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Himachal Pradesh High Court · body

2018 DIGILAW 2223 (HP)

State of H. P. v. Satish Kumar

2018-12-17

VIVEK SINGH THAKUR

body2018
JUDGMENT : Vivek Singh Thakur, J. The present petition has been filed by the State of Himachal Pradesh (hereinafter referred to as appellant-department), under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act), against the award dated 29.9.2016, passed by Arbitratorcum- Superintending Engineer, Arbitration Circle, Himachal Pradesh Public Works Department (HPPWD), Solan, whereby in respect of Claim No.2 of respondent-claimant, claiming market rates for execution of work, after expiry of the period of contract/award, an amount of Rs.16,69,928/- has been awarded, along with interest claimed in Claim No.6 at the rate of 8% per annum from the date one year after submission of the final bill by the respondent claimant to the date of award, and simple interest at the rate of 18% per annum for the period three mon ths beyond the date of award to the actual date of realization. 2. It is undisputed that the Arbitrator has passed the award after amicable settlement of the dispute, during the pendency of arbitration proceedings before him, under the instructions issued by the Government and as per that settlement, the respondent-claimant had abandoned/withdrawn his all other claims and had agreed for market rate for the execution of work during the extended period, in terms of the instructions issued by the Government for the said purpose. 3. For completion of record, it is relevant to record that the Engineer-in-Chief, HPPWD, vide letter No. PW-29-CTR-29-637/2015-13913-18, dated 31.12.2015 (Annexure A-2), had submitted a proposal to the Government, through the Additional Chief Secretary (PW) to the Government of Himachal Pradesh, Shimla, for determining settlement of prolongation claims, with respect to Pradhan Mantri Gram Sadak Yojna (PMGSY), of the contracts, as provided in other contracts under Clause 10 CC (Price Escalation). The crux of the proposal made by the Department was as under: (I) That in those cases where contractors was deprived hindrance free site and it lead to delay in execution, for determination of price variation date of bid opening will be the base for price analysis index formula. (II) That period for which such variation will be payable shall reckon after expiry of stipulated period and to determine this it has to be seen as for how much period the delay is on the part of department till hindrance free site was made available. (II) That period for which such variation will be payable shall reckon after expiry of stipulated period and to determine this it has to be seen as for how much period the delay is on the part of department till hindrance free site was made available. Thereafter the price quarterly index payable during the execution of work period by the contractor has to be applied e.g. If out of 2 years stipulated period, the work has been completed in 4 years and out of these two years extended period of for one year the delay is on the part of department and one year the delay is on the part of contractor, then the price variation shall be available to the contractor for the period for which delay had occurred on the part of the department i.e. 1 year and for determining this price variation, the date of bid opening shall be base for the price index and the price index during the period when work has been executed shall be made the base as per clause 10 CC of Standard Bidding Document. No other formula provided under 10 cc despite non-existence of clause shall be the best available option to the department to settle such claims. However the contractor will not be entitled for price variation of stipulated period of completion as per agreement. 4. Thereafter, the matter was considered by the Government and the decision of the Government was communicated to the Engineer-in-Chief, vide letter dated 15.3.2016, whereby it was conveyed that it has been decided that price escalation be given only under the PMGSY works and only cases where the contractor has entered into litigation and approached for amicable settlement and escalation may be given as per 10 CC clause only for increase in cost of material and labour and the escalation clause for increase in cost of material and labour as provided in the bid documents for NABARD and State works be provided for PMGSY works on the same pattern. 5. In the light of the aforesaid decision of the State, amicable settlement was arrived at between the parties before the learned Arbitrator and the Department had filed calculation of market rate as considered to be payable on account of amicable settlement to the respondent-claimant. As per this calculation, the Department had calculated the claim under clause 10 CC to the tune of Rs.21,93,182/-. As per this calculation, the Department had calculated the claim under clause 10 CC to the tune of Rs.21,93,182/-. However, before passing the award, on re-checking in the Department, it was found that the said claim was calculated for whole period, including the stipulated completion period and the extended period, whereas the same, as per instructions dated 31.12.2015, was payable for extended period only. Therefore, the Department has re-filed the calculation of the amount to the tune of Rs.16,69,928/-. 