Delhi High Court
M/S Satish Builders vs Union Of India on 10 January, 2025
Author: Jasmeet Singh
Bench: Jasmeet Singh
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment reserved on: 30.07.2024
Judgment pronounced on: 10.01.2025
+ O.M.P. (COMM) 267/2019
M/S. SATISH BUILDERS .....Petitioner
Through: Mr Anshul Mittal, Mr Kshitij Mittal, Ms Vaishali
Mittal, Mr Ashok Aggarwal, Mr Sarthak, Advs.
versus
UNION OF INDIA .....Respondent
Through: Mr Manish Mohan, CGSC, Mr Prakhar Vashisth, Mr
Deepen Yadav, Mr Shekhar Saharan, Mr Nitish
Bhardwaj, Advs.
CORAM:
HON'BLE MR. JUSTICE JASMEET SINGH
JUDGEMENT
: JASMEET SINGH, (J)
O.M.P (COMM.) NO. 267/2019
1. This is a petition under Section 34 of the Arbitration and Conciliation Act,
1996 (hereinafter called “the Act”) challenging the Award dated 25.01.2019
(hereinafter called the “Impugned Award”) and the Corrected Award dated
18.02.2019 (hereinafter called the “Corrected Impugned Award”) specifically
the findings of the learned Arbitrator regarding Claim Nos. 1,2 ,31,32,33,36& 3
in the case titled “Satish Builders Vs. Union of India”.
Brief Facts
2. The brief facts in the present matter are as under:-
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a. The petitioner is a registered partnership firm and was awarded the
work of “C/O Regional Office Building for Bureau of Indian Standard at
Plot No. 4A, Sector 27B, Chandigarh, including Electrical Installation” by
Respondent through the Executive Engineer, Chandigarh Central Division
– I, videthe Letter No. CCD – I/54(889)/AB/48 dated 07.07.2012 for a total
tendered amount of Rs. 6,53,79,880/-.
b. The stipulated date of start of work was 29.07.2012 while the
stipulated date of completion was 28.07.2013. However, the work was
completed on 31.03.2015 (being a total delay of 611 days).
c. The Petitioner invoked the Arbitration Clause on 19.05.2017 in
terms of Clause 25 of the contract on the ground that the respondent –
Union of India did not release justified payments against the work done to
the petitioner as well as made unjustified recoveries.
d. Consequently, the learned Sole Arbitrator was appointed by the
respondent vide the Letter No. 24/11/2016/A&C/2425 dated 03.08.2017.
e. The petitioner filed its Statement of Claims raising 42 claims for
various defaults and breaches on the part of the respondent and the
respondent filed a Statement of Defence. No Counter Claims were raised
by the respondent.
f.The learned Arbitrator passed the Impugned Award dated 25.01.2019
partly allowing claims of the petitioner.
g. The learned Arbitrator passed the corrected Award u/s 33 (2) of the
Arbitration & Conciliation Act vide his order dated 18.02.2019.
3. The petitioner is challenging findings of the learned Arbitrator in Claim
Nos. 1, 2, 3, 31, 32, 33 and 36. The claims are reproduced are as below:
S.No. Claims Claimed Amount Awarded Amount Digitally Signed By:DEEPANSHU MALASI Page 2 of 42 Signing Date:13.01.2025 O.M.P. (COMM) 267/2019 12:27:58 Claim No. Work executed but not Rs.1,53,00,198/- Total: Rs. 17,09,495/- 1 paid, withhold amount, withhold mile stone, illegal recovery, part rates, less rates paid etc Claim No. Escalation from day 1 Rs. 21,00,000 Rs. 4,38,070/- (as 2 under 10CC corrected on (Clubbed 19.04.2019) with Claims No. 31, 32, 33, & part 36) Claim No. Claim as per Clause Rs. 6,75,000 Clubbed with claim no. 31 6A Schedule F para 2 2(X) 15% profit on 10C Claim No. Claim as per Clause Rs. 3,75,000 Clubbed with claim no. 32 10c on P.O.L. 2 Claim No. Escalation damages Rs. 5,25,000 Clubbed with claim no. 33 for Escalation as per 2 Clause 10 C after stipulated date of completion Claim No. Claim 10C on all Rs. 3,00,000 Clubbed with claim no. 36 Substituted items, 2 Digitally Signed By:DEEPANSHU MALASI Page 3 of 42 Signing Date:13.01.2025 O.M.P. (COMM) 267/2019 12:27:58 Extra Items and Deviation on market rates along with 18% interest from due date of payment till Actual date of payment Claim No. Incentive 5% on Rs. 29,95,439 Nil 3 Tender Value Submissions of Petitioner: General:
4. One of the objections taken by the petitioner in the present petition against
the impugned Award is that the general findings of the learned Arbitrator in para
6 and claims no. 1, 3, 5 of the Award are vitiated by bias. However, the said
objection of bias has been dropped by the learned counsel for the petitioner.
5. In view of the above, the claim wise objections raised by the petitioner are
as under:-
Claim No. 1
6. The petitioner submits that Claim No.1 was divided into various sub-
claims and the petitioner is aggrieved qua the findings of the following sub-
claims:-
a. Part-B(i):
i. The petitioner submits that the findings of the learned Arbitrator
under this head are contrary to record, since as per clause 12.2, the
petitioner had duly submitted analysis of rates based on prevailing
market rates and the same were neither questioned nor any counter
rates were calculated by the respondent. In view of the same, the
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learned Arbitrator erred in unilaterally ignoring the rates of the
petitioner on the ground that the same are unreasonable and
contrary to the terms of the contract.
ii. The petitioner submits that finding with respect to the purchase
vouchers not being submitted is factually incorrect, since the same
forms part of the Arbitral Record.
Part H:
iii. The petitioner submits that the learned Arbitrator ignored that the
Final Rates of the substituted items are to be derived by adding
and subtracting the rates of the BOQ items to be substituted with
the difference of the Market rates.
iv. Additionally, Labour Escalation is also payable on the same. The
same is also evident by the circular issued by the DG (Works)
CPWD wherein it states that escalation is payable on substituted
items.
b. Part J:
i. As per Clause 12.2 of the Contract, the petitioner was entitled to
receive market rates for all items whose quantities deviated and
exceeded the permissible BOQ Deviation Limits. The petitioner
submitted detailed analysis of rates of all such quantities beyond
the deviated limits, which was never disputed by the respondent.
However, the learned Arbitrator arbitrarily reduced the rates of
the items claimed.
Claim No. 2, 31, 32, 33 and part of Claim No. 36
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7. The learned Arbitrator has arbitrarily decreased the cost of escalation on
other materials which was calculated in terms of Clause 10CC and even in the
absence of an escalation clause, the contractor is entitled to the same if the delay
is not attributable to the contractor/petitioner.
8. The learned Arbitrator has without any reason reduced the escalation cost,
which was derived on the accepted formula of Clause 10CC. The learned
Arbitrator by the virtue of the same reduced part of the claim.
