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2017 DIGILAW 930 (MP)

Viva Construction Co. v. State of M. P.

2017-08-24

S.K.AWASTHI, SANJAY YADAV

body2017
ORDER : SANJAY YADAV, J. Petitioner vide this Revision under section 19 of the Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983 (for brevity “Adhiniyam, 1983”) takes exception to the Award dated 27-11-2015 passed by the Madhyastham Adhikaran, whereby while finding the petitioner entitled for Award of Rs. 25,84,203/-, non-suited the petitioner on the finding that the Appeal is not in consonance with the stipulations contained under Clause 29 of the Agreement, as such not tenable under section 7-B of the Adhiniyam, 1983. 2. Relevant facts giving rise to controversy briefly are that the petitioner entered into works contract with respondents on 2-1-2009 for construction of Kunwarpur to Burda road under district Shivpuri under CRF Scheme. The amount of tender was Rs. 665.00 lakhs. The tender was accepted @ 14.30% below schedule of rates (SOR) = Rs. 569,90,500.00; work order was issued on 2-1-2009. The completion period was 16 months to be reckoned after 30 days of issue of work order as per Clause 2 of Agreement No. 100/2008-09. The due date of completion was scheduled as on 31-5-2010. As the work could not be completed within the scheduled time, an extension was sought which was turned down and respondent opted to terminate the contract under Clause 3(C) of the Agreement. The contract was rescinded on 23-2-2011. Petitioner invoked Clause 29 of the Agreement requesting the Superintending Engineer to allow the claims for losses and damages to the petitioner through its letter dated 28-2-2011. Superintending Engineer rejected all claims by his order dated 16-6-2011. Aggrieved petitioner preferred an Appeal before the Chief Engineer on 23-6-2011. As the Chief Engineer did not decide the Appeal, the petitioner after waiting for six months and before expiry of one year filed reference petition before the Madhyastham Adhikaran on 16-10-2012. The Adhikaran vide impugned Award though held the petitioner entitled for the amount as find mention in paragraph 12 of the Award, yet non-suited the petitioner as the reference was not found maintainable as per Clause 29 of the Agreement. 3. The reasons find mention in paragraph 8 of the Award, wherein the Adhikaran observed:— 8. The Adhikaran vide impugned Award though held the petitioner entitled for the amount as find mention in paragraph 12 of the Award, yet non-suited the petitioner as the reference was not found maintainable as per Clause 29 of the Agreement. 3. The reasons find mention in paragraph 8 of the Award, wherein the Adhikaran observed:— 8. (i) First and the foremost objection of the respondents is that the reference petition being in contravention of clause 29 of the contract agreement is not maintainable in view of the law laid down by the larger bench of the High Court of M.P. in the light of the decision rendered in Sanjay Dubey v. State of M.P., 2012 (4) M.P.L.J. 212 . The petitioner in paragraph 6 of the reference petition has averred in specific that the dispute arose on 23-2-2011 when the Respondent No. 2 took action under clause 3(c) of the contract agreement. The petitioner being aggrieved by it, submitted dispute and quantified claim before the S.E. on 28-2-2011. The reminder was also issued on 8-3-2011. The S.E. rejected all the claims vide office letter dated 16-6-2011. The petitioner preferred an appeal against it before the C.E. on 23-6-2011, which according to the petitioner, was lying unattended at the time of filing of the reference petition on 17-10-2012. (ii) The respondents submitted that the petitioner having acted in contravention of clause 29 of the contract agreement, the reference petition is not maintainable in view of the decision in Sanjay Dubey's case (supra). The relevant portion of clause 29 runs as under:— “Arbitration Clause Clause 29 - Except as otherwise provided in this contract all question and dispute relating to the meaning of the specifications designs, drawings and instructions herein before mentioned and as to thing whatsoever, in any way arising out of or relating to the contract designs, drawings, whether arising during the progress of the work or after the completion or abandonment thereof shall be referred to the S.E. in writing for his decision within a period of 30 days of such occurrence. Thereupon the S.E. shall give his written instructions and/or decisions within a period of 60 days of such request. This period can be extended by mutual consent of the parties. Upon receipt of written instructions or decisions, the parties shall promptly proceed without delay to