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2009(7) Supreme 611
SUPREME COURT OF INDIA
Markandey Katju and Ashok Kumar Ganguly, JJ.
M/s. Asian Techs Ltd. — Appellant
versus
Union of India & Ors. — Respondents
Civil Appeals Nos. 311 – 312 of 2003
Decided on : 07-09-2009
Facts of the case :
Appellant have in the instant case entered into as agreement with union of India for construction of Provision of lab and Administrative Block for NPOL at kakkanad, cochin on disputes arising between parties, matter was referred to Arbitration sole Arbitrator passed a non speaking award in favour of petitioner for payment of Rs 39,75,484/- together with part pendent elite and future interest. An application was filed by respondent challenging decree in terms of award which was allowed by High Court setting aside award.
2. Present appeals have been filed against said order of High Court.
Findings of the Court :
There was no dispute that delay in execution of contract was solely due to default of respondents. Admittedly appellant was not ready to carry out work beyond contracted period otherwise than on separate work orders and it was on specific assurance given by respondent to appellant to continue work and that rates would be decided across the table that appellant went ahead with work. Hence it was not open to respondent to contend that no claim for further amount could be made due to clause 11 (C) and that arbitrator would have no jurisdiction to award the same Evidence on record on the contrary showed that arbitrator was within his jurisdiction to decide matter in question. Impugned Order of High Court Hence set aside and award of arbitrator restored.
JUDGMENT
Markandey Katju, J.—
1. These appeals have been filed by special leave against the impugned judgment and order dated 2151 March, 2002 of the Kerala High Court in MFA No. 452 of 1997.
2. Heard learned counsel for the parties and perused record.
3. The appellant, Asian Techs Ltd entered into an agreement dated 2.9.1986 with the Union of India for construction of ‘Provision of Lab and Administrative Block etc for NPOL at Kakkanad, Cochin. The probable amount of contract was Rs. 3,58,96,665/-, and the construction was to be completed before 8.9.1988. The period of the contract was 24 months. Ext R1 is the agreement and Ext R1 (a) is the General conditions of contract known as IAFW - 2249. According to the appellant, due to the delay caused by the respondent, the project could not be completed by 30.6.1990. According to the appellant, the delay was because the site of the work proposed was changed by the respondent subsequent to the signing of the agreement. Also, the design and structural particulars of the building were fundamentally altered by the respondent by omitting the basement floor itself. The respondent nominated the suppliers of prime cost items belatedly. They did not finalize the design and structural particulars of the work within the period of the contract which expired on 8.9.1988 and dragged on the works, resulting in suspension of the ongoing works and making the labour and machinery items idle. By efflux of time the cost of labour, fuel, materials etc. increased. The respondents assured to settle the rates for extra items across the table and persuaded the petitioner to continue to carry out and complete the works. The respondent No. 2 allowed unconditional extension of time at the first instance on I 0.11.1988 and then from time to time, without levy of liquidated damages. There was no agreement of whatsoever nature in respect of rates for works carried out between 8.9.1988 and 30.6.1990, or on rates for, extra and altered items. The respondent did not pay even at the agreed rates in the agreement in respect of certain items and avoided reference to rates in the MES schedule of rates for many other items, for which rates were to be derived. The contract stipulated settlement of rates for extra items of work involved by Respondent No.2, being the accepting officer.
4. The respondents prepared the last bill on 27.2.1991 for works completed on 30.6.1990, which was received under protest on }.5.1991. The genera] condition 7(d) of IAFW 2249 forming part of the contract reserved rights of the petitioner and Respondent No.2, to correct any mistake in fixation of rates at any time, even after receipt of the last payment. It is alleged that the respondent No.2 failed to communicate any decision on objections to incorrect fixation of rates, duly notified from time to time by the petitioner. The rates were fixed by a board of subordinate officials, behind the back of the petitioner, violating the contract, and thus huge amounts due and payable to the petitioner were wrongfully withheld.
5. The petitioner invoked the arbitration clause in the agreement for settlement of the disputes and differences which arose and sent a demand notice dated 10, 12.1991 for payment of Rs. 1,24,58,108/- together with interest thereon. Respondent No. 2 on 15.6.1992 intimated readiness and willingness to refer the disputes and differences as specified in the notice dated 10.12.1991 to arbitration. The Chief Engineer Air Force was appointed the sole Arbitrator on 15 J 2.1992 and the respondents participated In arbitration proceeding without any demur or protest.
6. The Sole Arbitrator, found patent mistakes in fixation of rates of extra items favour of the petitioner for payment of Rs. 39,75,484/- together with past, pendente lite and future interest and rejected the counter claims. The Subordinate Judge’s Court, Ernakulam assed a decree in terms of the Award, on 8.10.96, while dismissing the application for setting aside the award
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