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2004 DIGILAW 75 (HP)

EXECUTIVE ENGINEER, H. P. PWD v. RAJESH THAKUR

2004-04-22

R.L.KHURANA

body2004
JUDGMENT R.L. Khurana, J.—Vide agreement No. 115 of 1995-96, the work of "Construction of Type-VI Houses/Cottages, 4 Units, i.e. 9 to 12 under Rental Housing Scheme at Kasumpti, Shimla (SH : building portion including WS and SI)" was awarded to the respondent-Contractor Shri Rajesh Thakur involving a total cost of Rs. 43,15,502. As per the terms of the agreement, the work was to be completed by 29.3.1997, that is, within one year reckoned from 15th day of the date of the award of work. The respondent started the work on 30.3.1996. It, however, was not completed within the stipulated period of one year. Time for completion of work was extended upto 31.12.2000. At the time of granting the extension the respondent was specifically called upon to complete the work within the extended period, failing which action as per various terms of the agreement would be taken against him. 2. It appears that on a dispute having arisen between the parties, the respondent on 9.2.2001 sought the reference of the dispute to arbitration in terms of the arbitration clause contained in the agreement. The dispute was accordingly referred to arbitration. 3. The respondent raised various claims before the arbitrator. No counterclaims were raised on behalf of the petitioner. The arbitrator, on the basis of the material placed before him by the parties, vide his award dated 12.4.2002 awarded a sum of Rs. 12,78,638 along with interest in favour of the respondent as under : Sl. No. Description of claim Amount claimed Amount awarded 1. Balance payment for work done. Rs. 8,49,660/- Rs. 7,50,026/- 2. Damages for prolongation of the work. Rs. 17,98,125/- 5,28,612/- 3. Payment for the item of removal of slip. Rs. 3,30,197/- Nil 4. Interest. @ 24% per annum @ 12% per annum (simple) on Rs. 7,50,026/-for nine months till the date of award. 5. Arbitration cost. Rs. 25,000/- Nil. Total: Rs. 12,78,638/-plus interest as awarded against claim No. 4. 4. The arbitrator further allowed future interest at the rate of 18% per annum on the sum awarded, that is, Rs. 12,78,638 in favour of the respondent from the date of award till date of realisation of the amount. 5. Feeling aggrieved by and being dis-satisfied with the award of the arbitrator, the petitioner has approached this Court by way of the present objection petition under Section 34, Arbitration and Conciliation Act, 1996. 6. 12,78,638 in favour of the respondent from the date of award till date of realisation of the amount. 5. Feeling aggrieved by and being dis-satisfied with the award of the arbitrator, the petitioner has approached this Court by way of the present objection petition under Section 34, Arbitration and Conciliation Act, 1996. 6. The award has been primarily assailed on the ground that the arbitrator in making the award has misread and mis-interpreted the terms of the agreement, especially clause 12 thereof. 7. Clause 12 of the agreement, in so far as, it is material for the purpose of the present case, reads : "The Engineer-in-charge shall have power to make any alterations in, omissions from, addition to or substitutions for, the original specifications, drawings, designs and instructions, that may appear to him to be necessary during the progress of the work and the contractor shall carry out the work in accordance with any instructions which may be given to him in writing signed by the Engineer-in-charge and such alterations, omissions, additions or substitutions shall not invalidate the contract and any altered, additional or substituted work which the contractor may be directed to do in the manner above specified as part of the work shall be carried out by the contractor on the same condition in all respect on which he agreed to do the main work. The time for the completion of the work shall be extended in the proportion that the altered, additional or substituted work bears to the original contract work, and the certificate of the Engineer-in-charge shall be conclusive as to such proportion. Over and above this, a further period to the extent of 25% of the time so extended shall be allowed to the contractor. The rates for such additional, altered or substituted works under this clause shall be worked out in accordance with the following provisions in their respective order :— (i) If the rates for the additional, altered or substituted work are specified in the contract for the work, the contractor is bound to carry out the additional, altered or substituted work at the same rates as are specified in the contract for the work. (ii) If the rates for the additional, altered or substituted work are not specifically provided in the contract for the work, the rates will be derived from the rates for a similar class of work as are specifically in the contract for the work. (iii) If the rates altered, additional or substituted work includes any work for which no rates is specified in the contract for the work and cannot be derived from the similar class of work in the contract, then such work shall be carried out at the rates entered in Himachal Pradesh Schedule of rate 1987 and HPSR-1993 for WS and SI of tender minus/plus percentage which the total tendered amount bears to the estimated cost of the entire work put tender. (iv) If the rates for the altered, additional or substituted work cannot be determined in the manner specified in clauses (i) to (iii) above, then the rates for such work shall be worked out on the basis of the schedule of rates of the district specified above