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1993 Supreme(SC) 624

SUPREME COURT OF INDIA
KULDIP SINGH AND P. B. SAWANT, JJ.
M/s. Chahal Engineering & Construction Co., Appellant
Versus
Irrigation Department, Punjab, Sirsa, Respondent.
Civil Appeal No. 3181 of 1991
Decided on 30-7-1993.

Advocates:
G.K.BANSAL, G.K.CHATRATH, G.RAMASVAMY, Indu Malhotra, P.CHAUDHARY, R.S.RANDHAVA, Shirin Jain, SUDHIR VALIA

Headnote:

Arbitration Act, 1940 – Section 16 and 30 – Competent Authority – Arbitration Proceedings – Respondent-Irrigation Department proposed to get a aqueduct constructed across contract on turn-key basis was entered into between appellant and Respondent drawings and designs submitted by appellant did not show any sealing arrangements with provision for proper bearing pads decided to adopt pre-stressed concrete super-structure involved increase in quantities agreement had provided that in case of any deviation in design increase in cost will not be charged to respondent appellant later on claimed extra amount on account of the increase in quantities and costs gave rise to a dispute between parties and ultimately dispute was referred to arbitration of Chief Engineer of respondent – Held, Counter-claim of respondents is itself of amount arbitrator also disallowed recovery statement submitted by State Government which was to tune which included a sum of account of wastage of material and Paid to contractor for construction of field offices and colonies a part of lump sum contract which was originally granted rates given in CSR Volume II are inclusive of expenses incurred by contractor on account of establishment of field offices and colonies claims of respondent in particular with regard to wastage and pilferage of materials supplied by them to contractor and (ii) advance made to contractor towards provisions for construction of the hutment and setting up of a field office contract was originally a lump sum contract fact that new rates of contract were complete and inclusive of all expenses incurred on items and no separate claim for such expenses was to be entertained – Order accordingly.

JUDGMENT

SAWANT, J.:—The present appeal arises out of an arbitration proceedings. The respondent-Irrigation Department [the Department] proposed to get a aqueduct constructed across the Sirsa river for a. distance of 15.455 Kms. of Sutlej Yamuna Link Canal. A contract on turn-key basis was entered into between the appellant and the respondent on 19th April, 1984 for the total cost of Rs. 6. 10 crores. The drawing and design was to be supplied by the appellant for approval by the Department.

The drawings and designs submitted by the appellant did not show any sealing arrangements with provision for proper bearing pads. Hence, on 6th September, 1984, it was decided to adopt pre-stressed concrete super-structure. This involved increase in the quantities. However, the agreement had provided that in case of any deviation in the design, increase in cost will not be charged to the respondent. The appellant later on, however, claimed extra amount on account of the increase in the quantities and costs. These gave rise to a dispute between the parties and ultimately in July, 1986, the dispute was referred to the arbitration of Chief Engineer of the respondent, Shri Avtar Singh. The claims preferred by the appellant amounted to Rs. 2.70 crores including the work of the super-structure amounting to Rs. 78 lakhs. On 14th August, 1987, Shri Avtar Singh gave his award in favour of the appellant without mentioning any specific amount. He also pronounced an interim award in favour of the appellant amounting to Rs. 55 lakhs, pending the working out of the final amount as per the directions given by him in the award.

On 16th November, 1987, Senior Sub-Judge, Ropar made the award the rule of the Court overruling the objection of the respondent that the final amount having not been specified, the matter be referred back to Shri Avtar Singh.

On 4th April, 1988, the respondent terminated the contract. Thereafter, they also filed an appeal in the High Court to set aside the award. By its judgment and order dated 11th January, 1991, the High Court set aside the award. Against the said decision of the High Court, the appellant preferred an appeal by special leave to this Court being C.A. No. 3181 of 1991.

By its order dated 13th August, 1991, this Court appointed Justice A. D. Koshal (Retd.) as the arbitrator. The order stated as follows :

"Against the award submitted to the Court for being made a rule of the Court the main objection of the State of Punjab was that the item-wise payments due to the contractor had not been quantified and, therefore, the award was not complete. An application under S. 16(1)(b) of the Arbitration Act had been filed on that ground before the Court for remitting the award while the claimant wanted the award to be made a rule of the Court. The learned trial Judge made the award a rule. On appeal the High Court has set it aside. Some of the comments made by the High Court were probably unwarranted in the facts of the case.

There is no dispute that the contract was divisible into two broad heads, one was the sub-structure and the other the superstructure. In regard to the sub-structure it is the common case of parties that the appellant completed it. In regard to the super-structure its contract has been cancelled. We make it clear that the contractor has no claim for the super-structure. We are also of the view, agreeing with the stand of the State Government, that until the dues were quantified the award really became incomplete unless it would be a case where there was no dispute about the performance and the arithmetic part of it remained to be calculated as a ministerial business. That aspect has not been considered mainly on account of the fact that when the arbitration proceedings were going on, the work too was on and had not been completed.

In this background, with the consent of the parties, we direct that there should be a fresh arbitration. The arbitrator should take note of the fact that the matter had once been arbitrat

























































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