Claim No. 3
9. The petitioner submits that claim no. 3 was made in respect of Clause 2A
of the GCC, which grants incentive for early completion.
10. The petitioner submits that once the works gets delayed due to hindrance
beyond its control, then such hindrance period is not to be taken into account
while computing the period for completion of works for calculating bonus under
clause 2A.
11. The petitioner submits that regular correspondences were sent by the
petitioner informing the reason for delay by the respondent, therefore the
petitioner was entitled to claim bonus/ incentive for 255 days. It is submitted
that even as per the register of the respondent, the justified delay also came to
645 days, which the respondent admitted was due to its own default, nonetheless
the learned Arbitrator rejected the said claim. The same is unjustified and
contrary to record.
Additional Claims
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12. Even though the prayer of the present petition is restricted to challenging
findings of part of Claims No. 1 (Part B(i), Part H, Part J); Claims No. 2, 31, 32,
33, part of Claim No. 36; and Claim No. 3 but since the petitioner has sought to
additionally challenge the finding of the learned Arbitrator on the aspect of delay
of 611 days, the claims, being Claims Nos. 4, 6, 8, 11, 12, 14, 34, 16, 17, 19,
20,22- 29, 38 and 40; Claim No. 5; Claims No. 7 and 15; Claims No. 9 and 30;
and Claim No. 41, also form part of the challenge.
13. It is pertinent to mention that neither any arguments have been made
against the said claims nor does the prayer clause seek setting aside of the same.
However, the pleadings made against the said Claims are as under:-
Claim Nos. 4, 6, 8, 11, 12, 14, 34, 16, 17, 19, 20,22- 29, 38 and 40
14. The counsel for the petitioner states that the learned Arbitrator has failed
to appreciate that the value of the various Staff, Plant & Machinery, T&P, Lab.
Establishment, Watch & Ward Staff, Engineering Staff, Office Expenses etc. was
not merely based on the total tender cost but was also based upon the stipulated
period, for which the same were to be employed. Therefore, the expenditure was
to be calculated on the basis of the number of additional days for which the
same had to be incurred (i.e. for additional 611 days of execution of work at the
site) instead on value of the balance work.
Claim No. 5
15. The petitioner submits that the petitioner was claiming an interest @12%
on the amounts due but wrongly impounded by the Respondent department and
since the delay way solely attributable to the respondent, the learned Arbitrator
was bound to grant interest.
Claim No. 7 and Claim No. 15
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16. The petitioner submits that the learned Arbitrator, while rejecting the said
claims recorded that the full payment is to be released immediately after the
particular item is completed, however since the same was not done, the
Respondent Department was liable to pay interest thereupon.
Claim No. 9 and Claim No. 30
17. The petitioner submits that the learned Arbitrator gravely erred in
rejecting the said claims for Loss of Profit since the contract was prolonged by a
period of 611 days over and above the stipulated period of 365 days due to the
breaches by the respondent. Hence, the losses suffered by the petitioner ought to
be compensated.
Claim No. 41
18. The petitioner submits that mere award of 8% pendent-lite interest is
against the terms of the contract as the Clause 10-B (IV) of the Agreement,
which mandates interest at the rate of 10%. Even for the future interest, the
petitioner was awarded for 10%, therefore pendent-lite interest should also be
@10% or more.
Claim No. 1 (Part D):
19. The petitioner has further attempted to challenge Claim No. 1 (Part D) at
the time of final arguments by way of filing of an additional short note, even
though the same does not find any mention in the pleading, prayer or written
submissions filed by the petitioner at the earlier stage.
20. The petitioner submits that the learned Arbitrator has sought to rewrite the
terms of the contract, more specifically clause 8.1 of the Agreement and clause 1
of the SCC (Special Conditions of Contract), while adjudicating the claim
towards Extra Work/Finishing work on exposed concrete surface.
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21. The petitioner submits that the learned Arbitrator has tried to apply an
interpretation of CPWD specifications when the above said clauses give
preference to “Nomenclature of Item as per schedule of quantities” over CPWD
specifications in case of any dispute.
22. The petitioner submits that Nomenclature of Item No. 3.4 specifically and
unambiguously excludes the price of ‘Finishing’, therefore there was no scope of
ambiguity that the finishing work carried out by the petitioner was to be charged
extra.
Submissions of the Respondent:
Claim 1
(Part B)
23. The respondent submits thatthe learned Arbitrator has awarded the
amount after duly taking into account the prevailing market rates and the
contract provisions. The respondent argues that the analysis of rates of the
materials at site are supposed to be inclusive of the VAT and additional 5%
miscellaneous charges. However, the contractor in case of certain items has
analysed the rates while adding 12.5% towards VAT and additional 5% misc.
charges, which is incorrect.
(Part H)
24. The respondent submits that the petitioner cannot place its reliance on
Clause 10C since the same is applicable only on agreement items and not on
substituted items. The respondent submits that the rates of substituted items are
derived by adding or subtracting the difference of market rates of the substituted
item and Agreement item to or from the rate of the Agreement item. So, the
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substituted items rates get decided on market rates and clause 10C is not
applicable on these items.
(Part J)
25. The respondent submits that the petitioner revised this statement of claim
through rejoinder and claimed for Rs. 24,67,363/-on the ground that09 BOQ
items of work deviated beyond the limit laid down under Schedule F of the
Agreement are to be paid at market rates under Clause 12.2 of the contract. It is
submitted that claims out of the said 9 items: (a) 03 BOQ Items namely items
No. 4.1, 9.1 and 9.5have not been deviated beyond the limit laid down in
Schedule F of the Agreement; (b) The rates paid for 03 BOQ Items No. 5.3, 7.1
& 12.2.1 are justified; (c) The rates for balance 03 BOQ Items No. 7.2.1,
11.6.1.1 & 11.3.1, have been modified by the learned Arbitrator correctly.
Therefore, the respondent submits that the justified amount works out to
13,718/- and the same has already been paid to the petitioner.
Claim 2, Claim 31, Claim 32, Claim 33, Claim 36
26. The respondent submits that the objections raised in the present petition
do not fall under any ground in section 34(2) of the Arbitration and Conciliation
Act, 1996. This court cannot re-appreciate evidence nor sit in appeal over an
Arbitral Award. It is submitted that the learned Arbitrator has passed a reasoned
award and it does not warrant any interference.
27. The respondent further submits that under the said claims, escalation is
categorised in two parts being: Escalation on other materials on the principle of
Clause 10 CC and Escalation on labour under Clause 10C.
a. Escalation on other materials: – The respondent submits though
there is no provision for escalation on other materials in the contract even
then the learned Arbitrator has awarded an amount of Rs. 2,36,934/- .
