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2013 DIGILAW 171 (PNJ)

Rajinder Kumar Manhas v. Union of India

2013-02-11

A.N.JINDAL

body2013
JUDGMENT A.N. JINDAL, J (ORAL) The judgment dated 11.05.2009 passed by the District Judge, Gurdaspur, whereby the Award dated 26.02.2002 passed by the Arbitrator, was confirmed, is under appeal. The appellant had entered into an agreement with the respondents for construction of the protective toe wall to microwave building at Dalhousie. The financial aspect thereof was Rs.99,245.02. The contract was to be completed by 18.01.1993, but was actually completed on 06.08.1993. The Union of India-respondent No.1 raised some disputes regarding non-submission of left over material against the appellant, whereupon the sole Arbitrator-respondent No.5 was appointed. Accordingly, the Arbitrator entered into the reference on 13.11.1999 and passed an Award dated 26.02.2002, which was dispatched to the appellant under registered cover on 01.03.2002. The appellant raised objections before the District Judge, Gurdaspur, pleading that the appointment of the Arbitrator was not legal; the Award is in utter conflict with the public policy; no reasonable opportunity was given to the appellant to lead evidence before passing the Award; the Award was time barred and the amount awarded was beyond the terms of the agreement being “excepted matters.” Heard, claim No.1, as set up by the claimants-respondents, was for Rs.35,080/-on account of departmental surplus material, which was not returned to the respondents after completion of the work, for which, the respondents had also served notices upon the appellant to return the surplus steel under Clause 42 (iii) vide Ex.C4 to Ex.C8. But, the said surplus material was not returned by the appellant before passing of the final bill (Ex.C11). The final bill was passed on 17.07.1995, showing recovery of Rs.44,284/-from the appellant on account of surplus material, not returned to the respondents. Document Ex.C9 shows that after giving credit of Rs.9204/-on account of a part of surplus material returned by the appellant, the balance amount of Rs.35,080/-was due towards the appellant. Consequently, interest at the rate of 18% per annum was awarded on the aforesaid amount with effect from the date of demand for arbitration i.e. 31.03.1999 till the making of the payment. The case of the appellant cannot succeed on the other ground. Though the appellant had raised objection before the District Judge, Gurdaspur, to the effect that the Arbitrator had no jurisdiction to pass the Award being “excepted matter”, but the said objection was never raised by him before the Arbitrator. The case of the appellant cannot succeed on the other ground. Though the appellant had raised objection before the District Judge, Gurdaspur, to the effect that the Arbitrator had no jurisdiction to pass the Award being “excepted matter”, but the said objection was never raised by him before the Arbitrator. Since the objection has not been raised before the Arbitrator, the same could not be raised later on before the District Judge. Now the question, “whether this case falls with the category of excepted matters”, the clause 42 (ii) and (iii) of the agreement need reproduced as under:- “42 (ii) After the completion of the work, the theoretical quantity of cement to be used in work shall be calculated on the basis of statement showing quantity of cement to be used in different items of work provided in Delhi Schedule of Rate ... prinhted by the CPWD. In case any item is executed for which the standard clause for the consumption of cement are not available in the above mentioned statement or cannot be derived from the statement, the same shall be calculated on the basis of standard formula to be laid down by the Superintending Engineer of the Circle concerned. Over this theoretical quantity of cement shall be allowed a variation up of 3% plus/minus for works estimated cost of which tender not exceeding Rs. 5 lakhs and up to plus/minus for works, the estimated cost, which as put to tender more than Rs.5 Lakhs difference in the quantity of cement actual issued on the contractor and the theoretical quantity including authorized variation, if not returned by the contractor, shall be recovered at twice the issue rates, without prejudiced the provision of the relevant conditions regarding return of materials governing the contract. In the event of it being discovered the quantity of cement used is less then the quantity ascertained as herein before provided (allowing variation on the munis side as stipulated above) the cost of quantity of cement so used, shall be recovered from the contract on the basis of stipulated issue rates and to side. 42 (iii) Provision of fore-going sub-clause shall apply Mutatis-Mutandis in the case of steel reinforcement of structural steel section (each diameter section or category shall be considered separately except that the theoretical require as per design or as authorized by Engineer-in-Charge, including authorized variation plus 3% wastage due to cutting pieces. 