comply such instructions or decisions. Thereupon the S.E. shall give his written instructions and/or decisions within a period of 60 days of such request. This period can be extended by mutual consent of the parties. Upon receipt of written instructions or decisions, the parties shall promptly proceed without delay to comply such instructions or decisions. If the S.E. fails to give his instructions or decisions in writing within a period of 60 days or mutually agreed time after being requested if the parties are aggrieved against the decision of the S.E. the parties may within 30 days prefer an appeal to the C.E. who shall afford an opportunity to the parties of being heard and to offer evidence in support of his appeal. The C.E. will give his decision within 90 days. If any party is not satisfied with the decision of the C.E., he can prefer such disputes for arbitration by a Tribunal constituted by the State Government from among the officers belonging to the Department not below the rank of S.E. one Retired Chief Engineer of any Technical Department and one serving officer not below the rank of S.E. belonging to another Technical Department.” (iii) Aforesaid clause makes it obligatory on the part of the petitioner to submit dispute before the S.E. in writing for a decision within a period of 30 days of such occurrence. According to the petitioner itself, the cause of action arose on 23-2-2011 when action under clause 3(c) of the contract agreement was taken against it. The quantified claim/dispute submitted before the S.E. on 28-2-2011 was well within time as per the contract agreement. In case of failure on the part of the S.E. to decide the dispute within a period of 60 days or mutually agreed time, the party aggrieved was under a further obligation to prefer appeal within 30 days. We have gone through the order of the S.E. dated 16-6-2011 (Ex.D. 4). It does not mention the consent/agreement of the respondents in extending time to render the decision. There is no other document to establish that the order on quantified claim was passed on 16-6-2011 within extended period in mutually agreed manner. (iv) The respondents in paragraph 6 of written statement have clearly denied that the S.E. decided the issue in mutually extended period. The written statement is supported by affidavit of the OIC. There is no other document to establish that the order on quantified claim was passed on 16-6-2011 within extended period in mutually agreed manner. (iv) The respondents in paragraph 6 of written statement have clearly denied that the S.E. decided the issue in mutually extended period. The written statement is supported by affidavit of the OIC. In this view of the matter, the petitioner was obliged to prove that the order on quantified claim was passed by the S.E. on 16-6-2011 within mutually agreed extended period. In the absence of proof in this regard, the petitioner was obliged to prefer an appeal before the S.E. within 30 days on failure of the S.E. to decide the quantified claim within a period of 60 days from the date of its receipt. According to the petitioner itself, the quantified claim was submitted on 28-2-2011 and its reminder was submitted on 8-3-2011. Accordingly, the appeal ought to have been preferred before the C.E. in the absence of mutually agreed extended period up to 30th May, 2011 (as per the submission of the quantified claim on 28-2-2011 and 8th June, 2011 (as per the submission of the reminder on 8-3-2011). Instead, the petitioner submitted its appeal on 23-6-2011, which was beyond the period prescribed contractually by virtue of clause 29, and has, thus, contravened the said clause. In the case of Sanjay Dubey (supra) the larger bench of the High Court of M.P. has observed:— “13.(i) Where the works contract contains a clause like Clause 29, the jurisdiction of the Tribunal can be invoked only after approaching the Authority as provided under the terms of the works contract.” (v) A feeble attempt has been made to avail six months period of failure on the part of the S.E. to decide the dispute, as provided in the proviso to sub-section (1) of section 7-B of the Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983. The provision is reproduced below for convenience:— “7-B. Limitation.