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Hence, there is need no further modification, especially since the claim of
the petitioner was not tenable.
b. Escalation on labour: – The respondent submits that the rates of
deviated items and extra items are calculated on prevailing market rates,
therefore escalation on these items is not payable. It is submitted that the
correct amount of escalation on agreement items up to SDOC and beyond
comes to Rs. 12,46,596, (though claimed as 16,27,120 by the petitioner)
againstwhich the Respondent have already paid Rs. 10,45,400. Balance
amount payable by the respondent under this category is Rs. 2,01,196/-,
which has been correctly awarded by Ld. Arbitrator and already paid to the
petitioner. The petitioner under this claim has added 1% labour cess, 12.5%
VAT and 15% CP &OH which has per methodology laid down in the
contact are not payable.
Claim 3
28. The respondent submits that Clause 2A of the agreement stipulates
payment of bonus if the work was completed before the stipulated date. In the
present case, admittedly the work was completed on 31.03.2015 and is way
beyond the stipulated date of completion, i.e.28.07.2013. Hence, the
bonus/incentive was not payable.
Analysis
29. I have heard the arguments raised on behalf of both the parties and
perused the material on record.
30. At the outset, the scope of interference in proceedings under section 34 of
the Arbitration and Conciliation Act, 1996 has been laid down by the courts time
and time again, more recently summarised in the judgment of this court in
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Indian Railways Catering and Tourism Corp Ltd. v Brandavan Foods Products,
2024:DHC:6114. The operative portion of which reads as under:-
“42. The scope of examination of an arbitral award under Section 34 of
the Act can be traced, more significantly so, in Associate Builders v.
DDA, 2024:DHC:6114 O.M.P. (COMM) 495/2022 & Conn. matters
(2015) 3 SCC 49, SsangyongEngg. & Construction Co. Ltd. v. NHAI,
(2019) 15 SCC 131 and Delhi Airport Metro Express (P) Ltd. v. DMRC,
(2022) 1 SCC 131. Reliance is also placed upon, inter alia, Dyna
Technologies (P) Ltd v. Crompton Greaves Ltd (2019) 20 SCC 1; UHL
Power Co. Ltd v. State of H.P. (2022) 4 SCC 116; South East Asia
Marine Engineering & Constructions Ltd v. Oil India Ltd (2020) 5 SCC
164; Patel Engineering Ltd v. North Eastern Electric Power
Corporation Ltd (2020) 7 SCC 167; PSA SICAL Terminals (P) Ltd. v.
Board of Trustees of V.O. Chidambranar Port Trust Tuticorin, 2021
SCC OnLine SC 508; and Army Welfare Housing Organisation v.
Sumangal Services (P) Ltd (2004) 9 SCC 619.
43. For the sake of brevity, the principles delineated in the aforesaid
cases are summarised hereinafter.
44. The award can be set aside on the ground of patent illegality if: a) the
view taken by the arbitral tribunal is impossible or such that no
reasonable person could arrive at it; b) if the arbitral tribunal exceeds its
jurisdiction by going beyond the contract, and adjudicating upon issues
not referred to it; c) the finding of the arbitral tribunal is based on no
evidence or it ignores material evidence. Rewriting of contractual terms
by the Arbitrator is completely prohibited, and an Award which suffers
from such perversity is liable to be set aside. The illegality must go to the
root of the matter and does not include mere erroneous application of law
or a contravention of law which is unrelated to public policy or public
interest. If two views are possible, the Court will not interfere with the
view of the arbitral tribunal if it has taken one of the two views.
Reappreciation of evidence is also impermissible.
45. The award can also be set aside on the ground of it being in
contravention with public policy of India, the scope of which includes: a)
fraud or corruption; b) violation of Sections 75 and 81 of the Act; c) any
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contravention with the fundamental policy of Indian law; d) violation of
the most basic notions of justice or morality, so as to shock the conscience
of the Court. The Court does not function as a Court of appeal, and errors
of fact cannot be corrected. The arbitrator’s findings on facts must be
accepted, as the arbitrator is the ultimate master of the quantity and
quality of evidence in making the award.
46. It is also relevant to note that the Court cannot modify or rewrite the
Award, and can only set it aside, post which the parties can re-initiate
arbitration proceedings, if they so choose. However, partial setting aside
is valid and justified, if the part proposed to be annulled is independent
and can be removed without affecting the rest of the award. For this,
reliance is placed upon McDermott International Inc. v. Burn Standard
Co. Ltd., (2006) 11 SCC 181; S.V. Samudram v. State of Karnataka
(2024) 3 SCC 623 and National Highways Authority of India v. Trichy
Thanjavur Expressway Ltd. 2023 SCC OnLine Del 5183.”
31. With this position in law, I shall now deal with the contentions raised by
the parties.
32. Even though the petitioner has prayed for setting aside ofmultitude of
claims (including Claim Nos. 1, 2, 3, 31, 32, 33 and 36) but during the course of
arguments the petitioner has primarily raised objections against the findings of
the learned Arbitrator with respect to:(i) the delay being attributable to both the
parties (which has resulted in dismissal/part dismissal of claims including but
not limited to payment of bonus, escalation and loss of profit) and (ii) Finishing
of work on exposed concrete surface, which has resulted in dismissal of claim
no. 1(D).
Finding on Delaybeing attributable to both the parties
33. I shall first be dealing with the objections raised against the finding of the
learned Arbitrator that the delay is attributable to both the parties. The operative
portion of the Award in this regard reads as under: –
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“6.2.2 On perusal of these documents and the correspondence exchanged
between the parties, it is seen that both parties have caused delay in
execution of the work. Whereas the Claimant had started writing letters
from day one of the start of Work and putting allegations on the
Respondent for not issuing drawings and/not giving decisions, the
Respondent had been writing their observations for the Claimant for not
deploying required resources on the Work.The Claimant, as mentioned
under para 6.1, has not been specific in pointing out at which point
which item got delayed for want of which drawing or decision. The
Architectural and structural drawings had been issued by the Respondent
before stipulated date of start of the Work for an overall view of the work
and planning and taking up the work. Some drawings were to be issued
as and when stage of the Work warranted. Had the Claimant deployed
required resources on Work, the stages of the Work would have arrived
early and accordingly the stage needed drawings would have been issued
early accordingly. The Respondent had pointed out what was getting
delayed for non-availability of manpower. Detailing of observations is
given in para 6.1.
6.2.3 Going by the stipulated date of completion and actual date of
completion, it is seen that the work got delayed by 611 days. In this delay,
as pointed out above, both parties are responsible. That means by going
further in the details, it could be laid down which party is responsible for
how much period out out of 611 days. This however is not required to be
worked out as the Respondent have decided to justify the entire period of
611 days as justified period. This presumably has been done on the basis
of the undertaking given by the Claimant on the application for seeking
Extension of Time (EOT) that they would not Claim for the damages if
EOT could be granted by the Respondent without levy of Compensation
under Clause 2 of the Contract. The Claimant however has submitted
that this undertaking had been given by them under duress. The fact that
the Respondent have justified the entire delay of 611 days and have not
levied compensation on the Claimant for delay in execution, support the
view that the said undertaking was not given under duress.
6.2.4 Going by above, it is clear that justified delay on the Work is 611
days and the same has been taken by the Respondent on their part
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irrespective of the fact that the delay was contributed by both the
parties.”
