Tamil Nadu Water Supply and Drainage Board, Madras v. Satyanarayana Brothers Private Limited, Madras and Another
2001-10-18
P.THANGAVEL, S.JAGADEESAN
body2001
DigiLaw.ai
Judgment :- P. THANGAVEL, J. The original side appeals in O.S.A. No. 248 of 1989 and O.S.A. No. 59 of 1993 are filed by the Tamil Nadu water supply and Drainage Board, Madras by its Managing Director as appellant against the orders of the learned single Judge dated 28.2.1989 and made in O.P. No. 122 of 1980 and Application No. 560 of 1980 in O.P. No. 428 of 1979 and O.P. No. 428 of 1979 respectively on the file of this Court. The facts that are necessary for disposal of these original side appeals are as follows : The city of Madras consisting of population of 17, 29, 861 in 1961 and 24, 69, 449 in 1971 as per the census, was experiencing acute water scarcity in 1947-1952 and again in 1969 due to the failure of the North East Monsoon. In order to relieve the population of city of Madras from the acute scarcity of water supply, the Government of Tamil Nadu took immediate steps to augment additional supply of water from perennial rivers and out of the abovesaid steps taken by the Government of Tamil Nadu, the project known as "Veeranam Project" had come into existence. The Government of Tamil Nadu accorded administrative sanction to tap supply from Veeranam tank to augment the water supply to the city of Madras by 40 M.G.D. as a first stage work and another 40 M.G.D., which was designed for 84 M.G.D. later, as a second stage work from the same source. Detailed investigations were made by the Government of Tamil Nadu with the assistance of Study Team as to how water from Veeranam Tank, which was fed through the Vadvar Channel taking off from the left bank of the Coleroon at Lower Anicut, can be brought to the city of Madras at a distance of about 155 miles. The Planning Commission, New Delhi, had also given clearance for the Veeranam Project after careful consideration of all aspects in its letter No. WS/9/(i)/66, dated 25.10.1968, but with condition that the plan should be prepared in such a manner that it should be possible to lay another pipeline to carry 40 M.G.D. to duplicate the water supply in due course, at the request of the Government of Tamil Nadu for such permission.
The Government of Tamil Nadu also accorded sanction to call for tender through the Special Chief Engineer, Public Works Department (Veeranam Works Scheme) and accordingly tender was called for fixing the last date and time at 3.00 p.m. on 18.12.1969 for "Manufacturing, supplying, delivering, 1676 m.m. (6") Diameter Prestressed Concrete Pipes and fittings including transporting to site, laying jointing and testing for raw water and clear water conveying mains from Veeranam Tank to Madras City "and the said tender was notified to be recovered in the office of the Chief Engineer, Public Works Department, Madras-5. It was also notified that the said tender should be in prescribed form obtainable from the office of the Chief Engineer, Public Works Department, Chepauk, Madras-5, that the same must be submitted in sealed cover addressed to the Chief Engineer (Buildings) and City Water Supply, Veeranam Project, Public Works Department, Madras-5, that the tender must be signed by the tenderer if it is a firm, signed by member of the firm and that the same shall be sent alongwith certificate of income-tax verification from the Appropriate Income-tax Authorities in the form prescribed. Satyanarayana Brothers, Madras, hereinafter referred to as "the contractor", submitted the tender along with the letter dated 22.1.1970 to the Chief Engineer (Buildings) and City Water Supply Veeranam Project, Public Works Department, Chepauk, Madras-5 with a request for foreign exchange requirement for import of equipments from foreign manufacturers. The contractor had also requested the Government of Tamil Nadu to give all assistance in procurement of foreign exchange and other necessary Central Government clearances.The Government of Tamil Nadu, after considering the tender submitted by the contractor, have decided to accept the tender tentatively in the Government Memorandum No. 15/PC/TWAD/70-1, dated 7.5.1970. The study team, consisting of the Minister for Public Works, the chairman, Tamil Nadu Water Supply and Drainage Board, Member-Secretary, Tamil Nadu Water supply and Drainage Board and the Chief Engineer (General and Veeranam Project), was sent abroad to study the various processes in the manufacture of prestressed concrete pipes and in particular to study and assess the technical feasibility of the Vacuum process proposed to be adopted by the contractor. After considering the recommendation made by the study team, the Government of Tamil Nadu, accepted the tender for lump sum contract of Rs.
After considering the recommendation made by the study team, the Government of Tamil Nadu, accepted the tender for lump sum contract of Rs. 16, 55, 87, 300 which was already accepted tentatively, subject to Government of India clearance of the Foreign collaboration arrangement and release of necessary foreign exchange and also subject to other conditions and issued G.O.Ms. No. 1607, Public (TWAD) Department, dated 13.7.1970 containing all conditions, since this contractor was the lowest tenderer. Articles of agreement was executed between the Government of Tamil Nadu on the one part and Tvl. Satyanarayana Brothers, Madras, viz., Contractor on the other part, specifying the terms and conditions with regard to the execution of the Veeranam Project. As per the said agreement, work should be completed within a period of 36 months from the date of entrustment of site which is to be done within 30 days after the date of acceptance of tender and if there is any delay in such entrustment of site, there should be extension of time in completion of the contract. Even though time is essence of contract as per the terms of agreement, extension of time can be granted for completion of the work at the request of the contractor for justifiable reasons.The contractor required Rs. 1.2 crores of foreign exchange for the purpose of importing necessary equipments for manufacture of prestressed pipes from Switzerland since the Swiss suppliers are insisting the payment in Deutshe marks. The contractor was advised to approach the Industrial Credit Investment Corporation of India, herein after referred to as "I.C.I.C.I." since the said corporation as two lines of credit available with it, viz., (1) a line of credit from the World Bank through the IBRD and (2) a line of credit from the German Government (through KFW). While the I.C.I.C.I. was approached by the contractor for procuring necessary foreign exchange, the said corporation insisted that the contractor should not be a partnership firm, but only an incorporated company to avail facilities of foreign exchange. The contractor firm was converted into a Private Limited Company as advised by I.C.I.C.I. on 24.2.1971 and a fresh agreement contending the very same terms and conditions was executed between the contractor and the State Government for the purpose of getting foreign exchange from I.C.I.C.I. The letter of credit was opened on 10.11.1971. The shipment of the equipment for the factory landed at Madras in February, 1972.