— [(1) The Tribunal shall not admit a reference petition unless— (a) the dispute is first referred for the decision of the final authority under the terms of the works contract; and (b) the petition to the Tribunal is made within one year from the date of communication of the decision of the final authority. Provided that if the final authority fails to decide the disputes within a period of six months from the date of reference to it, the petition to the Tribunal shall be made within one year or the expiry of the said period of six months.” The aforesaid proviso applies in case of failure on the part of the final authority to decide the dispute within a period of six months from the date of reference to it. The words “Final authority” has not been defined either in the contract agreement or elsewhere in the present case. The word “Final” means, as per the Black's Law Dictionary, as under:— “Final. - Last; conclusive; decisive, definitive; terminated; completed. In its use in reference to legal actions, this word is generally contrasted with “interlocutory”. According to clause 29 itself, the C.E. is the final authority as per the contract agreement; whereas S.E. is the initial/pre-final authority. Thus, proviso to sub-section (1) of section 7-B (supra) does not get attracted in the present case. In view of the aforesaid discussion, we uphold the objection of the respondents and hold that the petitioner has failed to establish that it has made compliance of clause 29 of the contract agreement; and consequently, the reference petition is found to be in contravention of clause 29 and is not maintainable.” 4. The petitioner has confined to only one issue, i.e., the construction of Clause 29 of the Agreement. It is urged that the Adhikaran has grossly erred in construing the provision under Clause 29 that once no action is taken by the Superintending Engineer on an objection raised and unless the period is mutually extended, the Superintending Engineer is abdicated of the jurisdiction to decide the objection if not decided within 60 days. It is contended that this erroneous construction of Clause 29 percolated in the analysis made by the Adhikaran leading it to draw a conclusion that the petitioner ought to have filed the reference under section 7 of Adhiniyam, 1983 on or before 30-5-2011. 5. It is contended that this erroneous construction of Clause 29 percolated in the analysis made by the Adhikaran leading it to draw a conclusion that the petitioner ought to have filed the reference under section 7 of Adhiniyam, 1983 on or before 30-5-2011. 5. Evidently, the date 30-5-2011 construed to be the last date on which the petitioner ought to have filed the reference is arrived at on the finding that with the recession of contract on 23-2-2011 and the dispute being raised before the Superintending Engineer on 28-2-2011 with the reminder submitted on 8-3-2011 on a failure on the part of the Superintending Engineer in deciding the matter within 60 days from the date of receipts, the Adhikaran has construed that the Superintending Engineer would be functus officio unless the parties mutually agree for extension of time. This reasoning has led the Adhikaran conclude that there being no mutual consent amongst the parties for extension of time to pass Award, the reference ought to have been on or before 30-5-2011. Thus in the tacit opinion of the Adhikaran, the order passed by the Adhikaran on 16-6-2011 was not an order in the eyes of law and, therefore, even an appeal before Chief Engineer was of no consequence. 6. Respondents on their turn have supported the verdict by the Tribunal. However, as against the findings as to entitlement of the petitioner, the respondents have not challenged the same. 7. Considered rival submission. 8. After careful reading, the reasons assigned by the Adhikaran and the interpretation given to Clause 29, we beg to differ with the Adhikaran. 9. Clause 29 of the Agreement is an arbitration clause providing two tier forum for resolution of a dispute arising out of or relating to a contract, the forums are the Superintending Engineer and the Chief Engineer, who is final departmental Authority to resolve the dispute. That, an inbuilt mechanism has been provided with specified time within which the decision is to be taken. For Superintending Engineer, the time within which the decision is to be taken is 60 days. However, there is an additional clause that if the mutual agreement give their consent, this period 60 days is extendable. For how many days it is to be extended is not provided. For Superintending Engineer, the time within which the decision is to be taken is 60 days. However, there is an additional clause that if the mutual agreement give their consent, this period 60 days is extendable. For how many days it is to be extended is not provided. The clause is further silent as to the consequences that if the decision is not taken within 60 days and if there is no mutual consent whether the Superintending Engineer is prohibited from passing the order. 