Back
Andhra Pradesh High Court
Judges : M.JAGANADHA RAO
Yelluru Mohan Reddy - Appellant
Versus
Rastriya Ispathnigam Ltd., Visakhapatnam - Respondent
Decided On : 11-09-90
ARBITRATION - SCOPE OF ARBITRATION CLAUSES - EXCLUDED MATTERS - ENGINEER'S DECISION - FINALITY - EXCEPTED MATTERS - VARIATIONS AND ADDITIONS - CONSTRUCTION OF CLAUSES - JURISDICTION OF ARBITRATOR.
Fact of the Case:
The petitioner entered into a contract with the respondent, Visakhapatnam Steel Project, on 31-3-1986. The petitioner was awarded the work on 30-12-1985 in a sum of Rs. 6,15,750/- and the work was to be completed in four months. The petitioner could not proceed with the work as the respondent allowed a reservoir to get filled up with water, which resulted in the trenches dug by the petitioner getting filled up with water. The petitioner requested the respondent to amend the agreement to include the additional work and additional expenditure, but the same was not done. The petitioner then wrote to the Engineer in charge to decide the dispute and give final certificate. The Engineer did not reply and the petitioner gave one week's notice for appointment of arbitrator and filed the present O. P. u/s. 8 (2) of the Act seeking appointment of an arbitrator.
Finding of the Court:
The Court held that the alleged assurance is not incorporated in the contract, that in fact as per Ex. A-1 notice the petitioner wanted to execute a fresh contract with new rates, that the contract was not placed before the Court but that the respondents placed the General Conditions and clause 16. 2 (c) before the Court and that unless there is a clause in the contract entitling a higher rate the petitioner cannot make any claim. The Court also held that Ex. A-6 does not amount to 15 days clear notice contemplated by the last para of Sec. 8 (2) of the Act.
Issues: 1. Whether the petitioner has complied with the last para of Sec. 8 (2) of the Indian Arbitration Act, 1940? 2. What is the proper construction of the arbitration clause which also contains a sub- clause excluding certain matters which have to be referred to an Engineer for decision, from its purview and what are the general principles applicable to such clauses?
Ratio Decidendi: 1. On a plain reading of Sec. 8 (2) of the Act, it is clear that the statute does not require any particular time to be mentioned in the notice given by one party to the other party for appointment of an arbitrator as per the terms of the agreement. All that is required is that if the appointment is not made within 15 clear days after service of the said notice, the Court could be moved by the party who gave notice, seeking appointment of an arbitrator. 2. The arbitration clause 16. 2 (a) states that all disputes and differences of any kind whatever arising out of or in connection with the Contract or the carrying out of the work shall be referred to and settled by the Engineer who shall state his decisions in writing. Such decision may be in the form of final certificate or otherwise. The decision of the Engineer with respect of any of the excepted matters shall be final and without any appeal as stated in clause 16. 1 hereof. But if either the Employer or Contractor be dissatisfied with the decision of the Engineer or any matter, question or dispute of any kind (except on any excepted matters) or so to the withholding by the Engineer of any certificate to which the Contractor may claim to be entitled then and in any such case, either party (the Engineer or the Contractor) may within 28 days after receiving notice of such decision given a written notice to the other party through the Engineer, requiring that such matters in dispute be Arbitrated upon. 3. The dispute whether the work is new or not included in the contract as contended by the contractor or whether it is already included in the contract as contended by the Engineer is not a question covered by Clause 11. 3 and therefore the matter is not an excepted matter under Clause 16. 1.
Final Decision: The revision petition is allowed and the O. P. filed by the petitioner is also allowed. The Court below is directed to appoint an arbitrator in terms of the latter part of Clause 16. 2 of the agreement and subject to the powers of the Court under S. 8 of the Arbitration Act, 1940. There shall be no order as to costs.
( 1 ) THIS civil revision petition raises a question of importance regarding the scope of arbitration clauses which also contains sub-clauses excluding certain matters from the purview of arbitration and also a question relating to the application of Section 8 (2) of the Indian Arbitration Act, 1940 (hereinafter referred to as the Act ).
( 2 ) THE facts of the case are as follows :--The petitioner entered into a contract with the respondent. The Visakhapatnam Steel Project, on 31-3-1986. Earlier the petitioner was awarded the work on 30-12-1985 in a sum of Rs. 6,15,750/- and the work was to be completed in four months. It appears from the counter that certain meetings took place between the petitioner and the respondent on 7th, 21st and 28th March, 1986 and a revised programme has fixed up in which the petitioner agreed to complete the work by the end of May, 1986 which would mean that there will be a delay of one month in the completion of the work, it is the case of the petitioner that he could not proceed with the work inasmuch as contrary to an alleged assurance a reservoir was allowed to get filled up with water by the respondent and that the trenches which were dug by the petitioner got filled up with water and therefore it became impossible, to proceed with the contract without involving additional expenditure. The petitioner therefore addressed a letter on 26-5-1986 (Ex. A-1) stating that he had excavated 27000 cubic meters as against 15000 cubic metres and covered a length which was short of 3 KMs. out of the total length to be covered. He stated that unless the water is bailed out it is impossible to excavate the soil. Extra cement is required. As in spite of the request to amend the agreement to include the additional work and additional expenditure, the same was not done, he is not able to proceed further. This being not a matter covered by the special conditions which could be disposed of by the Engineer, the petitioner requested that the rate for excavation of the earth and pitching be enhanced by 50% over the original rate or in the alternative, the petitioner may be given water free area after dehydration is made by the respondent. The Deputy Chief Engineer (Civil) sent a letter, Ex. A2, dated 4-6-1986 which does not refer to Ex. A1. He stated that the work was awarded on 30-12-1985 for completion in four months, that in spite of the revised schedule it was not completed even by May, 1986, that the petitioner did not mobilise his resources and had stopped work already for 10 days. The petitioner was requested to resume work and complete it at the earliest. Otherwise the work will be got completed at the petitioner s risk. The same officer after receipt of Ex. A1 sent a further letter on 11-6-86 (Ex. A3) to the petitioner stating that the allegation that the site condition has become altered on account of the filling up of the water is incorrect. Under the General Conditions no change in unit rate is admissible for any variation in quantities-that the petitioner has not completed the work according to the revised schedule and did not even complete 25% of the pitching work. The item of earth work in the bill already included the so-called additional work. The cement consumption now claimed is contrary to the petitioner s letter dated 23-12-1985. The road is, in fact, dry. The claim for extra rate is accordingly rejected. Before receipt of Ex. A3 the petitioner wrote Ex. A4 dated 14-6-86 stating that the contents of Ex. A2 have surprised him. The petitioner was ready and willing to proceed with the work if the points raised in Ex. A1 are answered. In reply the Deputy Chief Engineer wrote a (letter) on 16-7-1986 as per Ex. A5 that the progress of work was poor in spite of 8 letters and therefore it is clear that the petitioner failed to complete the work and has abandoned the site. Therefore, on being satisfied with the certificate of the Engineer, the respondents were giving 7 days notice unde
AI
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