The shipment of the equipment for the factory landed at Madras in February, 1972. A factory at Thirukalikundram and another factory at Panruti were commissioned by June, 1972 and January, 1973 respectively and Government of India sanctioned foreign exchange under U.S. aid loan. Since there was a delay of one year four months in commencing production of prestressed concrete pipe, time was extended upto 31.3.1976 even though the contract has to be completed by 23.6.1974. The contractor, who had agreed to manufacture 28 prestressed concrete pipes per day, at each factory and agreed to lay 72 pipes per day has not complied with the abovesaid commitment. The contractor, therefore, informed the Chief Engineer of the project to extend time upto 31.12.1975 to complete the work, but extension of time was granted only upto 30.6.1975 for the reasons assigned by the Chief Engineer. The contractor after receipt of the abovesaid extension upto 30.6.1975 had replied to the Chief Engineer in the letter dated 11.11.1974 to the effect that the contractor is rejecting the offer as it was not acceptable to them. In the very same letter the contractor has also agreed to work on conditions that the contractor will be paid for the work done at the rate to be worked out taking into account of the increase in cost due to circumstances then prevailing and that may arise later during the course of the work, that necessary time has to be given for completion of the work consistent with the capacity of equipment in the factory and rate of production practically feasible and that the contractor has to be compensated for the losses resulting directly or indirectly from all such delay and default on the part of the Government. By sending a letter as mentioned above to the Chief Engineer, the contractor has admittedly stopped work with effect from 30.6.1975. The Chief Engineer extended time for completion of the work subsequently by 31.12.1975, and again extensions was given upto 31.3.1976 but without agreeing to what was stated in the abovesaid letter dated 11.11.1974.
By sending a letter as mentioned above to the Chief Engineer, the contractor has admittedly stopped work with effect from 30.6.1975. The Chief Engineer extended time for completion of the work subsequently by 31.12.1975, and again extensions was given upto 31.3.1976 but without agreeing to what was stated in the abovesaid letter dated 11.11.1974. The contractor has not commenced the work which was stopped by him on 30.6.1975, but sought reference to arbitration of the dispute that had arisen between the contractor and Tamil Nadu Water Supply and Drainage Board, Madras, herein after referred to as "the Board." The Board and the 1st respondent approached the competent Court in connection with the arbitration, as it was alleged by the Board that there was no dispute in this matter. The contractor appointed one Thiru P. S. Subramaniam, a Chartered Engineer as Arbitrator of the contractor under Section 9 of the Arbitration Act and the Board moved an application in Application No. 43 of 1978 for revoking the appointment of P. S. Subramaniam as Arbitrator of the contractor before the competent Court. As there is a clause in the agreement between the Board and the contractor to refer the dispute between them to Arbitrator, the competent Court has directed the Board to nominate their nominee, so as to decide the dispute between both parties. After nomination of the Arbitrator by the Board, the contractor as well as the Board filed their claim statements before the Arbitrators appointed by them. The Arbitrators entered upon the reference on 18.3.1978, but they could not arrive at a conclusion due to difference of opinion between them. The same was informed to the parties to the arbitration proceeding. Thereafter, the parties to the arbitration proceedings authorised the Umpire, who is the 2nd respondent in the proceeding, to decide the dispute between both parties. The Umpire entered upon the reference on 2.4.1979 and after several hearings and also after considering the evidence placed before the Umpire, has passed an Award on 10.9.1979. The fact of passing the abovesaid Award on 10.9.1979 was informed to the contractor as well as to the Board and on the request of the contractor, the Umpire filed the award in the Court on 26.11.1979 and the same was taken on file in O.P. No. 428 of 1979 so as to enable the contractor to get his grievance redressed.
The contractor as petitioner filed the petition in O.P. No. 122 of 1980 to set aside the Award passed by the Umpire on 10.9.1979 on the grounds that the Award is a speaking Award and is vitiated not only by errors of law, but also on mistakes apparent on the face of the Award. The contractor has also alleged that relevant and material documents were not considered in the arbitration proceedings and therefore it is a misconduct according to law. Inter alia the contractor alleged that the conclusion of the Umpire that there is no obligation on the part of the State Government in getting foreign exchange cleared from Government of India and the contractor has abandoned the work on 30.6.1975 in spite of the extension of time granted for completion of the work are not correct and that the non-production of the inter-departmental correspondence of confidential nature between the Board and other departments will vitiate the Award. But on the other hand, the Board has filed an application in Application No. 560 of 1980 in O.P. No. 428 of 1979 to pass decree in terms of the Award and contended to sustain the Award passed by the Umpire stating that there is no error apparent on the face of the Award, that there is no obligation on the part of the State Government to get foreign exchange clearance from the Government of India for the contractor, that by abruptly stopping work with effect from 30.6.1975 in spite of the extension of time granted for completion of the work, the contractor has committed breach of contract and that therefore, the Board is entitled to a decree in terms of the Award passed rightly in the light of the documents and evidence produced before the Umpire.
It is also contended by the Board that inter-correspondence between the Board and the departments are secret documents and that the letter referred to by he contractor is in fact not available in the file of the Board and therefore the same may not be a ground to set aside the Award.After considering the submission made on both sides in the light of the evidence available on record the learned single Judge has come to the conclusion that there is an obligation on the part of the State Government to get foreign exchange clearance for import of equipments from Switzerland to manufacture prestressed concrete pipes, etc., that the Board ought to have extended time for completion of the contract as required by the contractor as there was delay of one year and four months in commencing the work due to problems faced by the contractor in getting clearance for foreign, exchange from the Government of India, that extension of time by the Board after stopping the work on 30.6.1975 by the contractor to complete the work may not be of any use, that there was no breach of contract on the part of the contractor, that the Umpire has not considered the reasons for abandonment of work by the contractor while taking into consideration of the correspondence between the Board and the contractor and also the non-production of the correspondence required to be produced from the Board and that therefore, the Award passed by the Umpire cannot be sustained and liable to be set aside. Accordingly, the learned single Judge set aside the Award dated 10.9.1979 passed by the Umpire thereby allowing the petition in O.P. No. 122 of 1980. Consequently, the learned single Judge dismissed the application bearing Application No. 560 of 1980 in O.P. No. 428 of 1979 and also the said Original Petition on 28.2.1989. Aggrieved at the orders dated 28.2.1989 and made in O.P. No. 122 of 1980 and Application No. 560 of 1980 in O.P. No. 428 of 1979 and also O.P. No. 428 of 1979, the Board, the first respondent before the learned single Judge, has come forward with these Original Side Appeals.We have heard the arguments at length advanced by the learned Advocate General for the appellant and Thiru R. Krishnaswami, Senior Counsel for the contractor, and perused the entire records. Both parties reiterated what they have urged before the learned single Judge.
