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2001 DIGILAW 534 (JHR)

Union of India v. Bhagwat Prasad Mehta

2001-08-01

GURUSHARAN SHARMA

body2001
JUDGMENT : Gurusharan Sharma, J.-Dispute relates to contract work allotted by appellants to the respondent for open improvement to sub-standard quarters under A.E.N. (JPL 25 units), for which an agreement dated 11.5.1988 was executed in between the parties. The work order was issued on 28.6.1988, work was to be finalised by 6.10.1988. During the said period additional work related to sanitary fittings, painting of wood and iron, demolition of existing old construction and supplying sand for the foundation were also got done by the contractor, and for which, on persuasion, work order could be issued on 6.11.1988. Time for completion of work was extended to 6.1.1989. The works done by respondent were entered in the measurement book. 2. It is said that on 21.1.1989, I.O.W. Eastern Railways at Japla removed respondent's materials from R.P.F. Barrack, Block No. 2 and on his complain, it was wrongly alleged that respondent had stopped work. The Assistant Engineer, Eastern Railways, Japla, through letter dated 28.2.1989 directed respondent to restart the work immediately within a week. 3. According to the contractor, though work was to be finished by 6.10.1988, but no map was supplied. Besides oral requests, even on the contractor's letter dated 2.6.1988 to supply the map, the South Eastern Railway Authorities, did not pay any heed. On 7.5.1988, the Assistant Engineer, Eastern Railways, Japla, intimated the contractor to receive the materials, but when he went there no material was supplied. In this way much of the contractor's time was wasted due to the negligence and delay on the part of the railway authorities. 4. Under clauses 17(2) and (3) of G.C.C. the contractor requested for extension of time to complete the works till 31.3.1990, on which he was directed to remove the tools from the site within 48 hours and came to the office within ten days for final measurement. 5. The Assistant Engineer prepared imaginary bills without disclosing the exten1 of work done by the contractor and so he refused to sign those incorrect bills. The contractor claimed that since there was no agreement for additional works, he was entitled to get his bill for such works at the current market rate which goes to Rs. 1,00,000/-. Cost of materials removed by the defendant was valued at Rs. 324,50/and a sum of Rs. 50,000/- was claimed on account of loss of profit for being not allowed to complete the work. 1,00,000/-. Cost of materials removed by the defendant was valued at Rs. 324,50/and a sum of Rs. 50,000/- was claimed on account of loss of profit for being not allowed to complete the work. A sum of Rs. 20,000/- was claimed by way of interest @ 16% per annum. A sum of Rs. 11,550/- deposited by him as earnest money was also not refunded. Altogether, the contractor has claimed Rs. 3,33,900/-. 6. On the other hand, railways claimed that map was supplied in time, but the plaintiff was not proceeding according to the specifications as per the contract and map. There was no delay in supplying the materials. So far as the additional work was concerned, the contractor was to be paid his remuneration as per the Schedule rate of the Eastern Railways. The contractor was to be paid only the actual amount for the work done. Neither the contractor had kept any material in R.P.F. Barrack nor it was removed. The contractor himself abandoned the work and removed all materials including those supplied by the Railways. Inspite of indulgence given on his request, the contractor did not re-start the work and failed to complete it. Ultimately by letter dated 14.8.1989 the contract was terminated. 7. On 19.6.1993, the parties agreed that Sri Basistha Singh, retired Works Manager of Bihar State Construction Corporation be appointed as Arbitrator. Hence, he was appointed Arbitrator and entered into reference and submitted his Award on 25.11.1993. The Arbitrator allowed Rs. 10,000/- which was deducted from the contractor's last bill, Rs. 50,000/- for the extra works done, Rs. 62,765/- for the loss of profit @ 15% of the value of work to be completed amounting to Rs. 4,18,433/-, Rs. 20,000/- towards interest value of contractor's capital payment kept pending in Irrigation Department, Rs. 11,500/- initial security and Rs. 8,919.50 towards amount of security deducted from his running bills @ 10%. Total amount to be paid to the contractor was calculated at Rs. 1,63,185/-. The Arbitrator also granted compound interest @ 16% per annum from 14.8.1989 to 14.8.1993 amounting to Rs. 1,32,284/-. Thus, the principal amount with interest came to Rs. 2,95,469. Same rate of interest was granted on the above amount from 15.8.1993 till the actual date of payment by the Railways. 8. 1,63,185/-. The Arbitrator also granted compound interest @ 16% per annum from 14.8.1989 to 14.8.1993 amounting to Rs. 1,32,284/-. Thus, the principal amount with interest came to Rs. 2,95,469. Same rate of interest was granted on the above amount from 15.8.1993 till the actual date of payment by the Railways. 8. By impugned judgment dated 22.4.1994, the aforesaid Award dated 27.9.1993 was made Rule of Court with interest @ 16% per annum from the date of decree till payment. 9. The Union of India represented by the General Manager, Eastern Railways, Calcutta, has, therefore, filed the present appeal under Section 39(vi) of the Arbitration Act, 1940. 10. Mr. Chatterjee, counsel for the appellants, submitted that the respondent claimed loss of profit at Rs. 50,000/- which on calculation was @ 10.8% per annum, but the Arbitrator granted a sum of Rs. 62,765/- towards profit loss @ 15%. A sum of Rs. 20,000/- was granted by the Arbitrator towards loss of interest due to blockage of payment under the Irrigation Department and the Subordinate Judge affirmed the same under the impression that in CWJC No. 2344 of 1999(R) it was admitted on behalf of the Railways that the said payment was stopped on account of shortage of fund, which was an error of record. In fact, Railways was not even party to the said Writ Petition, and the said statement was made on behalf of Irrigation Department of the State Government. Payment of the aforesaid amount was stopped under existing clause 52 A of the Agreement and respondent, was, therefore, not entitled to get the said amount of Rs. 20,000/- for loss on account of blockage of money payable to him by Superintending Engineer, North Koel-Karo Project. Respondent was also not entitled to 16% compound interest as per the agreement. 11. It is true that there was no occasion for the Arbitrator to grant loss of profit @ 15%, when the respondent himself claimed @ 10.8% only. Secondly, payment to the respondent by the Irrigation Department was stopped under Clause 51A of the Agreement and it was an error of record to observe that Railways accepted that the said payment was not made on account of non-availability of fund. 12. Secondly, payment to the respondent by the Irrigation Department was stopped under Clause 51A of the Agreement and it was an error of record to observe that Railways accepted that the said payment was not made on account of non-availability of fund. 12. I find force in the aforesaid submissions and accordingly the impugned judgment and Award is modified to the extent that instead of loss of profit @ 15% of the value of the work to be completed amounting to Rs. 4,18,433.00, respondent, as claimed, was entitled to loss of profit @ 10.8% only and he was also not entitled to be paid Rs. 20,000/- towards loss of interest due to blockage of payment under Irrigation Department. 13. In the result, this Appeal is disposed of with the aforesaid modification in the impugned judgment and Award. There shall be no order as to costs. Lower court records may be sent down.