JUDGMENT

V. Gopala Gowda, J.:- The appellant contractor filed these Civil Appeals questioning the common judgment and order passed by the High Court of Karnataka dated 29th August 2002 in Misc. First Appeal No. 4377 of 2000 (AA) alongwith cross Objection No.34/2001 wherein the appeal of the National Buildings Construction Corporation Ltd (hereinafter referred to as ‘NBCC’) was partly allowed and award passed by the Arbitrator was modified in regard to claims 1(a), (b), (c) and 2(a), (c), (e), (f) and (g). The High Court set aside the award of Rs. 8,16,412/- in regard to claim Nos.1(a),(b), (c) and 2(a), (c), (e), (f) and (g). Also, the rejection of claims under 1(d) and 1(e) is upheld and award of Rs.13,050/- and 10,204/- against claims 2(c) and (d) are also upheld. Cross objection filed by the contractor regarding grant of certain items of claims made by him is dismissed and consequently it is held that the contractor will be entitled to Rs.9,01,871.53 with interest at the rate of 12% per annum from 28.12.1987 till the date of deposit of payment by NBCC. Also, the amount paid by the NBCC in pursuance of the interim order passed by the High Court will be adjusted to the amounts payable and if excess has been received by the contractor, then he shall repay the same within three months to NBCC. This Order of the High Court is under challenge in these appeals urging various facts and legal contentions. For the purpose of appreciating the rival legal contentions urged on behalf of the parties the brief facts are stated hereunder.

2. NBCC is a public sector company with its headquarters in New Delhi and is engaged in the business of

(i) project management consultancy services for civil construction projects (ii) civil infrastructure for power sector and (iii) real estate development etc. It has 10 regional/zonal offices across the country, with one such zonal/regional office at Bangalore, Karnataka.

3. A notice was published in the newspapers by NBCC, Bangalore on 12.1.1985 with the purpose of inviting tenders for construction of five 5000 Metric Ton food storage godowns comprising of Group-I (Civil and Structural Works) and Group-II (internal and external electrification and sanitary work), structures at Bhimavaram, Phase II, West Godawari District, Andhra Pradesh. Pursuant to the said tender notice, the contractor submitted his tender for the said works and the offer of tender was accepted by NBCC.

4. It is the case of the contractor that in terms of the tender notification, percentage of rate for tender works of Group-I and item rate tenders for works of Group II referred to above were required to be submitted. The tender contained basic rate for work based on Central Public Works Department (CPWD) Delhi Schedule of Rates, 1981, which is called as ‘DSR-1981’ for brevity.

5. It is the case of the contractor that for any construction work, schedule of rates plays an important role in pre-construction stage like preparation of estimate. To meet this objective, CPWD is publishing DSR since 1931 on regular intervals based on the experiences and latest technologies which can be adopted in the construction sector. The DSR were revised many times in the subsequent years 1977, 1981, 1985, 1989, 1993, 1997, 2002, 2007 and 2010 based on the market rates of materials and labour prevailing during the period. The CPWD Manual is a reference document of CPWD and provides a basic frame work for planning, designing and execution of construction works in CPWD. He further contends that the offer made by the contractor pursuant to the tender notice was accepted and works were awarded in his favour by NBCC on the basis of DSR-1981 and the provisions of CPWD Works Manual apply with all vigor to the case in hand. The contractor entered into a detailed agreement with NBCC on 26.6.1985 incorporating therein certain terms and conditions agreed upon by the parties. The following terms and conditions were agreed upon between the parties:

(a) The rates of