Both parties reiterated what they have urged before the learned single Judge. On considering the submissions made on both sides, the following points are framed for consideration by this Court : (1) Whether there is any obligation on the part of the Government of Tamil Nadu to get foreign exchange clearance from Government of India as per the terms of contract entered into between the Contractor and the State Government ? (2) Whether the contractor has not committed breach of contract by abandoning the work with effect from 30.6.1975 ? (3) Whether the non-production of inter-departmental correspondence of confidential nature as required by the contractor will vitiate the Award passed by the Umpire. ? (4) To what relief ? Point No. 1 : The parties to these proceeding in O.P. No. 122 of 1980 have marked Exs. P-1 to P-240A and Exs. D-1 to D-660 by consent since the abovesaid Exhibits as referred to above have also been marked by consent in the suit in C.S. No. 176 of 1978 on the file of this Court. Ex. D-661, a file containing correspondence between the contractor and the Board was also marked before the learned single Judge. Admittedly, the people living in city of Madras experienced acute water scarcity not only in the year 1947-1952, but also in 1969 due to failure of North East Monsoon. To tide over such situation in the City of Madras, the Government of Tamil Nadu have taken immediate steps to augment additional supply of water from perennial rivers. Veeranam Project is an outcome of such situation of acute water scarcity in 1969. The Government of Tamil Nadu accorded administrative sanction to tap supply from Veeranam Tank to which water comes through the Vadvar Channel taking off from the left bank of the Coleroon at Lower Anicut, to the city of Madras at a distance of about 155 miles.
Veeranam Project is an outcome of such situation of acute water scarcity in 1969. The Government of Tamil Nadu accorded administrative sanction to tap supply from Veeranam Tank to which water comes through the Vadvar Channel taking off from the left bank of the Coleroon at Lower Anicut, to the city of Madras at a distance of about 155 miles. The fact also remains that at the request of Government of Tamil Nadu, the Planning Commission, New Delhi had also given clearance to Veeranam Project in its letter No. WS/9(i)/66, dated 25.10.1968, but with condition that the plan should be prepared in such a manner that it should be possible to lay another pipe line to carry 40 M.G.D. to duplicate the water supply in due course.Admittedly the Government of Tamil Nadu had accorded sanction to call for tender through the Special Chief Engineer, Public Works Department (Veeranam Works Scheme). The tender was also called for, for "Manufacturing, supplying, delivering, 1676 m.m. (66") Diameter Prestressed Concrete Pipes and fittings including transporting to site, laying, jointing and testing for raw water and clear water conveying mains from Veeranam Tank to Madras City and the said tender has to reach the office of the Chief Engineer" , Public Works Department, Madras-5 on or before 3.00 p.m. on 18.12.1969. The contractor submitted the tender along with Ex. D-557, the letter dated 22.1.1970 for the Veeranam Project. The Government of Tamil Nadu, which had decided to accept the tender tentatively in Government Memorandum No. 15/PC/TWAD/70-1, dated 7.5.1970, had accepted the tender for lump sum contract of Rs. 16, 55, 87, 300 after considering the recommendations of study team, but subject to the Government of India Clearance of the Foreign Collaboration arrangement and release of necessary foreign exchange and also subject to other conditions and issued G.O.Ms. No. 1607, Public (TWAD) Department, dated 13.7.1970 as seen in Ex. P-15. The fact remains that Satyanarayana Brothers, Madras, a partnership firm at that time which is referred to as Contractor herein, was the lowest tenderer for execution of the work for which tender was called for. Pursuant to the acceptance of the tender of the contractor by issue of G.O. referred to above, in articles of agreement was executed between the Government of Tamil Nadu on the one part and Tvl.
Pursuant to the acceptance of the tender of the contractor by issue of G.O. referred to above, in articles of agreement was executed between the Government of Tamil Nadu on the one part and Tvl. Satyanarayana Brothers, Madras, viz., the contractor on the other part specifying the terms and conditions with regard to the execution of the Veeranam Project under the head Part A - Scope of the work and location and under sub-head (1) Nature and Scope of Contract. It has been agreed by the abovesaid articles of agreement that the tender is for a lump sum contract with such additions, deductions, enlargements, deviations, alterations and omissions from time to time required by the Department and the said lump sum of tender is for the completion of the whole of the works described and intended in the specification or shown on the drawings an executed according to the specifications and general conditions of contract. It is also mentioned that the tenderer shall include with his tender a schedule showing how the lump sum is arrived at. In the light of the abovesaid fact it is evident that the tender was for lump sum contract of Rs. 16, 55, 87, 300 and the said position cannot be disputed by the contractor.A perusal of the articles of agreement entered into between the State of Tamil Nadu and the contractor would not disclose that there is any clause that the Government of Tamil Nadu had undertaken to get clearance or release of foreign exchange. The learned senior counsel appearing for the contractor has not brought to the notice of this Court about the availability of any such clause in the articles of agreement. But on the other hand, in the order issued by Government of Tamil Nadu in G.O.Ms. No. 1607, Public (TWAD) Department, dated 13.7.1970, based on which the articles of agreement was executed between the parties referred to above, had specifically stated that the acceptance of the tender of the contractor was subject to the Government of India clearance of the Foreign Collaboration arrangement and release of the necessary foreign exchange and also subject to other conditions.
No. 1607, Public (TWAD) Department, dated 13.7.1970, based on which the articles of agreement was executed between the parties referred to above, had specifically stated that the acceptance of the tender of the contractor was subject to the Government of India clearance of the Foreign Collaboration arrangement and release of the necessary foreign exchange and also subject to other conditions. The abovesaid saving clause included in the Government Order referred to above would disclose that it is for the contractor to get clearance of the Foreign Collaboration arrangement and the release of the necessary foreign exchange from the Government of India and it is not the obligation of the State Government to get such clearance for the contractor. It is because of the fact that there is no obligation on the part of the Government of Tamil Nadu to get clearance of foreign exchange, the contractor had requested in the letter dated 22.1.1970, sent to the Government of Tamil Nadu as seen in Ex. D-557 as follows : "We understand that the Government should give us all assistance in the procurement of foreign exchange and necessary Central Government Clearance." The abovesaid request of the contractor will clearly establish that the contractor has sought the assistance of the Government of Tamil Nadu in securing foreign exchange from the Government of India. If there is an obligation on the part of the Government of Tamil Nadu to secure clearance of foreign exchange from Government of India, there is no need for the contractor to request to render all assistance for clearance of foreign exchange from the Government of India. The word "contract" is defined, inter alia as follows : "...... or any other letter, notice or document upon or with reference to which the tender is made and acceptance thereof in the schedule of prices, if any, furnished by the contractor with his tender." The definition referred to above would show that any letter with reference to the tender is also a contract.
or any other letter, notice or document upon or with reference to which the tender is made and acceptance thereof in the schedule of prices, if any, furnished by the contractor with his tender." The definition referred to above would show that any letter with reference to the tender is also a contract. The definition of "Contract" and the extracted portion of the letter of the contractor will certainly lead to hold that there was no obligation on the part of the Government of Tamil Nadu to secure clearance of foreign exchange from the Government of India, but the contractor had sought only the assistance of Government of Tamil Nadu to secure clearance of foreign exchange required by him from the Government of India. The Special Chief Engineer (Veeranam Project) has brought to the notice of the Government of Tamil Nadu that the contractor has required certain modification and clarifications of the conditions imposed by the Government in G.O.Ms. No. 1607, Public (TWAD) Department, dated 13.7.1970 and in the original tender schedule itself. After examining the request No. 11 made by the contractor through the Special Chief Engineer referred to above, in G.O.Ms. No. 2239, Public Tamil Nadu Water Supply and Drainage Department, dated 30.9.1970 : "Request No. 11 : Permission to go ahead with preliminary arrangements such as purchase of equipments etc., pending clearance by the Government collaboration and releases of foreign exchange. The Government have decided to leave it to the contractor to take such action as they deem fit in the matter as they cannot advise at a stage when the agreement is yet to be signed. The Special Chief Engineer (Veeranam Project) is to inform the contractor accordingly." The reply given by the Government of Tamil Nadu by issuing the G.O., as mentioned above would also lend support to hold that the Government of Tamil Nadu have not undertaken to get clearance for foreign exchange from the Government of India.