(Emphasis Supplied)
34. The petitioner submits thatthe respondent has already admitted that the
delay was due to its own defaults. The same is also recorded in paras 6.2.2. to
6.2.4 of the Impugned Award, however contrary to the same the learned
Arbitrator has held that the parties were equally responsible for the delay. The
Petitioner relies on the letter dated 17.02.2016 by the Executive Engineer,
Chandigarh Central Division, CPWD to show that the respondent accepted that
the delay was justified since it was due to its own faults and hence the
respondent did not levy any compensation for 611 days. The operative portion of
the letter (EOT) is reproduced as under:-
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……………………
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35. The petitioner has attempted to suggest that the respondent had admitted
that the delay was attributable solely to the respondent. However, a perusal of
the award shows that both the parties alleged the factum of responsibility of
delay on the other party. It is for this reason that the learned Arbitrator
adjudicated the controversy. The operative portion of the Award in this regard
reads as under:-
“6.1.14 In this case one of the major issue is that of justification of delay
in execution. In submissions made, the Claimant justify delay of 975 days.
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In Synopsis, they justify delay of 826 days and 866 days in two
alternatives. The Claimant justify delay of 611 days.
The Supreme Court has already settled that this issue cannot be settled by
any of the party to the case. The same has to be decided by third party;
the Court or the Arbitrator. The Supreme Court decision in the matter of
M/s J.G. Engineers Pvt. Ltd Vs. UoI (CJ-3/CD-3 page 124 -138) under
para 14 and 15 is reproduced below;
14. The decision as to who is responsible for the delay in execution
and who committed breach is not made. subject to any decision of
the Respondent or its officers, nor excepted from arbitration under
any provision of the Contract.
15. In fact. the question whether the other party committed breach
cannot be decided by the party alleging breach. A Contract cannot
provide that one party will be the arbiter to decide whether he
committed breach or the other party committed breach. That
question can only be decided by only an adjudicatory forum, that is,
a court or an Arbitral Tribunal.
In this case both the parties have not agreed on as to who committed
breach and what should be the quantum of delay. Therefore according to
the Supreme Court Judgment it has first to be decided by this Tribunal as
to who committed breach of the Contract and what should be the delay in
execution of the Work.”
(“Emphasis Supplied”)
36. It is in these circumstances, the learned Arbitrator has gone through the
entire arbitral record and observed that though the petitioner has written
numerous letters to the respondent regarding delay, but no specific issues were
raised, i.e. pointing out specific delays caused to particular works.
37. In furtherance of the same, the learned Arbitrator enumerated instances
when the issue of non-availability of adequate workforce was brought to the
attention of the petitioner by the respondent and nothing was done on the
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petitioner‟s part. The operative portion of the Award in this regard reads as
under:-
“6.1 .8 There are numerous occasions when the Respondent pointed out to
the Claimant to increase the man power to expedite the Work as the pace of
Work was very slow. Following are some of the instances when the
Respondent through Site Order Book wrote to the Claimant/ made
observations in this regard and the Claimant had nothing to say in their
defense and simply wrote “noted” :
i. The Respondent wrote on· 05.12.2012 to increase man power.
ii. On 19.08.13 more man power deployed.
iii. The Respondent issued instructions on 18.10.2013 to expedite the work.
iv. On 24.10.2013 the Respondent wrote to Claimant that Electrical
equipment are lying in open at site but El Sub Station Building and Pump
House were not ready and as such asked to deploy resources on those
areas.
v. On 02.11.2013 the Respondent wrote that progress of Work was very
slow.
vi. On 11.11.2013 the Respondent wrote that there were many work areas
like external work, work in toilets which could be taken up. This could not
be done obviously for shortage of man power.
vii. On 26.11.2013 the Respondent wrote that various targets given by the
Claimant v could not be achieved for shortage of man power.
viii. On 09.12.2013 the Respondent Wrote to expedite the slow pace of work.
ix. On 19.12.2014 the Respondent wrote to start the outside work.
x. On 14.03.2014 the Respondent wrote that the work was. stand still and
only two three :-J workers were working.
xi. On 25.03.2014 the Respondent wrote that the man power had not been
augmented at site.
xii. On 02.04.2014 the Respondent listed large no. of activities which had not
been taken up by the Claimant.
xiii. On 14.04.2014 the Respondent wrote that except Trench work no other
activity was going on.
xiv. On 21.07.2014 the Respondent wrote that progress of work was very slow
and asked to increase the man power.
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xv. On 05.08.2014 the Respondent wrote that except Painters no other
worker was available at site and asked to take up the pending works on
SOS basis.
xvi. On 25.08.2014 the Respondent wrote that there was no worker at site and
the work had stopped.
xvii. On 14.10.2014 the Respondent wrote that observations made earlier had
not been attended.
xviii. On 23.12.2014 the Respondent wrote that labour had not been deployed
to attend the observations made.”
38. A perusal of the letters discussed above shows that the respondent has
repeatedly informed the petitioner that the work was being carried out in a slow
pace and the petitioner was repeatedly asked to increase its manpower by the
respondent. Even in the EOT relied upon by the petitioner, the respondent notes
that though the period of delay of 486 days (under serial number 13) has been
justified, however no ideal T&P and ideal manpower was provided during this
time. The said EOT dated 17.02.2016 of the respondent has also been
considered by the learned Arbitrator in para 6.2.3 of the Award (reproduced
above).
39. In the said circumstances, I am of the view that the question of delay falls
within the subjective assessment of the learned Arbitrator. The learned
Arbitrator has considered all the letters exchanged between the parties
(including the EOT) and thereafter come to the finding that the delay was
attributable to both the parties.
40. Once the learned Arbitrator has gone through entire record and has come
to a finding that the delay is attributable to both parties, this court under the
limited jurisdiction of section 34 of the Arbitration and Conciliation Act, 1996
cannot substitute the view taken by the learned Arbitrator if the same is a
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plausible view and is based upon material available before the learned
Arbitrator.
41. Hence, I am not inclined to interfere with the finding of the learned
Arbitrator regarding delay and the objection raised against the same is
dismissed.
42. In view of the above, the other claims sought to be challenged on the
ground that the delay was solely attributable to the respondent (being Claim
Nos. 4, 6, 8, 11, 12, 14, 34, 16, 17, 19, 20,22- 29, 38 and 40: Loss and Damages,
Overheads, etc.; Claim No. 5: Interest 12% on due amount impounded wrongly;
Claim No. 7 and Claim No. 15: Interest on part rates of Agreement Items and
Extra Items respectively; Claim No. 9 and Claim No. 30: Loss of profit due to
various breaches) do not warrant any inter-reference.
