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2009 DIGILAW 58 (AP)

Siddhardha Constructions Pvt. Ltd. v. Union of India, rep. By the General Manager, Secunderabad

2009-02-11

NOOTY RAMAMOHANA RAO

body2009
Judgment : This Application has been moved under subsection (6) of Section 11 of the Arbitration and Conciliation Act, 1996, (henceforth referred to as 'the Act'), seeking intervention for appointment and constitution of the Arbitral Tribunal for resolving the disputes that are, said to have, arisen between the parties. The Applicant Company responded to the tender notification floated by the respondent Railways on 29-07-2002 for the work relating to "supply and stacking of 50 mm gauge hard durable stone ballast". The tenders were opened on 04-09-2002 and the Applicant Company was awarded the work through a communication of acceptance of its tender on 31-10-2002, by the respondents. The Applicant Company was required to supply and stack 9900 cum of the hard ballast @ Rs.492 per cubic meter and thus, the total value of the contract has been worked out to be Rs.48,70,800/-. According to the Applicant Company it started undertaking the execution of the work of collecting the specified gauge of hard ballast stone, but however, could not unload or stack it for want of spaces to be allocated by the Railways. It is the case of the Applicant Company that the entire hard ballast material of 9900 cum is not required to be dumped or stacked at one place, but is required to be stacked at various locations, where the project work was going on. It was the case of the Applicant Company that the site, which has been required to be made available for such dumping has either not been physically available or even, if available, the said site is all filled with permanent way materials belonging to the Railways and thus, there was an actual constraint that has been brought about for the Applicant Company to stack the ballast procured by it. The Applicant Company has pointed out that in terms of the powers available under the "General Conditions of the Contract", subsidiary agreements have been executed extending the time for completion of the work on various dates; extending right up to 31-08-2006. During this process, the Applicant Company has been soliciting the revision of the rate, for, the costs of the procurement of the ballast have gone up, but however, the Railways have not agreed for the same. During this process, the Applicant Company has been soliciting the revision of the rate, for, the costs of the procurement of the ballast have gone up, but however, the Railways have not agreed for the same. It is stated in Paragraph No.5 of the present Application that the Applicant Company had executed the work for a value of Rs.36,55,504/-and thus, supplied a quantity of 7429.887cum. Hence, the Applicant solicited payment of the money for the work executed and when the final bill was prepared on 03-07-2007, the same was signed under protest. He has clearly recorded the expression "under protest" on the "no claim certificate in final bill" prepared by the Railway administration. According to the Applicant it has made a request on 21-01-2008 seeking the General Manager, South Central Railway, Secunderabad, in terms of subsections (5) & (6) of Section 11 of the Act, to refer the claims/ disputes for resolution to the Arbitral Tribunal. The Office of the General Manager, had acknowledged the receipt of the said notice on 22-01-2008, but since, there was no response from him by constituting the Arbitral Tribunal, it has moved the present Application on 17-06-2008 after serving an advance copy thereof on one of the Standing Counsel for the Indian Railways. The Applicant has crystallized its disputes/claims numbering 10, as follows: Claim No.1:- Refund of Security Deposit Rs.2,51,100-00 Claim No.2:- Loss of productivity and under utilization of the organization due to non-provision of the site for collection of ballast by the Railways, 10% of agreement value Rs.4,87,080-00 Claim No.3:- Loss due to delay in receiving the payments due to delay in dumping, waiting for linking of track to be done by another agency Rs.3,00,000-00 Claim No.4:- Expenditure for making path ways repeatedly for collection of ballast Rs.1,20,000-00 Claim No.5:- Idling of vehicles due to delay in showing the site for collection by Railways, for 24 months @ Rs.1,20,000/ month (2 tippers, 20 tons capacity @ Rs.60,000/- per month) Rs.28,80,000-00 Claim No.6:- Idling of dumping labour due to delay in the linking of track by another contractor. 