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Andhra Pradesh High Court
Judges : D.REDDAPPA REDDY, M.N.RAO
State Of A.P.REP.BY THE SUPERINTENDING ENGINEER, IRRIGATION CIRCLE, WARANGAL - Appellant
Versus
V.RAGHUNADHA RAO - Respondent
Decided On : 11-25-92
CONSTITUTIONAL LAW - GOVERNMENT CONTRACTS - ARBITRATION - PRELIMINARY SPECIFICATIONS OF ANDHRA PRADESH DETAILED STANDARD SPECIFICATIONS - VALIDITY - ARTICLES 14, 21 - WHETHER PRELIMINARY SPECIFICATIONS ARE UNCONSTITUTIONAL - WHETHER THE APPOINTMENT OF THREE OFFICIALS AS ARBITRATORS IS VOID AND UNENFORCEABLE.
Fact of the Case:
The petitioner, a registered Class-I Contractor, entered into a lumpsum agreement with the State of Andhra Pradesh for the construction of a spillway. The agreement contained an arbitration clause providing for arbitration by a body of officials. The petitioner filed a writ petition challenging the validity of certain Preliminary Specifications of the Andhra Pradesh Detailed Standard Specifications, including PSs. 20, 22, 27(c), 29, 36, 37, 40, 59, 62(b), and 73, on the ground that they were arbitrary and violative of Articles 14 and 21 of the Constitution. The petitioner also sought a declaration that the appointment of three officials as arbitrators was void and unenforceable.
Finding of the Court:
The High Court held that the Preliminary Specifications were unconstitutional and declared that the exclusion of the decision of the Executive Engineer and Superintending Engineer from the purview of arbitration under Clause 73 was invalid and offended Articles 14 and 21 of the Constitution. The High Court also held that the appointment of three officials as arbitrators was void and unenforceable.
Issues: 1. Whether the Preliminary Specifications of the Andhra Pradesh Detailed Standard Specifications are unconstitutional? 2. Whether the appointment of three officials as arbitrators is void and unenforceable?
Ratio Decidendi: 1. The High Court held that the Preliminary Specifications were unconstitutional on the following grounds: * They conferred sweeping discretionary and discriminatory power on officials. * They exempted the State from liability for non-performance or negligence in the performance of reciprocal contractual obligations. * They were a carry-over of feudal origins and a constitutional anathema. * They did not subserve any public policy but only "tend to promote inefficiency, negligence, callousness, nepotism and the like undesirable tendencies in the departmental offices." 2. The High Court held that the appointment of three officials as arbitrators was void and unenforceable on the ground that it was an unfair procedure offending Article 21 of the Constitution.
Final Decision: The High Court's judgment was affirmed by the Supreme Court in Delhi Transport Corporation vs. Delhi Transport Corporation Mazdoor Congress.
( 1 ) AGAINST the judgment of a learned single Judge K. Ramaswamy, J. (as he then was) allowing Writ Petition No. 9797/83 (V. Raghunadha Rao vs. State of A. P and ors), declaring certain Preliminary Specifications of the Andhra Pradesh Detailed standard Specifications as unconstitutional this appeal was preferred by the state of Andhra Pradesh.
( 2 ) THE sole respondent herein is a registered Class-I Contractor, formerly designated as A-Class Contractor. For all Government works of the value of more than Rupees Fifteen Lakhs only Class-I Contractors are eligible to submit tenders. Amongother conditions for registrationasclass-IContractor solvency to the extent of Rupees Two Lakhs is a necessary pre-condition. In respect of the construction work "ogee Spillway from Chain 91. 45 to Chain 110 of Taliperu projectatpedamidisileru village, Khammam District" a notification was issued by the Government of Andhra Pradesh on 29-9-1977 inviting tenders. The tender schedules were issued on 2-11-1977 and 3-11-1977. The last date for receiptof the tenders was 8-11-1977. Detailed description of the work contained as many as 70 items. The sole respondent herein submitted his tender on 8-11-1977 stipulating certain conditions stated in the covering letter accompany his tender. He was called for negotiations and an agreement was concluded on 23-12-1977 Lumpsum Agreement No. 28/77-78 for Rs. 80,20,884-05. The site was handed over to the respondent on 19-1-1978 and the work was required to be completed within 18 months from the date of handing over of the site i. e. , before 18-7-1979.
( 3 ) THE Andhra pradesh Detailed Standard Specifications are in two parts. Part-I consists of Preliminary Specifications and Part-11 Standard Specifications. Both invariably form part of contracts entered into by the State for execution of works.
( 4 ) THE agreement contains an arbitration clause providing for arbitration by a body of officials. The arbitration clause contained in Preliminaryspecification (PS) 73, in clear terms, excludes matters covered by PSs. 20,22,27 (c), 29,36,37 and 40 from the purview of arbitration. P. S. 59 debars any claim for compensation on account of delays or hindrance to the work except in the manner provided therein; it contemplates only extension of time being allowed by the Executive engineer or competent officer for unavoidable delays beyond the control of the contractor. P. S. 29 lays down that "in matters regarding materials, workmanship, removal of improper work, interpretation of the contract drawings and contract specifications, mode of procedure, and the carrying out of the work, the executive Engineer s decision shall be final and binding on the contractor. It also provides that, if any difference arises between the Executive Engineer and the Contractor in respect of the above matters, the contractor shall have a right of appeal to the Superintending Engineer whose decision shall be final. P. S. 20 says that, all materials, articles and workmanship shall be the best of their respective kinds for the class of work described in the contract specifications, and the materials shall be obtained from the source approved by the Executive engineer. P. S. 22 relates to details regarding the measurement and mixing. P. S. 27 (c) confers power on the Executive Engineer to reject at any stage any work which he considers to be defective in quality of material or workmanship. P. S. 36 relates to scaffolding instructions - the contractor has to instal them at his expense ensuring proper safety to the workers, and all the instructions issued by the Executive Engineer should be followed. P. S. 37 incorporates temporary works to be carried out by the contractor on the instructions of the Executive engineer and also the measures to be ensured for safety purposes. P. S. 40 enjoins upon the contractor to take all steps for protection of the work and the materials against sun or rain. P. S. 62 relates to payment on lumpsum basis or
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