Claim No. 3: Bonus/incentive as per clause 2A
43. The petitioner has contented that since the delay was not attributable to
the petitioner, hence it is liable to claim bonus/incentive for early competition as
per clause 2A. Clause 2A reads as under:-
“CLAUSE 2A: Incentive for early completion
In case, the contractor completes the work ahead of scheduled
completion time, a bonus @ 1% (one per cent) of the tendered value
per month computed on per day basis, shall be payable to the
contractor, subject to a maximum limit of 5% (five per cent) of the
tendered value. The amount of bonus, if payable, shall be paid along
with final bill after completion of work. Provided always that provision
of the Clause 2A shall be applicable only when so provided in
‘Schedule F'”
44. The learned Arbitrator in this regard held as under:-
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“As per findings of the AT under para6.2.delay of611 days is justified for
the Work. The Claimant have taken 365+ 611 days to complete the work.
They have therefore not completed the Work before time even by a single
day. As such the Claimant are not entitled to Bonus/Incentive.
The Claim is not justified.”
45. In the present case, since I have already dealt with and upheld the finding
on delay by the learned Arbitrator (delay being attributable to both the parties),
hence the finding on claim no. 3 for non-grant of bonus/incentive under clause
2A of the Agreement does not warrant any interference.
Claim No. 2, 31, 32, 33 and part of Claim No. 36
46. All these claims were clubbed together for adjudication on Escalation.
47. The petitioner submits that the learned Arbitrator has arbitrarily decreased
cost of Escalation on Other Materials calculated on clause 10CC without any
reason.
48. The operative portion of the Award reads as under:-
“In this Claim, the Claimant have Claimed Escalation in the cost of
labour and materials other than cement and steel during entire
construction period on all items of work; Agreement Items, Substituted
Items, Extra Items and Deviated Items. Escalation in the cost of of
cement and steel is already covered under Clause CA of the Contract.
There is no application of Clause 10 CC in the Contract. Clause 10C and
10CA are applicable. As Clause 10CC is not applicable, the Claimant
have calculated the Escalation on other materials on the principle of
Clause 10 CC.
………
While working out Escalation on other materials, the Claimant worked
out the cost of other materials as 40% of the Gross Value of the Work
done for every quarter of the year. As the Stipulated period of
construction is 365days, increase in cost of other materials is notDigitally Signed
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permitted in first 4 quarters of the period. The Claimant have worked out
the increase in balance 7 quarters in an indirect way Rs. 4,53,869. The
Claimant have not produced records that he paid extra on account
increase in the cost of other materials, It is felt that it will be reasonable
to pay under this to 50% of the theoretically worked out amount, say Rs.
2,36,934.”
(“Emphasis supplied)
49. Under the heading of escalation on other materials, the learned Arbitrator
observed that the petitioner has failed to show any evidence with respect to
amounts paid extra by it on account of increase in cost of the material payable
under clause 10CC. The learned Arbitrator was of the view that the petitioner
has calculated the same in an indirect manner and was inclined to award 50% of
the amount arrived at.
50. I am of the view that the learned Arbitrator analysed the material available
on record and found that the petitioner has not produced any document to show
that it had incurred extra amounts for increase in cost of material. No document
has been shown to me that the petitioner incurred extra amounts for increase in
cost of material. This court in the limited jurisdiction under section 34 of the
Arbitration and Conciliation Act, 1996 cannot reappreciate evidence. The
Hon‟ble Supreme Court in NTPC Ltd. v. Deconar Services (P) Ltd., (2021) 19
SCC 694 has held as under:-
“12. Further, it is also a settled proposition that where the arbitrator has
taken a possible view, although a different view may be possible on the
same evidence, the court would not interfere with the award. This Court
in Arosan Enterprises Ltd. v. Union of India [Arosan Enterprises Ltd. v.
Union of India, (1999) 9 SCC 449] , held as follows : (SCC p. 475, paras
36-37)
“36. Be it noted that by reason of a long catena of cases, it is now a
well-settled principle of law that reappraisal of evidence by the
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court is not permissible and as a matter of fact exercise of power by
the court to reappraise the evidence is unknown to proceedings
under Section 30 of the Arbitration Act. In the event of there being
no reasons in the award, question of interference of the court would
not arise at all. In the event, however, there are reasons, the
interference would still be not available within the jurisdiction of
the court unless of course, there exist a total perversity in the
award or the judgment is based on a wrong proposition of law. In
the event however two views are possible on a question of law as
well, the court would not be justified in interfering with the award.
37. The common phraseology ―error apparent on the face of the
record does not itself, however, mean and imply closer scrutiny of
the merits of documents and materials on record. The court as a
matter of fact, cannot substitute its evaluation and come to the
conclusion that the arbitrator had acted contrary to the bargain
between the parties. If the view of the arbitrator is a possible view
the award or the reasoning contained therein cannot be examined.”
51. In view of the above, I am not inclined to interfere with the said finding.
The objections raised against the said claim are rejected.
Claim No. 1
Part B(i)
52. With respect to part B(i) of claim no. 1, the petitioner states that the
petitioner had duly submitted analysis of rates of Substituted Items and Extra
Items on market rates, in terms of clause 12.2.
53. The learned Arbitrator while deciding the present claim has held as
under:-
“This part of the Claim pertain to ‘Dorma’ make fittings. As is clear from
the records, the Respondent asked the Claimant verbally to submit the
details of Dorma Fittings. The Claimant submitted Performa invoice ofDigitally Signed
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the items and on the basis of the rates indicated by the Company in their
Invoice, the Claimant worked out the rates of the items and submitted the
same. The Respondent asked the Claimant to submit purchase vouchers
which the Claimant did not submit: As per procedure, the Claimant
should have submitted the rates of the items within fifteen days of
occurrence of the items and the Respondent within one month of
submission of the analysis of the rates by the Claimant should have
sanctioned the rates. But this was not the stage of occurrence of the items.
The items were purchased and fixed later. The Engineer In Charge;
Respondent, asked the Claimant to submit purchase vouchers which they
did not. The Respondent verified themselves the rates in the market in
which they found that the Company had offered 15% rebate on the rates
indicated in the Performa Invoice. The Respondent finalized the rates of
the items on the basis of the rates verified from the market and finalized
the rates of the items. The rates appears to be correct and reasonable. As
the Claimant did not submit purchase vouchers and from the submissions
made by the parties it is not clear as to when the items were purchased
and fixed, it is difficult to assess whether the Respondent committed
breach by not sanctioning the items within stipulated time under the
Contract or not. This is however clear that the Respondent did not clarify
this issue in their defense. Therefore, giving advantage of this to the
Claimant, the amount of Claim can be worked out from the statement
submitted by the Claimant for this Claim. It is noticed that the Claimant
have worked out their rates on the basis of the rates in Performa Invoice.
After adding installation cost. Freight charges, labour cess and O.H &
C.P. the amount of Claimant and the Respondent comes Rs. 1063249 and
Rs. 9,54,865 respectively. The difference in amount is Rs.1,08,384 only as
deductions towards WCT and labour Cess will be made from both sides
amount.
The Claim is justified for Rs. 1,08,384.”
54. A perusal of the above shows that the learned Arbitrator was of the view
that the petitioner failed to submit the purchase vouchers to the respondent. In
the absence of the purchase vouchers, the respondents themselves verified the
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rates and found that the company had offered 15% rebate on the rates indicated
in the Performa invoice.