minus/plus the percentage which the total tendered amount bears to estimated cost of the entire work put to tender : Provided always that if the rate for a particular part/parts of the item is not in the schedule of rates, the rate for such part or parts will be determined by the Engineer in charge on the basis of the prevailing market rates when the work was done. (v) If the rates for the altered, additional or substituted work cannot be determined in the manner specified in sub-clause (i) to (iv) above, then the contractor shall within 7 days of the date of receipt of order to carry out the work, inform the Engineer in charge of rate which it is his intention to charge for such class of work, supported by analysis of the rate/rates claimed, and the (Engineer-in-charge shall determine the rate or rates on the basis of prevailing market rates, and pay the contractor accordingly). However, the Engineer-in-charge, by notice in writing, will be at liberty to cancel his order to carry out such class of work and arrange to carry it out in such manner as he may consider advisable. But under no circumstances, the contractor shall suspend the work on plea of non-settlement of rates of items failing under this clause. However, the Engineer-in-charge, by notice in writing, will be at liberty to cancel his order to carry out such class of work and arrange to carry it out in such manner as he may consider advisable. But under no circumstances, the contractor shall suspend the work on plea of non-settlement of rates of items failing under this clause. (vi) Except in case of items relating to foundations provisions contained in sub-clause (i) to (v) above shall not apply to contract or substituted items as individually exceed the percentage set out in the tender documents (referred to herein below as "deviation limit") subject to the following restrictions :— (a) The deviation limit referred to above is the net effect (algebrical sum) of all additions and deductions ordered. (b) In no case shall the addition/deductions (arithmetical sum) exceed twice the deviation limit. (c) The deviations ordered on items of any individual trade included in the contract shall not exceed plus/minus 50% of the value of that trade in the contract as whole or half the deviation limit which ever is less. (d) The value of additions of items of any individual trade not already included in the contract shall not exceed 10% of the deviation limit. Note : Individual trade means the trade sections into which a schedule of quantities annexed to the agreement has been divided or in the absence of any such division, the individual sections of the Himachal Pradesh Public Works Department schedule of rates specified above such as excavation and earth work, concrete, wood work and joinery etc. The rates of any such work except the items relating to foundations which is in excess of the deviation limit shall be determined in accordance with the provisions contained in clause 12-A." (Emphasis supplied) 8. There is no denying that in view of the revision in the architectural drawings, certain extra and substituted items of work were got executed by the petitioner from the respondent. Therefore, in terms of Clause 12 of the agreement, the respondent became entitled for additional payments in respect of such extra and substituted items of work. The question, thus, arises as to how the additional payments for such extra and substituted items of works are to be determined. Clause 12 of the agreement provides for determination of such additional payments. 9. The question, thus, arises as to how the additional payments for such extra and substituted items of works are to be determined. Clause 12 of the agreement provides for determination of such additional payments. 9. There is no dispute that sub-clause (v) of Clause 12 of the agreement would be applicable in the present case. This sub-clause specifically provides that the "Engineer-in-charge" shall determine the rate(s) on the basis of the prevailing market rates and pay the contractor accordingly. 10. Admittedly, the "Engineer-in-charge" is the Executive Engineer. The case put forth by the petitioner before the arbitrator as well as before this Court is "that the Engineer-in-charge had determined the rates of extra and substituted items of work and had recommended the same to the Superintending Engineer, who in turn after provisionally approving the same submitted it to the Chief Engineer for final approval and that whatever rates were approved by the Chief Engineer, were payable to the respondent for extra and substituted items of work. 11. A bare reading of sub-clause (v) of Clause 12 of the agreement quoted above shows that the authority to determine the rates for extra and substituted items of work is the Engineer-in-charge, that is, the Executive Engineer. The sub-clause does not provide for approval of rates either by the Superintending Engineer or the Chief Engineer. The determination of rates made by the Engineer-in-charge is final and binding on the department. The arbitrator has, therefore, rightly interpreted clause 12 of the agreement in arriving at the conclusion that it is the Engineer-in-charge who is the competent authority to determine the rates payable in respect of extra and substituted items of work. 12. The arbitrator has given detailed reasons for his award and as such it cannot be said that the award is not supported by reasons and is, therefore, opposed to Public Policy of India. 13. For the foregoing reasons, there being no merit in the present objection petition, the same is dismissed accordingly leaving the parties to bear their own costs. -