The Special Chief Engineer (Veeranam Project) is to inform the contractor accordingly." The reply given by the Government of Tamil Nadu by issuing the G.O., as mentioned above would also lend support to hold that the Government of Tamil Nadu have not undertaken to get clearance for foreign exchange from the Government of India. It is relevant to point out that such a reply was ordered to be given by the Government of Tamil Nadu to the contractor through the Special Chief Engineer (Veeranam Project) even 9 months after the request made by the contractor in the letter sent in connection with the tender submitted to the Special Chief Engineer, public works would clearly go to show that the Government of Tamil Nadu have not undertaken to get clearance from the Government of India for foreign exchange for purchase of equipments from Switzerland to manufacture prestressed concert pipes in India by the contractor.The learned single Judge, relying on the Government order issued under Ex. P-15 referred to above, wherein the Government of Tamil Nadu have confirmed the tender of the contractor subject to the Government of India clearance of the Foreign collaborations arrangement and release of the necessary foreign exchange and also subject to the other conditions held that parties to the contract expected, the Government of India will release the foreign exchange as required by the contractor. We are unable to agree with the expression made by the learned single Judge in that respect since the tender of the contractor was accepted subject to the conditions of getting clearance of foreign exchange from Government of India only by the contractor and not by Government of Tamil Nadu. The learned single Judge has extracted a portion of the Ex. P-22, dated 13.8.1970, a letter written by Member-Secretary, TWAD Board and Additional Secretary to Government, Public (TWAD) Department, Madras to the Chief Controller of Imports and Exports (Capital Goods) New Delhi and has held that the extracted portion in the order of the learned single Judge will show the expectation of the State Government as well as the contractor to get clearance of foreign exchange from the Government of India.
A perusal of the portion extracted by the learned single Judge would disclose that the abovesaid Member Secretary had made mention about the acute water scarcity experienced by the city of Madras during previous year and the Government of Tamil Nadu did not want to experience the very same difficulty into coming years and therefore, he has requested to give top priority to the application of the contractor enclosed along with that letter and accord permission for import of foreign equipments urgently. The abovesaid letter will only lead to conclude that the Government of Tamil Nadu had extended all assistance required by the contractor as mentioned in his letter dated 22.1.1970 which was sent in connection with the tender of the contractor.The learned single Judge has relied on Ex. P-23, dated 18.8.1970 and extracted a portion of that letter wherein the Government of India had informed by way of reply to Ex. P-22, dated 13.8.1970 that credit will be given by any country to India usable for making purchase only from that country, that the capital goods committee loan available to Government of India from West Germany Government is usable only for making imports from Germany and cannot be used for making imports from other countries, that to purchase equipments from Swiss Suppliers, Duetshe Marks currency cannot be insisted and used and that therefore advised to instruct the contractor to get in touch with the I.C.I.C.I. for a loan from them who have two lines of credit available to them, viz., (a) a line of credit from the World Bank through the I.B.R.D. and (b) a line of credit from the German Government (through KFW). Of course the Chief Engineer, Veeranam Project has sent a letter to the Secretary to Government, Public Works Department, Madras-9 as seen in Ex. D-553, dated 21.8.1969 requesting the Government to obtain sanction for release of foreign exchange to an extent of Rs. 1, 60, 00, 000. The Secretary to Government, Public Works Department, Madras-9, has also in turn written a letter to the Secretary to Government of India, Ministry of Finance, New Delhi, as seen in Ex. D-554, dated 27.8.1969 requesting for clearance of foreign exchange.
1, 60, 00, 000. The Secretary to Government, Public Works Department, Madras-9, has also in turn written a letter to the Secretary to Government of India, Ministry of Finance, New Delhi, as seen in Ex. D-554, dated 27.8.1969 requesting for clearance of foreign exchange. The letter written by the Chief Engineer, Veeranam Project and the letter written by Secretary to Government Public Works Department, Madras-9 will show that the Government of Tamil Nadu have rendered all assistance to get clearance of foreign exchange at an early date from Government of India, Ministry of Finance, New Delhi, as requested by the contractor to give all assistance to him in procurement of foreign exchange and other necessary Central Government clearance as mentioned in Ex. D-557, dated 22.1.1970.Admittedly, the contractor, at the time of submitting the tender and at the time of execution of articles of agreement after acceptance of such tender, was only a firm consisting of partnership. While the contractor approached the I.C.I.C.I., the contractor was in formed that to procure required foreign exchange the contractor had to give guarantee from a first nationalized bank, and must be an incorporated company to avail the facility of foreign exchange. Therefore, the contractor, after converting the partnership firm into a private limited company as advised by I.C.I.C.I. on 24.2.1971 and also after entering into an articles of agreement on the same terms and conditions with the Government of Tamil Nadu, approached I.C.I.C.I. for grant of foreign exchange to purchase the equipments from Switzerland to manufacture prestressed concrete pipes. With the help of I.C.I.C.I., the letter of credit was opened on 10.11.1971 for purchase of the abovesaid equipments. The abovesaid facts would also lead to infer that the contractor has to approach I.C.I.C.I. as advised by the Government of India to obtain foreign exchange to import the equipments referred to above on his own accord. Nothing was brought to the notice of this Court by the learned senior counsel appearing for the contractor between the contractor and the Board to the effect that the Government of Tamil Nadu had failed to perform the alleged obligation in getting foreign exchange clearance from Government of India.
Nothing was brought to the notice of this Court by the learned senior counsel appearing for the contractor between the contractor and the Board to the effect that the Government of Tamil Nadu had failed to perform the alleged obligation in getting foreign exchange clearance from Government of India. The abovesaid facts would clearly go to show that the Umpire was right in coming to the (conclusion that the Government of Tamil Nadu had rendered all possible assistance to get foreign exchange clearance and if there was any delay in getting such foreign exchange there can be no blame at the doors of State Government. Therefore the Umpire has found that it was the obligation of the contractor to secure allotment of necessary foreign exchange and it was not the obligation of the Government of Tamil Nadu. There is no reason to interfere with such conclusion of the Umpire and accordingly, the point No. 1 is answered against the contractor.Point Nos. 2 and 3 : According to Clause 55 of the articles of agreement, the contractor shall commence the work forthwith on handing over the possession of the site to the contractor. According to the articles of agreement, the setting up and commissioning of factories for manufacture of pipes shall be completed within 8 months while completion and test and trial run of all the factories and 20 per cent of the finished work shall be completed from 9th month to 15th month. Likewise completion and test and trial run of all the factories and 45 per cent of the finished work shall be completed between 16th month and 21st month while completion and test and trial run of all the factories and 70 per cent of the finished work shall be completed between 22nd month to 27th month as per the articles of agreement. It is also evident from a perusal of the articles of agreement that completion and test and trial run of all the factories and 85 per cent of the finished work shall be completed between 28th month to 33rd month while the completion and test and trial run of all the factories and 100 per cent of the finished work shall be completed between 34th month to 36th month.