55. In addition, the learned Arbitrator was of the view that as per the
documents available on record it is difficult to ascertain when the items were
purchased and fixed, hence it was unclear whether the respondent committed
any breach by sanctioning the items within stipulated time. In this view of the
matter, the learned arbitrator awarded Rs. 1,08,384/-.
56. To my mind, the learned Arbitrator analysed the rates provided by the
petitioner under clause 12.2 and reasoned that the same is without credible
evidence, the petitioner only submitted Performa Invoices and not purchase
vouchers showing the actual purchase price of the items. Nothing has been
shown to me to prove the contrary by the petitioner. The respondent verified that
the manufacturer/company was showing 15% rebate on the rates given in the
Performa invoice. The learned Arbitrator analysed the material available before
him and thereafter arrived at his finding giving benefit to the petitioner.
Therefore, I am of the view that the said findings are plausible and in terms of
NTPC Ltd. (supra) cannotbe interfered with/substituted under the limited
jurisdiction of section 34 of the Arbitration and Conciliation Act, 1996.
57. In this view, the objections raised against Part B(i) of Claim no. 1 does
not merit any consideration and is rejected.
Part D:
58. The petitioner on 30.07.2024 handed over an additional short note dated
29.07.2024 to challenge the findings of the learned Arbitrator for part D of
Claim no. 1. The petitioner claims rewriting of terms of clause 8.1 of the
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Agreement and Clause 1 of SCC by non-grant of amount for Extra item/Work
towards finishing work on Exposed Concrete Surface.
59. The petitioner has not challenged the same in the present petition under
section 34 of the Arbitration and Conciliation Act, 1996and has raised it
subsequently. Since, the grounds in the note of arguments do not form part of
the objection petition, the respondent did not have the opportunity to meet the
same in brief written synopsis filed in March of 2020. Hence, this claim needs
to be rejected at the threshold.
60. Without prejudice to the above, the operative portion of the Award reads
as under:-
“The Claimant have Claimed for 6mm thick finishing plaster on exposed
Concrete surface. In this regard, the provision in the specifications is very
clear. As per para 5.4. 7 of the specifications, the exposed concrete
surface finishing is part of the concrete item and it’s cost is included in the
cost of the item. This plaster finish is on the concrete surface which is
obtained through formwork. Para 4.2.13 clearly lays down that that
plastering and finishes other than those obtained through for workshall
be specified and paid for separately unless otherwise specified. The
Claimant made the plea that Directorate General of Works later issued
modification in the case making it clear that finishing plaster on exposed
concrete surface is part of the concrete item which justifies their Claim. In
this regard it is to be understood that the purpose to issue the amendment
by the Directorate General of the Works must have been to remove the
ambiguity and make it abundantly clear that finishing on exposed
concrete surface is part of the concrete item.
The Claimant have Claimed extra for under layer of tile work ocn the plea
that on rough face of the wall, 15 mm thick under layer has been done.
This is allegedly on the analogy of the regular plaster that on rough side
of the wall 15mm plaster is done. In this case the item clearly lays down
that the tiles are to be fixed on an under layer of 12mm thick. Therefore
paying extra for 15mm thick under layer does not arise. Technically, it isDigitally Signed
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possible to have smooth surface with 12 mm under layer on rough side of
wall. One thing has to be understood that in case of regular plaster on
wall, minimum cushion of 12 mm is required on wall for weather
protection. On fare face it can be achieved with 12 mm thick plaster but
on rough surface it can be achieved with 15 mm thick plaster only. the
case of under layer of tiles, criteria of weather protection is not there and
that is why 12mm thickness is ok.”
61. The petitioner submits that the learned Arbitrator has attempted to apply
an interpretation of CPWD specification in contravention to the clause 8.1 of the
Agreement and clause 1.1 of SCC whereby clear preference has been given to
Nomenclature of item as per Schedule of Quantities. The clauses 8.1 of the
Agreement and Clause 1.1 of the SCC read as under:-
Clause 8.1 of the Agreement
“8.1 In the case of discrepancy between the schedule of Quantities, the
Specifications and/ or the Drawings, the following order of preference
shall be observed:-
i. Description of Schedule of Quantities.
ii. Particular Specification and Special Condition, if any.
iii. Drawings.
iv. C.P.W.D. Specifications.
v. Indian Standard Specifications of B.I.S.”
Clause 1.1 of the SCC
“1.1 Except for the items, for which Particular Specifications are given or
where it is specifically mentioned otherwise in the description of the items
in the schedule of quantities, the work shall generally be carried out in
accordance with the “CPWD Specifications 2009 Vol. I & 11” and as per
instructions of Engineer-in- Charge. Wherever CPWD Specifications are
silent, the latest IS Codes / Specifications shall be followed and the rates
should be all inclusive.
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In the case of discrepancy between the Schedule of Quantities, the
Specifications and/ or the Drawings, the following order of preference
shall be observed:-
i. Nomenclature of item as per Schedule of Quantities
ii. Special Conditions.
iii. Particular Specifications.
iv. CPWD Specifications.
v. Architectural Drawings.
vi. Indian Standard Specifications of B.I.S.
vii. All non-schedule items shall be governed by manufacturer’s
specifications.
……..”
62. The petitioner submits that the nomenclature of schedule of item 3.4
unambiguously excludes the price of „finishing,‟ and hence the petitioner was
entitled to charge extra for cost of finishing. Item 3.4 is reproduced as under:-
“Providing and laying in position machine batched and machine mixed
design mix M-25 grade cement concrete for reinforced cement concrete
work, using cement content as per approved design mix, including
pumping of concrete to site of laying but excluding the cost of centering,
shuttering, finishing and reinforcement, including admixtures in
recommended proportions as perIS: 9103 to accelerate, retard setting of
concrete, Improve workability without impairing strength and durability
as per direction of Engineer-ln-Charge.”
(“Emphasis Supplied”)
63. A perusal of the above item shows that the cost of finishing was to be
excluded for the item of 3.4, however it does not signify that the same be
charged extra especially since Clause 9 of the Particular Specifications
categorically states that finishing shall be done in accordance with CPWD
specifications. Clause 9 of the Particular Specifications reads as under:-
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“9.0. FINISHING:-
9.1 The work shall be done in accordance with CPWD Specifications.
9.2 All painting material of approved brand and manufacturer shall be
brought to the site of work in the original sealed containers. The material
brought to the site of work shall be sufficient for at least 30 days of work.
The material shall be kept under the joint custody of contractor and
representative of the Engineer-in-charge. The empty containers shall
notfrom the site till the completion of the work without permission of the
Engineer-in-charge.”
64. Additionally, Clause 1.32 of the Special Conditions, which is in relation
to Batch Mix Concrete, specifically states that no additional cost shall be paid on
account of „finishing‟ of pointed wall surface. Clause 1.32 of the Special
Conditions read as under:-
“1.32 In the item of finishing walls with water proofing cement paint,
only the plain/flat area shall be ” measured for payment and nothing
extra shall be paid on account of pointed wall surface.”