42 (iii) Provision of fore-going sub-clause shall apply Mutatis-Mutandis in the case of steel reinforcement of structural steel section (each diameter section or category shall be considered separately except that the theoretical require as per design or as authorized by Engineer-in-Charge, including authorized variation plus 3% wastage due to cutting pieces. Over this theoretical quantity 2% minus shall be allowed as variation due to wastage being more or less.” Similarly, Clause 25 of the agreement, which relates to the disputes and differences, is reproduced as under:- “CLAUSE 25. Except where otherwise provided in the contract all questions and disputes relating to the meaning of the specifications, designs, drawings and instructions hereinbefore mentioned and as to the quality of workmanship or materials used on the work or as to any other question, claim, right matter or thing whatsoever in any way arising out of or relating to contract designs, drawings specifications, estimates, instructions orders or these conditions or otherwise concerning the works or the execution or failure to execute the same whether arising during the progress of the work or after the completion of abandonment thereof shall be referred to the sole arbitration of the person appointed by the Chief Engineer, C.P.W.D. in charge of the work at the time of dispute or if there be no Chief Engineer, the administrative head of the said C.P.W.D. at the time of such appointment. It will be no objection to any such appointment that the arbitrator so appointed is a Government servant, that he had to deal with the matters to which the contract relates and that in the course of his duties as Government servant he has expressed views on all or any of the matters in dispute or difference. The arbitration to whom the matter is originally referred being transferred or vacating his office or being unable to act for any reason, such Chief Engineer or administrative head as aforesaid at the time of such transfer, vacation of office or inability to act, shall appoint another person to act as arbitrator in accordance with the terms of the contract. Such persons shall be entitled to proceed with the reference from the stage at which it was left by his predecessor. Such persons shall be entitled to proceed with the reference from the stage at which it was left by his predecessor. It is also a term of this contract that no person other than a person appointed by such Chief Engineer or administrative head of the C.P.W.D. as aforesaid should act as arbitrator and if for any reason, that is not possible, thematter is not to be referred to arbitration at all. In all cases, where the total amount of all the claim in dispute is Rs.75,000/-(Rs. Seventy five thousand) and above, the arbitrator shall give reasons for the award. Subject as aforesaid the provisions of the Arbitration Act 1940 or any statutory modification or re-enactment thereof and the rules made thereunder and for the time being in force shall apply to the arbitration proceeding under this clause. It is a term of the contract that the party invoking arbitration shall specify the dispute or disputes to be referred to arbitration under this clause together with the amount or amounts claimed in respect of each such dispute. If the contractor(s) do/does not make any demand for arbitration in respect of any claim(s) in writing within 90 days of receiving the intimation from the Govt. that the bill is ready for payment, the claim of the contractor(s) will be deemed to have been waived and absolutely barred and the Govt. shall be discharged and relased of all liabilities under the contract in respect of these claims. The arbitrator(s) may from time to time with consent of the parties enlarge the time, for making and publishing the award. The decision of the Superintending Engineer regarding the quantum of reduction as well as justification thereof in respect of rates for sub-standard work which may be decided to be accepted will be final and would not be open to arbitration.” On conjunctive reading of the aforesaid provisions, though Clause 25 refers to the word “except whereas otherwise provided in the contract”, but Clause 42 (ii) & (iii) do not anywhere specify the powers of the Superintending Engineer or the Engineer-in-Chief to determine in case of non-return of the unutilized material, supplied to the contractor. Thus, even if the Union of India had mentioned a penalty clause in the contract agreement, that does not take the dispute out of the purview of the Arbitrator. Thus, even if the Union of India had mentioned a penalty clause in the contract agreement, that does not take the dispute out of the purview of the Arbitrator. As such, the case of the appellant fails, firstly on the ground that no such objection was raised by the appellant before the Arbitrator and secondly, none of the provisions of clause 42 empowers the Superintending Engineer of the circle concerned to decide about the loss suffered by the respondents on account of non return of the steel material. Now coming to the interest, though the agreement is silent about the provisions regarding claim of interest, yet the Court as well as the Arbitrator appear to have exercised the discretion while awarding statutory interest at the rate of 18% per annum to the respondents. No other argument has been raised. Resultantly, finding no merit in the appeal, the same is dismissed.