Therefore, it is evident that the entire work should be finished within 36th month from the date of handing over the site as per the articles of agreement between the government of Tamil Nadu and the Contractor. As per Clause 26(1) of the articles of agreement, time is the essence of this contract and the contractor shall complete the whole of the works required under the contract to be executed including tests on completion within the period or by the date specified in the letter of Acceptance of Tender. As per Clause 76(2) of the articles of agreement if the contractor wants extension of time fixed under the contract for completion of the works, he shall give to the Engineer in writing the earliest possible notice of claim for an extension of time for the completion of the works together with a statement of the facts on which he bases his claim. If the Engineer is of the opinion that the extension sought for by the contractor for the reasons assigned by him is justifiable one, he can extend the time as he finds fit. The question whether or not the time was the essence of contract would essentially be a question of the intention the of the parties to be gathered from the terms of the contract. Even, if the parties to the agreement have expressly provided that the time is essence of contract, such a stipulation will have to be read alongwith the provisions of the contract and such other provisions may, on construction of the contract, exclude the inference that the completion of the work by a articular date was intended to be fundamental. That can be seen in providing a clause for extension of time in certain contingents. This view finds support from the decision of the Hon'ble Apex Court in M/s. Hind Construction Contractors by its Sole Proprietor Bhikan Mulchand Jain (Dead) by L.Rs. vs. State of Maharashtra 1970 (2) SCC 70).
That can be seen in providing a clause for extension of time in certain contingents. This view finds support from the decision of the Hon'ble Apex Court in M/s. Hind Construction Contractors by its Sole Proprietor Bhikan Mulchand Jain (Dead) by L.Rs. vs. State of Maharashtra 1970 (2) SCC 70). It the Clause 56 referred to in the articles of agreement is taken into consideration in the light of the decision of the Hon'ble Apex Court, it is evident that in the contract between the Government of Tamil Nadu and the contractor, it cannot be held that time is essence of contract because of the clause embodied in the agreement referred to above and also due to existence of a clause for extension of time to complete the work by the Engineer for justifiable reasons. It is because of that, the parties to the Award proceeding had conceded before the Umpire that time ceased to be essence of contract.Admittedly, the handling over of the site at Panruti was on 24.6.1971 and therefore, the contract have to be completed by 23.6.1974 subject to the extension to be granted by the Engineer at the request of the contractor of justifiable reasons. For import of the equipments from Switzerland, the contractor had to approach the Government of India and on their advice again at I.C.I.C.I. for clearance of foreign exchange which was cleared by the Government of India by order dated 23.12.1970. It is not in dispute that the Government of Tamil Nadu had extended all assistance in getting clearance of foreign exchange from the Government of India. Due to the nature of contract entered into by the contractor with the Swiss Supplier for equipments on payment by Doutecha Marks, the Government of India could not give clearance of the foreign exchange as desired by the contractor, but advised to approach I.C.I.C.I. which has two lines of credit available with it. For getting foreign exchange assistance from I.C.I.C.I., the partnership firm of the contractor has to be converted into an incorporated company, viz., private limited company and such conversion had taken place on 24.2.1971.
For getting foreign exchange assistance from I.C.I.C.I., the partnership firm of the contractor has to be converted into an incorporated company, viz., private limited company and such conversion had taken place on 24.2.1971. A fresh agreement has to be entered into between the Government of Tamil Nadu and the contractor after converting the partnership firm as a private limited company with the same terms and conditions on 27.8.1971 to avail foreign exchange facilities from I.C.I.C.I. The foreign exchange was sanctioned by the Government of India under U.S. aid loan and the U.S. aid loan was stopped due to war and therefore, the contractor had to again approach the I.C.I.C.I. for loan. The contractor was able to get licence for import of Tylox equipment only in the month of May, 1972 and the letter of credit was opened on 10.6.1972 eventhough the first shipment of the factory equipment had reached Madras in February, 1972. The factories at Thirukalikundram and Panruti were commissioned in June, 1972 and January, 1973 respectively. There was a delay of one year four months eventhough commencement of production of prestressed concrete pipes should have been done within 8 months from the date of delivery of sites. There is no contribution on the part of the Board or the State Government for the abovesaid delay, but the said delay was only due to the laches of the part of the contractor. It is relevant to point out that this Court has already held that there is no obligation on the part of the Government of Tamil Nadu to get clearance of foreign exchange for import of machineries or equipment from Switzerland except to render all assistance for getting the same. It is also relevant to point out that it is not the case of the contractor that the Government of Tamil Nadu have not rendered all assistance for clearance of foreign exchange from Government of India. In view of the abovesaid circumstances, it cannot be said that there is justifiable reason on the part of the contractor in not complying the contract within the period of 36 months.Admittedly contract work progressed with low profile in spite of all assistance rendered by the Government of Tamil Nadu through its Board.
In view of the abovesaid circumstances, it cannot be said that there is justifiable reason on the part of the contractor in not complying the contract within the period of 36 months.Admittedly contract work progressed with low profile in spite of all assistance rendered by the Government of Tamil Nadu through its Board. The machineries installed at Thirukalikundram and Panruti were having the capacity of manufacturing 28 prestressed concrete pipes each per day and the contractor had agreed with the Board in the conference between them that they will produce prestressed concrete pipes to the abovesaid capacity and had also agreed to lay 72 pipes per day. The contractor has not complied with such commitment either in manufacturing of prestressed concrete pipes or in laying of the pipes. According to the learned senior counsel appearing for the contractor, they could not achieve the target of production due to frequent failure of electricity and drop in voltage. It is relevant to point out that a sum of Rs. 4, 00, 000 was sanctioned by the Government of Tamil Nadu for the purpose of getting electric connection, etc., to the factories at Thirukalikundram and Panruti. As per the articles of agreement the contractor has to take every effort to get electric energy and water for manufacture of prestressed concrete pipes and the Government of Tamil Nadu have to render assistance alone for the same. Even, if there is any frequent failure of electricity or drop in voltage as alleged by the learned senior counsel for the contractor, the Government of Tamil Nadu cannot be blamed for the same and the contractor has to make alternative arrangements to comply with the terms of the contract entered into by him with the State of Tamil Nadu. For the poor performance of manufacture of prestressed concrete pipes, the contractor his to blame himself and cannot shift the blame to Government of Tamil Nadu. A perusal of the record produced before Court would disclose that the Special Chief Engineer of Veeranam Project had found on 3.5.1975 that the contractor had manufactured only 10, 400 prestressed concrete pipes as against the 36, 200 number of the abovesaid pipes required for the completion of the work. According to the Special Chief Engineer, the contractor would require 20 more months for the manufacture of the balance number of the said pipes.
