The court held that the claims for escalation of wages, price of stone dust, and loading after sunset were permissible under the contract as the relevant clauses did not bar such claims in cases where delay was caused by the railway, in special circumstances.

I.P. Mukerji, J.

1. This is an application to set aside an arbitration award made on 27th September, 2006. The proceedings were conducted and the award made under the Arbitration and Conciliation Act, 1996. The learned sole Arbitrator, sole was appointed by the Hon'ble the Chief Justice of this Court on 1st July, 2004. This application is made by the Union of India on behalf of Eastern Railway Administration, under section 34 of the above Act to set aside such award.

2. The respondent is a registered partnership firm carrying on business in New Alipore in Kolkata. The Eastern Railway Administration entered into a contract with them on or about 20th February, 2002. This contract was reduced to a formal agreement between the parties on 5th April, 2002. The respondent was to supply and load 20000 Cubic Metres of stone dust into railway wagons at inter alia Pakur. Rajgram and other quarries nominated by the railways. The railways needed such stone dust for restoration of about 24 Kms. of railway track. The rate at which the respondent was to be paid was Rs.72.50 per Metric ton. The duration of the contract was three months from 20th February, 2002. As is usual in railway contracts, apart from the signed contract document, the General and Special Conditions of Contract of the railways were incorporated into the contract. The work was ultimately completed on 29th November, 2002. It was required to have been completed by 19th May, 2002. This delay was made up by three extensions granted by the railways. Each letter of extension said that the contract was extended till a particular date "in terms of Clause 17(2) of the General Conditions of Contract" and that "the other terms and conditions of the original contract will remain the same as before". The terms of this extension are the subject matter of much dispute between the parties, which will be discussed in detail later.

Some terms and conditions of this contract are most significant for determination of this application. The first is Clause 25 of the Special Conditions which is as follows:

"Clause 25 of the Special Conditions: The tenderer while quoting the rates shall take into account the possible fluctuation of the market rate in respect of labour, materials, taxes etc. during currency of the contract and also the extension of the same granted from time to time under Clause 17(3) of the General Conditions of contract and standard Specifications (1969) Edition."

3. The second is Clause 17(2) of the General Conditions which is as follows:

"If the Contractor be delayed at any time in the progress of the works by any act or neglect of the Railway's employees or by any other contractor employed by the Railway under sub-Clause (4) of clause 20 of these conditions, or by strikes, lock-outs, fire, unusual delay in transportation, unavoidable casualties or any causes beyond the Contractor's control, or by delay authorised by the Engineer pending arbitration, or by any cause which the Engineer shall decide to justify the delay, then the time of completion of the works may be extended for such reasonable time as the Engineer on behalf of the Railway may decide."

4. The third is Clause 17(3) of the General Conditions which is as follows:

"17(3) Extension of time on Railway Account - In the event of any failure or delay by the Railway to hand over to the Contractor possession of the lands necessary for the execution of the works or to give the necessary notice to commence the works or to provide the necessary drawings or instructions or any other delay caused by the Railway due to any other cause whatsoever, then such failure or delay shall in no way affect or vitiate the contract or alter the character thereof or entitle the Contractor to damages or compensation therefor but in any such case, the Railway may grant such extension or extensions of the completion date as may be considered reasonable."

The other clauses which have same significance are clause 6 and clause 11 which are also