the basin of the tank. There was delay in removing the chocked filter blanket which was in between Ch. 21 and Ch. 22 and it was left incomplete by another agency employed by the respondent. Defaults were made by the department in regular payments of the running bills. Large sum due to the claimant in regular blocked. The State did not make proper arrangements for watering and compaction of earth work due to which the contractor was not capable of compacting the earth. The Executive Engineer had taken a arbitrary action under Clause 4.3.3.2 of the contract agreement. The claimant, though had given an undertaking that he would after loss, the State despite the undertaking had given cut and withheld Rs. 33,000/- out of the 7th running bill. The contract claimed the following amounts : (1) Rs. 3,14,836 towards infructuous over head expenses; (2) Rs. 4,16,002 as loss of profit; (3) Rs. 3,635 as escalation in wages and cost of material; (4) Rs. 2,04,376 in respect of final bill; (5) Rs. 37,435 as security deposit; and (6) Rs. 65,656 as interest; Total Rs. 10,41,940. The applicant State denied the allegations and the claim. 3,14,836 towards infructuous over head expenses; (2) Rs. 4,16,002 as loss of profit; (3) Rs. 3,635 as escalation in wages and cost of material; (4) Rs. 2,04,376 in respect of final bill; (5) Rs. 37,435 as security deposit; and (6) Rs. 65,656 as interest; Total Rs. 10,41,940. The applicant State denied the allegations and the claim. It was submitted that the site was handed over to the contractor as per the site conditions. The State was not required to deliver the whole of the site, According to the State, the petitioner-claimant never raised such objections during the currency of the agreement. The sanction of the forest department was neither needed nor required and the claimant cannot be permitted to make capital out of the department correspondence. There was no delay in removal of filter blanket. The site between Ch. 21 and Ch. 22 was made over to the claimant when it was demanded by him. Under clause 4.3.7 and 4.3.8, the claimant was duty bound to submit monthly bills, but he failed. The payments were made to the contractor despite submission of the bills on the basis of work actually done by the contractor. The claimant could not complete the work in time. He did not adhere to the construction programme, which resulted in severe threat to the entire project during the ensuing rainy season. Repeated reminders were made, but the petitioner did not improve the work, as a result of which a cut had to be given by the State in between Ch. 22 and Ch. 23, resulting in a total loss of Rs. 5.47 lacs to the department, in order to save the executed work from being washed away. They submitted that on these facts and under the circumstances the State, left with no option, had to take action under clause 4.3.3.3, which was later on revoked. It was also contended that the claimant-contractor did not approach the Engineer-in-Chief under clause 4.3.15, therefore, the reference was not maintainable. It was submitted that the State was entitled to recover Rs. 2.23 lacs from the claimant. 4. The Tribunal recorded evidence, received documents and after hearing the parties, awarded Rs. 1,89,159.40 with 12 per cent interest in favour of the claimant with effect from 17-7-1987 till realisation and also directed that the F.D.R. for Rs. It was submitted that the State was entitled to recover Rs. 2.23 lacs from the claimant. 4. The Tribunal recorded evidence, received documents and after hearing the parties, awarded Rs. 1,89,159.40 with 12 per cent interest in favour of the claimant with effect from 17-7-1987 till realisation and also directed that the F.D.R. for Rs. 5,700/- furnished towards earnest money be released by the State to the petitioner along with interest accrued due till the date of its encashment. 5. Being aggrieved by the award of the Tribunal, the revision has been filed by the State, under Section 19. From the award of the Tribunal and the finding, it appears that the claimant could not prove that the forest of the site was not made available to him. The Tribunal also held that there was no delay in removal of filter blanket. The Tribunal also held that the claimant-contractor could not prove that the State blocked the petitioner's finances by non-payment of the monthly running bills. In para 17 of its order, the Tribunal held that there was no material delay due to want of adequate watering and compaction of units. It also held that it did not cause any hindrance in the actual progress of the work during the working period. It also held that the withdrawal order, Ex. P-8, amounted to a technical breach of the contract, yet, it did result in material delay because the claimant continued to work upto the end of June 1984, after issue of the impugned withdrawal order and even after the stipulated period which expired on 23-3-1894. The Tribunal awarded Rs. 69,619.15 as infructuous over head expenses, Rs. 23,475.95 as loss of profit, Rs. 528.60 as escalation of labour, material, etc., Rs. 31,601/- as payment due to the final bill Rs. 33,000/- as amount withheld from the 7th running bill towards cut, and also directed refund of the security deposit of Rs. 31,735/-, with a direction for release of the F.D.R. for Rs. 5,700/-. Interest and costs were also awarded. 