According to the Special Chief Engineer, the contractor would require 20 more months for the manufacture of the balance number of the said pipes. It is also seen from the letter dated 16.8.1975 of the Special Chief Engineer that out of 10, 586 pipes manufactured upto that date, the contractor had laid only about 4, 520 pipes. No acceptable reason was given by the contractor as to why he had not even laid 10, 586 pipes which were manufactured as an 16.8.1975. The work done by the contractor in manufacturing prestressed concrete pipes and laying of the said manufactured pipes would disclose that the contractor was not complying with the terms of the articles of agreement as referred to above.Of course, the contractor had sought for extension of time for completion of work till 31.12.1975, but the Government of Tamil Nadu, after taking into consideration of the poor performance of the contractor, had granted extension of time only upto 30.6.1975. The contractor ought to have continued the work with all his abilities to complete the work as per the articles of agreement and should have sought for extension of time for such completion showing justifiable reason to the authority concerned. Without doing so, contractor has stopped work with effect from 30.6.1975. A perusal of the records would show that the contractor had sent a reply as seen in Ex. D-267, dated 14.12.1974 to the Chief Engineer for the letter dated 11.11.1974 as seen in Ex. D-256 under which time was extended upto 30.6.1975, as follows : "This is not acceptable to us. We reject this offer due to the following reasons : (1) it is not clear that reservations are implied as per the first clause, and (2) the period of further time envisaged for completion is insufficient for the purpose". After rejecting the extension of time granted upto 30.6.1975, the contractor has also stated in the letter dated 14.12.1974 addressed to the Chief Engineer as follows : "However, we are continuing the work on the definite understanding that, (1) we will be paid for the work done at the rate to be worked out taking into account the increase in cost due to circumstances now prevailing and that may arise later during the course of the work.
In other words, the rates have to be fixed up taking into account the increase in cost of labour, materials, bank rate of interest and such other items relevant for escalation of rates for the work; (2) that necessary time will be allowed for the completion of the work consistent with the capacity of the equipments in the factory and rate of production practically feasible; and(3) at any rate we will be compensated for the losses resulting directly or indirectly from all such delay and default on the part of the Government as already brought out above." Even after the sending of the reply under Ex. D-267 for the letter Ex. D-256, the contractor had sent a letter to the authority concerned as seen in Ex. D-346, dated 22.8.1975, a portion of which runs as follows : "In this letter we have requested to you to grant an extension of time for 26 months for completion of balance of work, settle our claims immediately and make payment early, making also quite clear therein that the extension of time now asked for would take effect only from the date on which the amount due to us was fully paid and rates revised." Ex. D-352, a note at volume V page 94 would disclose that the contractor had made claim for escalation for labour rates as well as consumables. The tenor of the letters and the note sent by the contractor to the authority concerned in connection with the contract for completion of the project of Veeranam would disclose that the contractor had not only failed to perform his part of the contract in completing the work in phased manner, but had also sought extension of time as the contractor desires for completion of work not on the terms and conditions already entered into in the articles of agreement, but on new terms and conditions. It will otherwise mean that for the balance work to be carried out and completed, the contractor was not prepared to do on the original terms and conditions, but he is prepared to continue the balance work on new terms and conditions, viz., under a new articles of agreement. Expecting to continue the balance work on new terms and conditions, the contractor had abruptly stopped the work on 30.6.1975 by sending letters subsequently also as seen in Exs.
Expecting to continue the balance work on new terms and conditions, the contractor had abruptly stopped the work on 30.6.1975 by sending letters subsequently also as seen in Exs. D-346 to D-349 while the Special Chief Engineer, Veeranam Project had also sent reply as seen in Exs. D-350 and D-351. A perusal of the records would further reveal that the Government of Tamil Nadu had extended time for completion of the work upto 31.12.1975 from 30.6.1975 and again extended time upto 31.3.1976 from 31.12.1975 after receipt of the letter dated 22.8.1975 as seen in Ex. D-346 from the contractor requesting time for 26 months for completing the work. Even though extension of time for completion of the contract work was given periodically by the Government of Tamil Nadu, the contractor had not resumed work which was abruptly stopped on his own accord with effect from 30.6.1975 insisting for a new contract on new terms and conditions. As already pointed out, the delay in completion of the contract is only due to latches on the part of the contractor and it was not established that the Government of Tamil Nadu had contributed anything for such delay on the part of the contractor. The learned single Judge has referred to many letters written by the contractor to the Special Chief Engineer, Veeranam Project and also the letter written by the abovesaid Special Chief Engineer and held that, had those letters been considered by the Umpire, he would have come to an otherwise conclusion that the contractor has not committed breach in execution of the work of Veeranam Project. With due respect to the learned single Judge, we are unable to agree with his conclusion for the simple reason that the contractor, by making use of his own latches in completing the work within the stipulated time, had sought for extension of time to complete the balance contract work only under new terms and conditions, but not under the terms and conditions mentioned in the articles of agreement already entered into by him with the Government of Tamil Nadu and had also stopped work with effect from 30.6.1975 abruptly.
In the circumstances stated supra we are of clear opinion that the contractor alone had committed breach of contract in executing the work of Veeranam Project and there is no contribution on the side of the Government of Tamil Nadu in committing such breach of contract.The learned senior counsel for the contractor contends that non-production of Ex. D-661, a file containing correspondence between the counsel for the contractor and the advocate for the Board, will vitiate the Award passed by the Umpire. Of course, it is evident from the perusal of the order passed by the learned single Judge that the counsel for the contractor sent a letter dated 13.7.1978 to the counsel appearing for the Board to produce 7 items of documents out of which one item is relating to handing over of a note by former Chief Engineer, Veeranam Project Thiru Hedge (Ex. D-660). It is also evident from the perusal of the order of the learned single Judge that the learned senior counsel appearing for the Board then had brought to the notice of the Court by means of a counter that the note said to have been given by Thiru A. S. Hedge to his successor at the time of handing over charge, is a secret document and the same is not available in the records of the Board. In any event, it was contended by the learned Senior Counsel appearing for the Board then that at the note said to have been given by Thiru Hedge to his successor will not bind the Board in any respect. The learned Advocate General contended before us that such a note or correspondence exchanged between inter-departments or offices may not be admissible in evidence and in any event that may not advance the case of the contractor in any respect since it is very clear from the documents already before Court that the contractor has committed breach of contract. Of course in Biswabhusan Naik vs. The State 1952 AIR(Orissa) 289), a Division Bench of Orissa High Court has an extreme doubt as to whether all secretariat notes are admissible in evidence to come to a conclusion.