20 labour for a total period of 300 days @ Rs.100/- per head per day. Rs.6,00,000-00 Claim No.7:- Additional rate for the supplies made beyond the original currency of the contract for a quantity of 5811.8 cum @ Rs.150/- per cum. 20 labour for a total period of 300 days @ Rs.100/- per head per day. Rs.6,00,000-00 Claim No.7:- Additional rate for the supplies made beyond the original currency of the contract for a quantity of 5811.8 cum @ Rs.150/- per cum. Rs.8,71,770-00 Claim No.8:- Loss due to continuation of overheads beyond the initial completion period (28-02-2003) from March 2003 up to 31-08-2006 for site office and Head Office, as per Hudson's formula up to the date of termination. Rs.48,70,800 x 42/2 x 10% Rs. 51,14,340-00 Claim No.9:- Interest on all the above from September 2006 to the date of payment at 24% compounded ...To be worked out. Claim No.10:- Cost of arbitration ...To be worked out. In fact, these are the very claims, which the Applicant has listed out in its representation dated 15-09-2007, which was addressed to the General Manager, South Central Railway, Secunderabad, as well as the Chief Administrative Officer/Con/SCR/Secunderabad and the Chief Engineer/C-V/South Central Railway, Secunderabad, seeking settlement of the same. This communication of the Applicant Company was received by the General Manager, South Central Railway, on 20-09-2007. Thus, it is clear that there is a contract entered into by and between the parties on 22-01-2003 with regard to the supplying, stacking and leading on to the track and dumping 50 mm gauge hard angular durable stone ballast, and the total value of the work was noted as Rs.48,70,800/-. The agreement entered into by and between the parties had specifically noted the date of issuance of the 'acceptance' letter by the respondents on 01-10-2002, and hence, the date of completion of the contract was slated as 28-02-2003 and that a security deposit of Rs.2,51,100/- has also been collected from the Applicant Company. This agreement has specifically pointed out the "General Conditions Of Contract" governing the performance of the works covered by the said agreement or the "General Conditions Of Contract of the Engineering Department of the South Central Railway" as amended from time to time, will form part of the agreement. Clauses 63 & 64 of the General Conditions Of Contract of the Engineering Department of the Ministry of Railways, specifically dealt with the issue of settlement of disputes that might crop up between the parties. In particular, Clause64, has clearly spelt out the detailed procedure for constituting the Arbitral Tribunal comprising of Railway Officers upon a demand in that regard being made. In particular, Clause64, has clearly spelt out the detailed procedure for constituting the Arbitral Tribunal comprising of Railway Officers upon a demand in that regard being made. Thus, the disputes that have arisen between the parties are solicited to be resolved, through the communication dated 15-09-2007 and more specifically for being referred for resolution through the mechanism of arbitration through the notice dated 22-01-2008, which was received and acknowledged by the competent authority, namely, the General Manager, South Central Railways, Secunderabad, on 22-01-2008. When notice was issued in the above matter on 07-08-2008, the respondents entered appearance and the Deputy Chief Engineer of the South Central Railway, filed a very brief counter affidavit in the matter. While denying the various averments made by the Applicant in the present Application, it is specifically asserted in Paragraph No.3 of the counter affidavit that no breach of contract has been committed by the Railways. It is, further, pointed out that pursuant to the letter dated 15-09-2007 of the Applicant, the respondent Railways have taken action and the claims/disputes are being referred for arbitration and, in that process, the General Manager, South Central Railway, vide their proceedings dated 20-06-2008, informed the Applicant to indicate two names of his choice, of the four names suggested, for constituting the Arbitral Tribunal. The communication dated 20-06-2008 has been enclosed to the counter affidavit. It reads as follows: "Sub : In the Matter of Arbitration of Claims/Disputes arising out of Supplying and stacking of ballast in MLY Yard Agt.12/CAO/C/SC/2003 dt.22-1-03. Ref : Your letter No.SIDCONS/Moula Ali/200209/32 Dated 15-09-07.