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2016 DIGILAW 1815 (HP)

V. S. Saini Government Contractor v. State of H. P.

2016-08-30

DHARAM CHAND CHAUDHARY

body2016
JUDGMENT : Dharam Chand Chaudhary, J. The petitioner is a Government Contractor. He was awarded the work namely construction of road from Jhroli to Jara Km 0/0 to 3/0 (SH: Cleaning grass, Construction of retaining wall, Breast wall, cross drainage work, Side drain, parapets, road sign boards and metalling & Tarring including construction of one Bridge as well as maintenance of the said road for a period of five years) under the Prime Minister Gram Sarak Yojna (PMGSY) Phase-9 at an estimated cost of Rs.1,20,38,241/-. The work was to be commenced after 15th day of issuance of letter of award. The letter of award was issued on 24.02.2011. The work was agreed to be completed within a period of 12 months. The agreement, Annexure P-1 came to be executed between the petitioner-Contractor and the respondent-department in this regard. It appears that for want of site clearance and the hindrances attributed to the respondent-department, the petitioner-Contractor failed to start the work well within the stipulated period. The work though commenced and even was executed partly, however, during the course of further execution of the work, certain disputes were raised by the petitioner-Contractor before the respondent-department. The Chief Engineer concerned vide Annexure P-3 to the supplementary affidavit filed on 25.04.2016 was apprised by the petitioner-Contractor about the difficulties he faced during the course of execution of the work and according to him, no one was there to hear his hue and cry, therefore, left with no other option except to rescind the work. He also made a request to the Chief Engineer concerned to convene work management meeting in his office so that the matter could be inquired into as to who is responsible in the department for causing the inordinate delay occurred on the part of the department. The letter Annexure P-3 was followed by another letter Annexure P-4 dated 24.04.2015, highlighting therein his claims against the respondent-department by the petitioner- Contractor. No action was taken by the respondent-department on the letters, AnnexureP-3 and P-4. This has led in issuance of a legal notice, Annexure P-2 on 08.07.2015 by the petitioner- Contractor to the respondent-department through its Chief Engineer, H.P.P.W.D, Kangra Zone, Dharamshala. No action was taken by the respondent-department on the letters, AnnexureP-3 and P-4. This has led in issuance of a legal notice, Annexure P-2 on 08.07.2015 by the petitioner- Contractor to the respondent-department through its Chief Engineer, H.P.P.W.D, Kangra Zone, Dharamshala. The notice, Annexure P-2 was received by the respondent-department and in reply thereto i.e. Annexure R-3 dated 14.08.2015 to its counter-affidavit filed on 30th May, 2016, the petitioner-Contractor was advised to resort to Disputes Redressal Mechanism provided under Clause 24 of the agreement, Annexure P-1. The petitioner-Contractor instead of resorting to Clause 24 of the contract agreement has, however, filed this petition for appointment of Arbitrator by this Court. 2. In reply to the petition, there is no dispute qua awarding of work in question to the petitioner- Contractor. There is also no dispute qua execution of the agreement, Annexure P-1. The petition has only been resisted and contested on the ground that the petitioner-Contractor has not resorted to Clause 24 of the contract agreement before seeking appointment of the Arbitrator by the Court. 3. Mr. Sumeet Raj Sharma, learned counsel has contended that the petitioner-Contractor has resorted to the redressal mechanism provided under Clause 24 of the agreement. He has pressed in service in this regard the correspondence, Annexure P-3 and Annexure P-4 made by the petitioner- Contractor with the Chief Engineer (Kangra Zone) and Superintending Engineer, 9th Circle Nurpur, H.P.P.W.D. District Kangra. According to Mr. Sharma when there was no response for sufficient long time, the petitioner-Contractor was forced to serve the competent authority i.e. Chief Engineer, Kangra Zone at Dharamshala with legal notice, Annexure P- 2 and as the respondent-department has already missed the opportunity of making appointment of the Arbitrator in terms of Clause 25 of the contract agreement, the petitioner-Contractor was not left with any other and further remedy to approach this Court by way of this petition for seeking appointment of the Arbitrator. 4. Mr. Virender Verma, learned Additional Advocate General while drawing the attention of this Court to the provisions contained under Clause 24 of the agreement has strenuously contended that now the Chief Engineer, Kangra Zone, Dharamshala has rejected the claim of the petitioner-Contractor and as such in terms of Clause 24.2, he is at liberty to prefer an appeal to the Standing Empowered Committee as contemplated under Clause 24.3 of the agreement. 5. 