6. It was submitted on behalf of the State that the claimant was not entitled to the said amount, rather on the other hand, the State was entitled to recover damages. It was submitted that the Tribunal went wrong in making calculations in para 43 of its order. On the other hand, it was submitted in reply that the calculations were correct. It was submitted that the Tribunal went wrong in making calculations in para 43 of its order. On the other hand, it was submitted in reply that the calculations were correct. We are afraid, we are unable to accept the contention of the respondent. The Tribunal held that the amount of the contract was Rs. 11,35,000/- and the period of the contract was four working months. The Tribunal, in calculation, also held that the anticipated turn over per month would he Rs. 2,83,960/- and the anticipated over head expenses at the reduced rate of 5 per cent month-would be Rs. 14,198/-. The Tribunal thereafter held that the over head expenses incurred by the petitioner from 24-11-1983 to 30-6-1984, i.e., 7 1/4 months, would be Rs. 1,02,935.50. The Tribunal further held that out of the total work done, the contractor, at 5 per cent, has already recovered Rs. 33,316.35, as over head expenses. The Tribunal thereafter deducted this amount from Rs. 1,02,935.50 and came to the conclusion that the contractor is entitled to recover Rs. 69,916.15. The Tribunal failed to understand that the period of contract was to expire on 23-3-1984. If by that date the value of the work done was Rs. 6,66,327.00 then, within the period of further three months; the contractor was called upon to complete the work of the value of Rs. 4,69,513/- (say Rs. 4,70,000/-). Applying the same test, the turn over per month would be approximately Rs. 1,56,066/-. The over head expenses at 5 per cent would be Rs. 7,800/- per month. In our calculation, on the findings arrived at by the Tribunal, which we confirm to be correct, the claimant was entitled to claim infructuous over head expenses. The claimant would only be entitled to Rs. 7,800/- per months for a period of three months. The total amount as per our calculation would be Rs. 23,490/- (say Rs. 23,500/-). The loss of profit has been calculated by the Tribunal, applying the very same principle which we have adopted for determining the infructuous over head expenses. The Tribunal was right in awarding Rs. 25,475.65 as loss of profit suffered by the claimant. The Tribunal was right in holding that due to the interference of this forest department, the work came to a stand still for no fault of the claimant. The Tribunal was right in awarding Rs. 25,475.65 as loss of profit suffered by the claimant. The Tribunal was right in holding that due to the interference of this forest department, the work came to a stand still for no fault of the claimant. The Tribunal was also right in holding that due to this impediment, the State had incurred material breach by withdrawing the order in anticipation. We accordingly hold that instead of Rs. 69,619.15, the claimant is entitled to Rs. 23,500/- as infructuous over head expenses. It is also held that the claimant is entitled to Rs. 23,475.65 as loss of profit. The Tribunal has given proper findings in support of its observation that the claimant is entitled to a total escalation as Rs. 528.60. Counsel for the state could not point out any illegality in the award. 7. It appears from the record that a sum of Rs. 33,000/- was deducted by the department out of the 7th running bill in May 1985. The total amount for the cut was estimated at Rs. 1,00,000/- and apportioned equally amongst the three contractors engaged in the project. Latter on the total loss due to the said cut was re-estimated at Rs. 5.47 lacs and the amount apportioned to the claimant was Rs. 1.53 lacs. There is nothing on record to show or suggest as to what was the foundation for arriving at the amount of Rs. 1,00,000/- or Rs. 5.47 lacs. No material has been placed no record to show or satisfy us, the oral evidence is missing. In the absence of the material on record, we are not in a position to hold that the State really suffered loss. The claimant in entitled to this amount of Rs. 33,000/- which has been wrongly deducted from the 7th running bill towards cut. The Tribunal, while considering the claim of short payment in relation to bolder toe with quarried stone, came tot he conclusion that the claimant was entitled to the payment at the stipulated rate of Rs. 100 per cubic metre. Counsel for the State was unable to show why the reduced rate of Rs. 75.90 was made applicable to this term. The claimant in our opinion, is entitled to full rates for full quantities. The Tribunal was right in holding that in place of Rs. 1,86,543/- short payment Rs. 31,601/- was made. 100 per cubic metre. Counsel for the State was unable to show why the reduced rate of Rs. 75.90 was made applicable to this term. The claimant in our opinion, is entitled to full rates for full quantities. The Tribunal was right in holding that in place of Rs. 1,86,543/- short payment Rs. 31,601/- was made. We are in agreement with the Tribunal and hold that under this head, the claimant is entitled to claim Rs. 31,601/- from the State. 8. Once it is held that the State has committed a breach and the claimant is entitled to loss of profit and infructuous over head expenses, then, obviously, the claimant would be entitled to release of the F.D.R. and the amount deducted as security by the State from the running bills. The Tribunal was right in directing refund of the security deposit and release of the F.D.R. In our opinion, the Tribunal was justified in granting the claim for refund of the security and the release of the F.D.R. 9. It was next contended that interest from 11-7-1987 should not have been awarded by the Tribunal. Once the court comes to the conclusion that a party is entitled to interest, unless invalidity in shown, this court would be loathed in interfering with the discretion exercised by the Tribunal. We refuse to interfere with the rate of interest. 10. Accordingly the claim of the claimant under the head of infructuous over head expenses in reduced to Rs. 23,500/- instead of Rs. 69,819.15. Rest of the claim as awarded by the Tribunal, including interest and costs are maintained. The claimant would be entitled to Rs. 1,43,840.40 with interest as awarded by the Tribunal.