65. Hence, in view of the above reproduced clauses, I do not find favour with
the argument raised by the learned counsel for the petitioner that the learned
Arbitrator could not have applied CPWD specifications to decide the aspect of
Extra Item/Finishing work on Exposed Concrete Surface.
66. Even otherwise, the argument raised by the petitioner that “Nomenclature
of Item as per Schedule of Quantities” should have been given preference over
the CPWD Specifications above is a question of interpretation of the contract
and not rewriting terms of contract. The same is clearly under the domain of the
learned Arbitrator and does not fall under the limited grounds of challenge
available under section 34 of Arbitration and Conciliation Act, 1996. The
Hon‟ble Supreme Court in M.P. Power Generation Co. Ltd. v. ANSALDO
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Energia SpA, (2018) 16 SCC 661 summarised the position in law. The operative
portion reads as under:-
“25. The limit of exercise of power by courts under Section 34 of the
Act has been comprehensively dealt with by R.F. Nariman, J.
in Associate Builders v. DDA [Associate Builders v. DDA, (2015) 3
SCC 49 : (2015) 2 SCC (Civ) 204] . Lack of judicial approach,
violation of principles of natural justice, perversity and patent
illegality have been identified as grounds for interference with an
award of the arbitrator. The restrictions placed on the exercise of
power of a court under Section 34 of the Act have been analysed and
enumerated in Associate Builders [Associate Builders v. DDA, (2015)
3 SCC 49 : (2015) 2 SCC (Civ) 204] which are as follows:
(a) The court under Section 34(2) of the Act, does not act as a court of
appeal while applying the ground of “public policy” to an arbitral
award and consequently errors of fact cannot be corrected.
(b) A possible view by the arbitrator on facts has necessarily to pass
muster as the arbitrator is the sole judge of the quantity and quality of
the evidence.
(c) Insufficiency of evidence cannot be a ground for interference by the
court. Re-examination of the facts to find out whether a different
decision can be arrived at is impermissible under Section 34(2) of the
Act.
(d) An award can be set aside only if it shocks the conscience of the
court.
(e) Illegality must go to the root of the matter and cannot be of a
trivial nature for interference by a court. A reasonable construction of
the terms of the contract by the arbitrator cannot be interfered with by
the court. Error of construction is within the jurisdiction of the
arbitrator. Hence, no interference is warranted.
(f) If there are two possible interpretations of the terms of the contract,
the arbitrator’s interpretation has to be accepted and the court under
Section 34 cannot substitute its opinion over the arbitrator’s view.”
(“Emphasis Supplied”)
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67. In view of the above, I am not inclined to entertain this objection and the
same is rejected.
Claim H
68. With respect to thesubmission of the petitioner thatthe petitioner is
entitled to receive labour escalation under clause 10C of the Agreement with
respect to all BOQ items, including the substituted items, the learned Arbitrator
has held as under:-
“The Claimant have raised this Claim payment of labour escalation on
Substituted Items under Clause 10C. Rates of the Substituted Items are
derived by adding or subtracting the difference of the market rates of the
Substituted Item and Agreement Item to or from the rate of the Agreement
Item. So the Substituted Items rates get decided on market rates. These
items are also prepared at the time of execution. Therefore Clause 10 C is
not applicable on these items.
This part of the Claim is not justified.”
69. Clause 10C of the Agreement reads as under:-
“CLAUSE 10C : Payment on Account of Increase in Prices/Wages due to
Statutory Order(s)
If after submission of the tender, the price of any material incorporated in
the works (excluding the materials covered under Clause 10CA and not
being a material supplied from the Engineer-in-Charge’s stores in
accordance with Clause 10 thereof) and/or wages of labour increases as
a direct result of the coming into force of any fresh law, or statutory rule
or order (but not due to any changes of rate in sales tax/VAT,
Central/State Excise/Custom Duty) beyond the prices/wages prevailing at
the time of the last stipulated date of receipt of tenders including
extensions, if any, for the work during contract period including the
justified period extended under the provisions of clause 5 of the contract
without any action under clause 2, then the amount of the contract shallDigitally Signed
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accordingly be varied and provided further that any such increase shall
be limited to the price/wages prevailing at the time of stipulated date of
completion or as prevailing for the period under consideration, whichever
is less.
If after submission of the tender, the price of any material incorporated in
the works (excluding the materials covered under Clause 10CA and not
being a material supplied from the Engineer-in-Charge’s stores in
accordance with Clause 10 thereof) and/or wages of labour as prevailing
at the time of last stipulated date of receipt of tender including extensions,
if any, is decreased – as a direct result of the coming into force of any
fresh law or statutory rules or order (but not due to any changes of rate in
sales tax/VAT, Central/State Excise/Custom Duty), Government shall in
respect of materials incorporated in the works (excluding the materials
covered under Clause 10CA and not being material supplied from the
Engineer-in-Charge’s stores in accordance with Clause 10 hereof) and/or
labour engaged on the execution of tie work after the date of coming into
force of such law statutory rule or order be entitled to deduct from the
dues of the contractor such amount as shall be equivalent to the difference
between the prices of the materials and/or wages as prevailed at the time
of the last stipulated date for receipt of tenders including extensions if any
for the work and the prices of materials and/or wages of labour on the
coming into force of such law statutory rule or order. This will be
applicable for the contract period including the justified period extended
under the provisions of clause 5 of the contract without any action under
clause 2.
Engineer in Charge may call books of account and other relevant
documents from the contractor to satisfy himself about reasonability of
increase in prices of materials and wages.
The contractor shall, within a reasonable time of this becoming aware of
any alteration in the price at any such materials and or wages of labour,
give notice thereto to the engineer-in-Charge stating that the same is
given pursuant to this condition together with all information relating
thereto which he may being position to supply.
For this purpose, the labour component of the work executed during
period under consideration shall be the percentage as specified in
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Schedule F of the value of work done during that period and the
increase/decrease in labour shall be considered on the minimum daily
wages in rupees of any unskilled adult male mazdoor, fixed under any
law, statutory rule or order.”
70. A perusal of clause 10C shows that that the same pertains to increase in
prices/wages on account of statutory orders during the period of contract
(including extensions) however it does not deal/provide for payment of
escalation on substituted items. Substituted items are dealt with in clause 12 of
the Agreement, which reads as under:-
“12. The Engineer-in-Charge shall have power (i)to make alteration in,
omissions from, additions to, or substitutions for the original
specifications, drawings, designs and instructions that may appear to
him to be necessary or advisable during the progress of the work, and
(ii) to omit a part of the works in case of non-availability of a portion of
the site or for any other reasons and the contractor shall be bound to
carry out the works in accordance with any instructions given to him in
writing signed-by the Engineer-in-Charge and such alterations,
omissions, additions. or, substitutions, shall form part of the contract as
if originally provided therein and any altered, additional or substituted
work which the contractor may be directed to do in the manner
specified above as part of the works, shall be carried out by the
contractor on the same conditions in all respects including price on
which he agreed to do the main work except as hereafter provided.