Of course in Biswabhusan Naik vs. The State 1952 AIR(Orissa) 289), a Division Bench of Orissa High Court has an extreme doubt as to whether all secretariat notes are admissible in evidence to come to a conclusion. It is evident from the correspondence between the contractor and the Board referred to above by us, that the contractor has abruptly stopped work with effect from 30.6.1975 on his own accord and had insisted to continue and complete the balance work on new terms and conditions. It can be seen from Ex. D-660 revised estimate of contract itself that he had claimed revised rate of Rs. 29.25 crores as against Rs. 16, 55, 87, 300 agreed to in the tender submitted by him which was accepted by the Government of Tamil Nadu by issue of orders in G.O.Ms. No. 1607, Public (TWAD) Department, dated 13.7.1970 and followed by articles of agreement containing the terms and condition. Therefore, we are of firm opinion that non-production of the documents referred to by the learned single Judge in his order, by the Board, will not vitiate the Award passed by the Umpire.In Dhulipudi Namayya vs. The Union of India 1958 AIR(AP) 533), a Division Bench has held that where a party to a validly concluded contract refuses to carry out the work he has agreed to do unless the opposite party agreed to certain other new conditions, he commits a breach of contract. It has also been held that after such refusal the opposite party is entitled to treat the contract terminated and recover from the party in breach compensation for any loss or damage caused by the breach which, naturally arose in usual course of things from such a breach or which the parties knew, when they made the contract, to be likely to result from the breach of it, but not for any remote and direct loss or damages sustained by reason of the breach. It has also been held that there is no need for termination of contract in such circumstances. In State of Rajasthan vs. Puri Construction Co. Ltd. and another 1995 (1) Arb. LR 2 (SC)), the Honourable Apex Court was pleased to hold as follows : "Claims before the Arbitrators arise from the contract between the parties.
It has also been held that there is no need for termination of contract in such circumstances. In State of Rajasthan vs. Puri Construction Co. Ltd. and another 1995 (1) Arb. LR 2 (SC)), the Honourable Apex Court was pleased to hold as follows : "Claims before the Arbitrators arise from the contract between the parties. It is well settled that if a question of law is referred to Arbitrator and the Arbitrator comes to a conclusion, it is not open to challenge the award on the ground that an alternative view of law is possible. In this connection, reference may be made to the decisions of this Court in Alopi Parshad & Sons Ltd. vs. Union of India, and Kapoor Nilokheri Co-operative Dairy Farm Society vs. Union of India. In Indian Oil Corporation Limited vs. Indian Carbon Limited, this Court has held that the Court does not sit in appeal over the award and review the reasons. The Court can set aside the award only if it is apparent from the award that there is no evidence to support the conclusions or if the award is based upon any legal proposition which is erroneous." In Arosan Enterprises Ltd. vs. Union of India and another 1999 (3) Arb. LR 310 (SC)), the Apex Court was pleased to hold as follows : "Section 30 of the Arbitration Act, 1940 providing for setting aside an award of an Arbitrator is rather restrictive in its operation and the statute is also categorical on that score. The use of the expression "shall" in the main body of the section makes it mandatory to the effect that the award of an arbitration shall not be set aside excepting for the grounds as mentioned therein to wit : (i) arbitrator or umpire has misconducted himself; (ii) award has been made after the supersession of the arbitration or the proceedings becoming invalid; and (iii) award has been improperly procured or otherwise invalid. The above-noted three specific provisions under Section 30 thus can only be taken recourse to in the matter of setting aside of an award. The legislature obviously had in its mind that the Arbitrator being the Judge chosen by the parties, the decision of the Arbitrator as such ought to be final between the parties. .......
The above-noted three specific provisions under Section 30 thus can only be taken recourse to in the matter of setting aside of an award. The legislature obviously had in its mind that the Arbitrator being the Judge chosen by the parties, the decision of the Arbitrator as such ought to be final between the parties. ....... it is now a well settled principle of law that reappraisal of evidence by the Court is not permissible and as a matter of fact exercise of power by the Court to reappraise the evidence is unknown to proceedings under Section 30 of the Arbitration Act. In the event of there being no reasons in the award, question of interference of the Court would not arise at all. In the event, however, there are reasons, the interference would still be not available within the jurisdiction of the Court unless, of course, there exist a total perversity in the award or the judgment is based on a wrong proposition of law. In he even however two views are possible on a question of law as well, the Court would no be justified in interfering with the award.The common phraseology "error apparent on the face of the record" does not itself, however, mean and imply closer scrutiny of the merits of documents and materials on record. The Court as matter of fact, cannot substitute its evaluation and come to the conclusion that the Arbitrator had acted contrary to the bargain between the parties. If the view of the Arbitrator is a possible view cannot the award or the reasoning contained therein cannot be examined." In State of U.P. vs. Harish Chandra and Co. 1998 (2) Arb. LR 716 (SC)), the Honourable Apex Court was pleased to hold as follows : "The claim which was made in that case by Durga Prashad before the Arbitrator was for the non-payment of the full amount as per final bill submitted by him and the interest so awarded on the said amount was clearly not covered by Clause 4 of the contract. Similar is the fact situation in the present case and the wording of the clause in question is also of an identical nature. Therefore, the contention of learned senior counsel for the appellant-State that Clause 1.9 barred the consideration of such a claim for interest cannot be sustained.
Similar is the fact situation in the present case and the wording of the clause in question is also of an identical nature. Therefore, the contention of learned senior counsel for the appellant-State that Clause 1.9 barred the consideration of such a claim for interest cannot be sustained. The High Court, therefore, rightly came to the conclusion that clause was not a bar to such claim. Further contention of learned senior counsel for the appellant that the claims regarding cutting of hard rock were wrongly granted, cannot be made the subject-matter of an objection under Section 30 of the Arbitration Act which could have been agitated for getting any reduction of the amount as awarded by the Arbitrator. It was a question purely on the merits of the award which could not be agitated in objections as they were not in the nature of an appeal against the award before the Court below." The principles laid down by the Honourable Apex Court as well as by the High Court of Andhra Pradesh in the cases cited above disclose that the contractor cannot dispute the award passed by the Umpire as if it is a judgment under appeal and the Award cannot be set aside except on the ground that the Arbitrator or the Umpire has misconducted himself or Award has been made after the supersession of the arbitration or the proceedings becoming invalid or the Award has been improperly procured or otherwise invalid. It is also evident from the cases cited above that the Arbitrator being a Judge chosen by parties to the proceeding, the decision of the Arbitrator as such ought to be final between the parties. It is also evident from the decisions cited above that the Court cannot reappraise the evidence in coming to a conclusion as it is unknown to the proceedings under Section 30 of the Arbitration Act and in any event the Award cannot be set aside unless there is total perversity in the Award or the judgment is based on a wrong proposition of law.