5. Having gone through the record and also analyzing the rival submissions, true it is that Clause 24 of the contract agreement provides for disputes redressal mechanism by way of amicable settlement, however, the respondent-department has failed to resort to the mechanism as provided irrespective of the petitioner-Contractor approached the competent authority i.e. Chief Engineer (Kangra Zone) H.P.P.W.D Dharamshala long back on 12.08.2014 vide Annexure P-3 to the counter affidavit filed by the petitioner-Contractor. Not only this but Annexure P-3 was followed by a detailed representation, Annexure P-4 highlighting therein his claims by the petitioner-Contractor against the respondent-department which was addressed to the Superintending Engineer concerned. The correspondence so made by the petitioner- Contractor well before he having served the competent authority with legal notice, Annexure P-2 should have been dealt with in terms of Clause 24 of the contract agreement. However, no explanation is forthcoming as to why efforts were not made to settle the disputes, if any, between the parties in terms of Clause 24 of the agreement. Even if the Superintending Engineer was not the competent authority, he should have made a reference of Annexure P-4 to the Chief Engineer concerned and initiated the process to deal with the matter in terms of Clause 24 of the agreement. True it is that in reply Annexure R-3 to the legal notice, Annexure P-2, the petitioner-contractor was advised to have recourse in terms of Clause 24 of the agreement, however, in the given facts and circumstances and also that no action was taken by the respondent-department on the receipt of Annexure P-3 and Annexure P-4 the petitioner-Contractor has rightly approached this Court for seeking appointment of the Arbitrator to adjudicate the disputes having arisen between the parties during the execution of the work. 6. It is worth mentioning that during the course of proceedings in this petition, learned Additional Advocate General has drawn the attention of this Court qua disputes settlement mechanism provided under the agreement. Learned counsel for the petitioner, however, had informed this Court that despite representation made, the respondent-department never came forward to get the disputes settled amicably. It is recorded so in the order passed in this petition on 08.01.2016. Learned counsel for the petitioner, however, had informed this Court that despite representation made, the respondent-department never came forward to get the disputes settled amicably. It is recorded so in the order passed in this petition on 08.01.2016. Being so and taking into consideration such submissions, the petitioner-Contractor was directed to file a supplementary affidavit to substantiate that irrespective of he having approached to get the disputes settled amicably, the authorities in the respondent-department failed to do so. The supplementary affidavit came to be filed by the petitioner-Contractor and the correspondence he made highlighting therein the disputes having arisen Annexure P-3 and Annexure P-4 also annexed thereto. Irrespective of the competent authority failed to adhere to Annexure P- 3 and Annexure P-4, this Court during the course of hearing in this petition deemed it appropriate to direct the parties on both sides to sit together and chalk-out the possibility of amicable settlement. The following order in this regard came to be passed on 21.07.2016. “Rejoinder is not intended to be filed. Heard for sometime. In the nature of the claims and counter-claims as laid on both sides impending further consideration a direction to the petitioner-Contractor and Chief Engineer, Kangra zone at Dharamshala to sit together on 5.8.2016 at 11.00 AM in the office of the later and chalk out the possibility to settle the dispute amicably as provided under Clause 24 of the contract agreement. The Court be informed on the next date about the progress, if any, made in this regard. List on 10.8.2016.” 7. The meeting, however, did not take place on 10.08.2016 as directed. The petitioner-Contractor as such, was directed to attend the office of Chief Engineer concerned at Dharamshala on 16.08.2016, as per order passed in this petition on the previous date. Now the meeting is already held on 16.08.2016 and learned Additional Advocate General has placed on record the copy of proceedings dated 27.08.2016, which reveals that claims of the petitioner-Contractor stood rejected. I am not in agreement with the submissions made on behalf of the respondent-State that the petitioner- Contractor should prefer an appeal against the decision of the Chief Engineer concerned for the reason that the competent authority has lost such right having failed to resort to the provisions contained under Clause 24 of the agreement at the time when the petitioner-Contractor has made the representation, Annexure P-3 and Annexure P-4. 8. 8. Since this Court is satisfied that during the execution of the construction of road from Jhroli to Jara, disputes have arisen between the parties, therefore, such disputes in terms of arbitration agreement now can only be resolved by an Arbitrator to be appointed by this Court. Consequently, I allow this petition and appoint Mr. Mrigender Singh, District and Sessions Judge (Retd.) as Arbitrator to adjudicate the disputes raised by the petitioner-Contractor and also the counter-claim, if any, if preferred by the respondent-department. The Registry is directed to supply an authenticated copy of this judgment to learned Arbitrator forthwith. It is expected from the learned Arbitrator to enter upon the reference within two weeks from the date of receipt of a copy of this judgment under intimation to the parties on both sides. Learned Arbitrator shall be free to fix his fee, of course being guided by the schedule to the Arbitration and Conciliation Act in this regard. The fee so fixed shall be shared by the parties on both sides equally. A sum of Rs.50,000/- in equal proportion shall tentatively be paid to the Arbitrator by each party on the first date of hearing. The remaining amount, however, shall be payable to learned Arbitrator before the termination of the proceedings i.e. announcement of award. 9. The petition is accordingly allowed and stands disposed of.