12.1 The time for completion of the works shall, in the event of any
deviations resulting in additional cost over the tendered value sum
being ordered, be extended, if requested by the contractor, as follows;
(i) In the proportion which the additional cost-of the altered, additional
or substituted work, bears to the original tendered value plus.
(ii) 25% of the time calculated in (i) above or such further additional
time as may be considered reasonable by the Engineer-in-Charge.
12.2……… In the case of substituted items (items that are taken up with
partial substitution or in lieu of items of work in the contract), the rate for
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the agreement item (to be substituted) and substituted item shall also be
determined in the manner as mentioned in the following para.
(a) If the market rate for the substituted item so determined is more than
the market rate of the agreement item (to be substituted), the rate payable
to the contractor for the substituted item shall be the rate for the
agreement item (to be substituted) so increased to the extent of the
difference between the market rates of substituted item and the agreement
item (to be substituted).
(b) If the market rate for the substituted item so determined is less than
the market rate of the agreement item (to be substituted), the rate payable
to the contractor for the substituted item shall be the rate for the
agreement item (to be substituted) so decreased to the extent of the
difference between the market rates of substituted item and the agreement
item (to .be substituted)…”
(“Emphasis Supplied”)
71. A combined reading of the clause 12 and the finding of the learned
Arbitrator shows that the learned Arbitrator considered clause 12.2 to come to
the finding that labour escalation is not applicable on substituted items under
clause 10C since the same is to be decided on the basis of market rates, as given
in clause 12.2.The said analysis by the learned Arbitrator appears to be a fair and
reasonable interpretation, especially since Clause 12 of the Agreement
categorically states that any substitutions and substituted workshall form part of
the contract as if originally provided for and the same shall be carried out by the
contractor on the same conditions in all respects including price.
72. In view thereof, the objections raised against the same does not warrant
any interference and are rejected.
Claim J
73. The petitioner submits that the petitioner is entitled to receive payment at
market rates on all deviated items which exceeded the permissible BOQ
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Deviation Limits in terms of clause 12.2 of the Agreement. In this regard, the
learned Arbitrator observed that:-
“This part of the Claim is regarding Deviated quantity not paid on
prevailing market rates. The Claimant have sent revised statement for this
part of the Claim through rejoinder and changed caption of the Claim.
The Claim is submitted is for Rs. 24,25,607. This part of the Claim is
covered under Clause 12.2 of the Contract. Submission of the Claimant is
that quantities of 9 items of Work have deviated beyond the limit laid
down under Schedule F for which they are entitled to be paid market rates
under Clause 12.2 of the Contract but he has not been paid the correct
rates
It has been observed that quantities of items no. 4.1, 9.1 and 9.5 have not
deviated beyond limit and rates of items no. 5.3, 7.1 and 12.2.1 paid are
justified. Rates of the 9 following three items need change as under:
Item no. 7.2.1 ( qty. 0.96 Kg) rate to be Rs. 2300 instead of Rs. 1930.05
Item no. 11.6.1.1 ( qty. 66,27 mtr) rate to be Rs. 1100 instead of Rs.
953.00
Item no. 11.13.1 ( qty. 128 no.) rate to be Rs. 300 instead of Rs. 271.90
With above details, Claim amount comes Rs. 13717.64
This part of the Claim is justified for Rs. 13718.”
74. Clause 12.2 of the Agreement reads as under:-
“12.2 Deviation, Extra Items and Pricing
In the case of extra items (items that are completely new, and are in
addition to the items contained in the contract) the contractor may within
fifteen days of receipt of order or occurrence of the item(s) claim rates,
supported by proper analysis, for the work and the engineer-in-charge
shall within one month of the receipt of the claims supported by analysis,
after giving consideration to the analysis of the rates submitted by the
contractor, determine the rates on the basis of the market rates and the
contractor shall be paid in accordance with the rates so determined.
In the case of substituted items …
……
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In the case of contract items, substituted items, contract cum substituted
items,which exceed the limits laid down in schedule F, the contractor may
within fifteen days of receipt of order or occurrence of the excess, claim
revision of the rates, supported by proper analysis for the work in excess
of the above mentioned limits, provided that if the rates so claimed are in
excess of the rates specified in the schedule of quantities, the Engineer-in-
Charge shall within one month of receipt ofthe claims supported by
analysis, after giving consideration to the analysis of the ratessubmitted
by the contractor, determine the rates on the basis of the market rates and
the contractor shall be paid in accordance with the rates so determined.”
75. The learned Arbitrator observed that out of the 9 items of work for which
quantities have been said to have deviated beyond the BOQ limits, 3 have not
been deviated, 3 have been justified and only rates of three items need to be
changed. The said finding is based on analysis of material and documents
available on record.
76. The petitioner has submitted that all the items discussed above were
deviated beyond the permissible BOQ limits and the learned Arbitrator has not
rightly appreciated the same. I am of the view that the same is a matter of
evidence. The learned Arbitrator on assessment of the rates submitted by the
petitioner found no deviation in items 4.1, 9.1 and 9.5 and was of the opinion
that payment of rates of items no. 5.3, 7.1 and 12.2.1 was justified. The learned
Arbitrator only found infirmity in rates of items 7.2.1, 11.6.1.1 and 11.13.1 and
the said infirmities were duly rectified. In view of the finding being based on
subjective assessment on facts of the learned Arbitrator, I am not inclined to
differ/interfere with the same.
77. Additionally, the learned Arbitrator also awarded an amount of Rs.
1,70,639 for deviated items beyond the BOQ limits in Part A of Claim No. 1.
The operative portion of the Award in this regard reads as under:-
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“Claim No. 1
Part A
In this case quantities of certain items had increased beyond the limit
specified in Schedule F of the Contract and market rates of these items are
less than the Agreement rates. This situation is covered under Clause 12.3
of the Contract. Under the provisions of the Contract, the onus lies on the
Engineer in Charge; the Employer, to issue notice to the Contractor within
one month of occurrence of the increase in the quantity intimating the
increase in quantity and ask his comments relating to revision of rates of
the item within fifteen days of issuance of the notice. The Engineer in
Charge within one month of the expiry of fifteen days period, shall revise
the rates of the items based on market rates taking in to consideration the
reply of the Contractor. In this case, the Engineer in Charge did not
comply with the provisions of the contract. He issued notice much later
even after. completion of the work. Silence on the· part of-the Engineer In
Charge on rates of the items when these were being executed, gave
assurance to the Contractor that he would get the quoted rates of the items
in the agreement. Therefore the Claimant is entitled to Agreement rates for
all such items.
The Claim is justified for Rs. 1, 70,639.”
78. In this view, the findings on the said claim does not warrant any
interference and the same is rejected.
Conclusion
79. In view of the above, the present petition and pending applications, if any,
are dismissed.
JASMEET SINGH, J
JANUARY 10th, 2025/dj
Digitally Signed
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