It is further clear from the decision of the Division Bench of the Andhra Pradesh High Court that if a party to a validly concluded contract refuses to carry out the work he had agreed to do unless the opposite party agreed to certain other new conditions, he commits breach of contract for which the opposite party is entitled to compensation or damages. It is also further clear that there is no need for termination of contract in such circumstances. The principles laid down by the Honourable Apex Court as well as the Andhra Pradesh High Court would lead to conclude that the learned single Judge has, contrary to the above said principles laid down by the Courts referred to above more particularly, the Apex Court, set aside the Award passed by the umpire who is an eminent and popular retired Judge of this Chartered High Court.The learned senior counsel for the contractor relied on the following decisions in support of the case of the contractor : (1) K. P. Poulose vs. State of Kerala and another. In that case it was held by the Honourable Apex Court that if the Arbitrator has committed legal misconduct in arriving at a conclusion inconsistent with his own findings and ignoring material documents which may throw abundant light on the controversy to arrive at a just and fair decision, the award has to be set aside. (2) Government of Kerala and another vs. P. Jolly, A Full Bench of the said High Court has held that if a non-speaking award was passed contrary to basis or obvious feature of the contract or traverse beyond obvious terms of contract, if has to be set aside. (3) Associated Engineering Co. vs. Government of Andhra Pradesh and another 1991 (2) Arb. LR 180 (SC)). The Honourable Apex Court was pleased to hold that where it is apparent not by construction of the contract but by merely looking at the contract that the Umpire travelled totally outside the permissible territory and thus exceeded his jurisdiction in making the award it is an error going to the root of his jurisdiction." (4) Union of India vs. Jain Associates and another 1994 (1) Arb. LR 494 (SC)).
LR 494 (SC)). The Honourable Apex Court has held that in the case of non application of mind in a non-speaking award passed by the Arbitrator, it is not possible to separate bad portion from the good portion of the award and therefore, the entire award has to be set aside. (5) Premier Fabricators, Allahabad vs. Heavy Engineering Corporation Ltd., Ranchi 1997 (1) Arb. LR 517). The Honourable Apex Court has held that if the Umpire was required to decide the preliminary issue first and then to decide on merits and if from the non-speaking award it could not be discerned that umpire had considered arbitrability of the claims which was a jurisdictional issue, it has to be held that the umpire has committed jurisdictional error and in such circumstances, the award may either be set aside in entirety or the same may be remitted to the umpire for de novo consideration.(6) The Upper Ganges Valley Electricity Supply Co. Ltd. vs. The U.P. Electricity Board. It has been held by the Honourable Apex Court that an award can be set aside only if there is an error of law on the face of record. (7) Juggilal Kamlapat vs. General Fibre Dealers. It has been held by the Honourable Apex Court that the contention therefore that once the award is set aside the Arbitrator becomes functus officio and consequently there can be no further reference with respect to the dispute decided by the award which is set aside, must fail in view of the specific provisions of Section 19 of the Arbitration Act. The principles laid down by the Honourable Apex Court as well as the Full Bench of Kerala High Court in the decisions cited above by the learned senior counsel for the contractor will have no application to the facts and circumstances of this case. Hence, they will not render any help to the contractor in any respect. Therefore points 2 and 3 are answered against the contractor. Point No. 4 : A perusal of the claim statements filed by the Board would disclose that the Board has claimed a sum of Rs. 50, 29, 63, 329 from the contractor on the ground of breach committed by him under various heads while the contractor in full quit of all the amounts due from the Board after adjusting the amount due to the Board, claimed a sum of Rs.
50, 29, 63, 329 from the contractor on the ground of breach committed by him under various heads while the contractor in full quit of all the amounts due from the Board after adjusting the amount due to the Board, claimed a sum of Rs. 13, 92, 00, 478.17. After considering the material evidence available on record and submissions made on both sides, the Umpire has held that the Board is entitled to a sum of Rs. 2, 67, 41, 079 as outstanding advance, Rs. 33, 66, 368 as unrecovered value of material, Rs. 8, 83, 818 as miscellaneous dues from the contractor and Rs. 5, 000 as nominal damages, thus making in all a sum of Rs. 3, 09, 96, 265. The Umpire had also come to the conclusion that the contractor is entitled to a sum of Rs. 8, 64, 676 towards increase in cost of labour, Rs. 14, 560 under U.S.R. (Item 9) and Rs. 31, 23, 355 towards the amount retained by the Government making a total of Rs. 40, 02, 591 from the Board. As this sum payable to the contractor by the Board falls short of the amount payable by the contractor to the Board, this has to be deducted from and out of the amount payable by the contractor to the Board. If the abovesaid sum of Rs. 40, 02, 591 is deducted from Rs. 3, 09, 96, 625, the amount payable by the contractor to the Board will work out to Rs. 2, 69, 93, 674. Therefore, the Umpire has passed an Award in favour of the Board and against the contractor for a sum of Rs. 2, 69, 93, 674 and also to pay interest at 9 per cent per annum from the date of Award. It is needless to point out that the Board is entitled to interest on the amount due to it from the contractor and this position finds support in the decision reported in State of U.P. vs. Harish Chandra & Co. (supra), cited by the learned Advocate General. The Umpire had also left open the rights of the Board as regards hypothecation of machineries to be decided in appropriate proceedings.
(supra), cited by the learned Advocate General. The Umpire had also left open the rights of the Board as regards hypothecation of machineries to be decided in appropriate proceedings. The contractor was also not permitted to remove the machineries from the site upon which they have been erected and the rights of parties in that regard will abide the decision in the suit pending between the parties. By concluding so, the umpire had rejected the balance claim made on the side of the Board as well as on the side of the contractor. The learned Advocate General and the learned senior counsel appearing for the Board and the Contractor respectively have not advanced any argument with regard to the correctness of the findings given by the Umpire with regard to the claims made under various heads by the Board as well as by the contractor. It is also relevant to point out that the learned single Judge, who had gone into the Award by reappreciating the evidence, had also not given any finding that the Award amount arrived at by the Umpire is not correct. In the above circumstances, we are bound to hold that the Award amount arrived at by the Umpire is correct and accordingly the said finding is also confirmed.In view of the foregoing reasons we are unable to agree with the order passed by the learned single Judge in setting aside the Award dated 10.9.1979. Hence the orders passed by the learned single Judge has to be set aside and accordingly set aside. In fine, both original side appeals filed by the Board are allowed thereby setting aside the orders passed by the learned single Judge in Application No. 560 of 1980 in O.P. No. 428 of 1979, O.P. No. 428 of 1979 and O.P. No. 122 of 1980 on 28.12.1989 and a decree is passed in terms of the Award dated 10.9.1979 passed by the Umpire. In the circumstances of this case, the appellant Board entitled to costs throughout.