6. The respondent-claimant had not disputed the said stand of the Department and had accepted the settlement of the dispute on the same amount and the impugned award was passed by the Arbitrator. 7. After passing of the award, a letter dated 26.9.2016 was again written to the Arbitrator by the Department that as per fresh calculation the respondent claimant is entitled only to Rs.2,10,697/- instead of Rs.16,69,928/-. However, the said calculation was not entertained as the award had already been passed. 8. Feeling aggrieved of the aforesaid passing of the award by the Arbitrator, the State has filed the present petition. 9. It is an admitted fact on the record that the work was awarded to the respondent-claimant on16.4.2007 and it was not completed during the stipulated period, i.e. on or before 30.4.2008, but was completed during the period extended by the appellant-department upto 31.12.2008. 10. As per formula adopted by the appellant department of determining the price deviation for amicable settlement in disputes, like the present one, the period for which such variation will be payable shall reckon after expiry of stipulated period and for that period only for which the delay has been caused on the part of the department and no price escalation shall be permissible to the contractor where the delay is on the part of the contractor and further that for determining this price variation the date of bid opening shall be the base for price index and price index during the period when work has been executed shall be made the base as per clause10CC of Standard Bidding Document. However, the contractor will not be entitled for price variation of stipulated period of completion as per agreement. 11. In the present case, the stipulated period had expired on 30.4.2008 and thereafter extension was granted by the department upto 31.12.2008. However, the contractor will not be entitled for price variation of stipulated period of completion as per agreement. 11. In the present case, the stipulated period had expired on 30.4.2008 and thereafter extension was granted by the department upto 31.12.2008. In view of the proposal of the department, to determine the claim of price escalation amicably, on the basis of formula adopted by the department for settlement, the plea of delay on the part of the contractor is not available to the appellant department. Therefore, as per instructions/formula, referred supra, respondent-claimant is entitled for price escalation from 1.5.2008 to 31.12.2008 and for determining the price variation ‘date of bid opening’ shall be the base for the price index, meaning thereby the difference in price prevailing on the date of bid opening and the price prevailing during the period when the work had been executed will be the basis for calculating the claim of escalation in price. 12. In the present petition, appellant-department has claimed that as per the formula adopted by the State, respondent-claimant will be entitled to Rs.2,10,697/-. In the supplementary affidavit, dated 21.6.2018, filed by the petitioner-Department, this calculation has been justified by stating that the base price index is to reckon from the date when the stipulated period of completion of work ends and not from the bid opening date and on the basis of this the appellant-department has calculated the amount payable as Rs.2,10,697/-. 13. A bare reading of the formula adopted by the State as contained in letter dated 31.12.2015 (referred to supra), it is not the base price index of the last date of stipulated period of completion of work, which is to be taken into consideration for calculation of escalation in price but it is the date of bid opening which shall be the base for the price index. Therefore, present petition has been filed by the State, based on wrong calculations and under misconceived interpretation of the formula adopted by the State for amicable settlement of the claims of contractor under PMGSY works. 14. Therefore, present petition has been filed by the State, based on wrong calculations and under misconceived interpretation of the formula adopted by the State for amicable settlement of the claims of contractor under PMGSY works. 14. In supplementary affidavit dated 21.6.2018, it is also stated that in this case initially price variation was determined on the basis of price index on the date of bid opening and by taking into consideration the extended period and the total claim payable on account of price escalation was worked out to Rs.16,69,928/-In view of the formula adopted by the State, I find that there is no ambiguity or mistake in the formula adopted by the appellant-department, where the amount payable to respondent-claimant has been determined at Rs.16,69,928/-. 15. In view of the above discussion, present petition is dismissed alongwith pending applications filed by the State, if any, but except OMP No.274 of 2017 filed by the respondent-claimant for release of the amount in his favour. 16. Petition stands disposed of. OMP No.274/2017 17. This application is also disposed of with liberty to the respondent-claimant to file afresh for release of the amount.