10. In our considered opinion, the Superintending Engineer is not functus officio merely because the decision is not taken within 60 days. Had that been the intention it could have been incorporated in the Clause that non-decision within 60 days or within extended period would render the dispute raised otiose. If that was the intention then there was no need to incorporate the sentence “if the parties are aggrieved against the decision of the S.E., the parties may within 30 days prefer an appeal to the C.E. who shall afford an opportunity to the parties of being heard and to offer evidence in support of his appeal”. The appeal thus lies against a decision. 11. The expression “decision” has been construed to be: “A word which has been used as signifying the judgment of the Court; a judgment given by a competent tribunal; the findings of fact; the finding by the Court upon which a decree or judgment may be entered; the result of the deliberations of a tribunal, See 18 CLJ 128 : 20 IC 1 : 32 Cal 162 : 13 Bom LR 113 : 35 Bom 231 : 25 All 109 : 30 IA 35 (PC) : 5 Bom LR 100 : 4 OC 66. The word ‘decision’ unless otherwise qualified by the context, may possibly embrace matters both of civil and criminal law. AIR 1930 PC 291 (PC). The refusal of the judge to do a ministerial act can hardly, with propriety, be called a ‘ruling’ or ‘decision’. ‘Cruse v. Me Queen,’ (Tex. Civ. App. 1894) (PI. See Law Lexion by P Ramanatha Aiyar, 4th Edition 2010 Page 1816).” 12. In view whereof, an “indecisiveness” or an “indecision” on the part of the Superintending Engineer can never be construed to be a “decision” giving rise to avail the remedy of Appeal. ‘Cruse v. Me Queen,’ (Tex. Civ. App. 1894) (PI. See Law Lexion by P Ramanatha Aiyar, 4th Edition 2010 Page 1816).” 12. In view whereof, an “indecisiveness” or an “indecision” on the part of the Superintending Engineer can never be construed to be a “decision” giving rise to avail the remedy of Appeal. Because unless the forum of final authority is exhausted, aggrieved person cannot avail the remedy under section 7-B of the Adhiniyam, 1983. 13. The question can be examined from the angle of section 7-B of the Adhiniyam, 1983 which mandates that the reference under section 7 is not admissible unless (i) the dispute is first referred for the decision of the final Authority under the terms of works contract (i.e. clause 29) and (ii) the petition is made within one year from the date of communication of the decision of the final Authority. Proviso appended with section 7-B of the Adhiniyam, 1983 stipulates that if the final Authority fails to decide the disputes within a period of six months from the date of reference to it, the petition to the Tribunal shall lie within one year of the expiry of six months. Thus, imperative it is that before involving the forum before Adhikaran, the departmental remedy undoubtedly is in the case at hand the Chief Engineer and not the Superintending Engineer is the final Authority. If the interpretation given by the Adhikaran is accepted and the Superintending Engineer has derelicted in discharging its duty in deciding the Appeal within 60 days, then the aggrieved person is left with no remedy because there being no decision, he cannot avail the remedy of Appeal before the Chief Engineer nor can he file the reference. That, trite it is that a person cannot be left remedy less. 14. Reliance placed on behalf of the State on paragraph 9 of the decision in Sanjay Dubey v. State of M.P., 2012 (4) M.P.L.J. 212 hardly takes us anywhere in the present fact situation. Reading of paragraph 9 would make it clear that the special Bench was concerned with the period of limitation under section 7-B as to how it is to be arrived at and not with the nuances of Clause 29 as in the case at hand. 15. Taking any view of the matter, we do not approve the conclusion arrived by the Adhikaran qua Clause 29 of the Agreement. 15. Taking any view of the matter, we do not approve the conclusion arrived by the Adhikaran qua Clause 29 of the Agreement. Accordingly, the decision, that the Reference was not tenable, is set aside. 16. That the dispute qua termination of contract on 23-2-2011 was raised on 28-2-2011 wherein order was passed on 16-6-2011. Petitioner preferred an appeal within 30 days on 23-6-2011. And the Appellate Authority having failed to take decision thereon within 90 days, the petitioner was well within the period of limitation. Since the Adhikaran had found the petitioner entitled to certain claims and the petitioner has confined only to the issue regarding Clause 29 of the Agreement, we hold that the Reference is maintainable and the petitioner is entitled for the claim arrived at by the Adhikaran. The impugned Award is modified to the extent above. There shall be no costs.