IMPORTANT POINT
The main legal point established in the judgment is that claims under a works contract must be made within the prescribed period of limitation, and an award based on no evidence and being perverse can be set aside under Section 34 of the Arbitration and Conciliation Act, 1996.

JUDGMENT :

I.P. Mukerji, J.

1. This is an appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (“the Act”). It is from a judgment and order dated 23rd December, 2021 passed by the learned judge, Commercial Court at Asansol. It was made on an application by the respondents under Section 34 of the Act to set aside the arbitral award dated 30th June, 2017. The entire award was set aside.

2. The agreement between the parties for widening and strengthening of a road to the extent of 10 km in the then district of Bardhaman by the appellant contractor was executed in 2002. The date of commencement of the work was 25th November, 2002. The time period for it to be concluded was twelve months from that date i.e. till 24th November, 2003. Its value was Rs.2,21,72,209/-.

3. The award was for a total sum of Rs.47,77,036/-together with interest and cost.

4. The essential facts are these:-The appellant could not make sufficient progress with the work. Time had to be extended which was done by the respondents.

5. The appellant applied to the respondents for extension of time on 20th November, 2003 which was granted on 5th April, 2004 up to 31st May, 2004. In spite of the extended period expiring without completion of the work, the concerned engineer of the respondents asked the appellant to continue the work. Then he went on to demand a higher price for the work to be completed saying that the cost of raw materials had increased. Unless a higher price was paid, it was not possible for him to complete the remainder work.

6. Now Clause 2 of the agreement between the parties stipulated that if work proportionate to time was not performed the contractor would have to pay damages to the respondents at the rate specified in the agreement. On such terms the work could be proceeded with.

7. By his letter dated 18th November, 2004 the Executive Engineer, Burdwan High Way Division No.III, PW Roads noted that in spite of extension of time the work “has not yet been proportionately executed”. The letter was a kind of a show cause, asking the appellant to give reason why penal action under clause 2 of the agreement should not be imposed on him. The duration of the agreement was extended till 30th November, 2004.

8. On 20th November, 2004 the appellant replied to this show cause notice alleging various defaults on the part of the respondents which prevented him from progressing with the work timely. This was followed by a letter dated 24th November, 2004 where the appellant, inter alia, stated that the executive engineer had no power to issue the notice. Such power was vested with the Superintendent Engineer. He also stated that proportionate work had been accomplished by him.

9. By a decision contained in his letter dated 25th November, 2004 the Superintendent Engineer imposed daily penalty on the appellant under Clause 2 to be effective from 1st December, 2004. Time to perform the work was extended till 20th December, 2004.

10. On 16th December, 2004 the appellant submitted a bill claiming Rs.1,26,22,303/-for extra work allegedly done.

11. Finally, on 22nd December, 2004 the Executive Engineer decided that the appellant had become liable to forfeiture of his entire security deposit. In accordance with its terms at or about the same time, the agreement was also deemed to have been terminated by the respondents.

12. Then the matter rested for nearly seven years.

13. On 8th January, 2011 the appellant made the said claim together with claims for certain extra works amounting to Rs.2,31,000/-, Rs.43,37,550/-, Rs.45,000/-and for refund of security deposit of Rs.17,19,432/-thereby commencing arbitral proceedings under Section 21 of the Act. It was stated in the above demand that the bills already raised by the appellant up to the second R.A bill of Rs.79,58,907/-did not include the present demand.

THE AWARD

14. The claims which were claimed before and awarded by the learned arbitrator related to some extra amounts of work claimed to have been done by the appe