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2002 Supreme(Del) 4

High Court Of Delhi
CONTINENTAL CONSTRUCTION LIMITED - Appellant
Versus
FOOD CORPORATION OF INDIA - Respondent
Decided On : 01/04/2002

The main legal point established in the judgment is that the claim was not time-barred as per the agreement and the Limitation Act, and time was not the essence of the contract due to delays caused by both parties.

Headnote:

ARBITRATION - Construction Dispute - Clause 12.1, Indian Contract Act, 1872 - Section 28, Indian Contract Act, 1872 - Limitation Act - Liquidated Damages - Time as Essence of Contract

Fact of the Case:

The applicant sought to enforce an arbitration award against the objector, the Food Corporation of India, for delay and non-settlement of bills related to construction works. The objector raised objections to the award, including the claim being time-barred and the imposition of liquidated damages.

Finding of the Court:

The court analyzed the nature of the award, the agreement between the parties, and the relevant legal provisions. It found that the claim was not time-barred as per the agreement and the Limitation Act. The court also held that time was not the essence of the contract due to delays caused by both parties. The court dismissed the objections and made the award a rule of the court.

Issues: The issues involved whether the claim was time-barred, whether time was the essence of the contract, and the validity of the imposition of liquidated damages.

Ratio Decidendi: The court held that the claim was not time-barred as per the agreement and the Limitation Act. It also found that time was not the essence of the contract due to delays caused by both parties. The court further determined that the imposition of interest at 10% p.a. was justified based on the facts of the case.

Final Decision: The court dismissed the objections, made the award a rule of the court, and passed a decree in terms of the award in favor of the applicant.

V. S. AGGARWAL

( 1 ) BY this common judgment both the suits mentioned above can conveniently be disposed, since the question involved by and large in both the petitions are identical. Therefore, they are being taken up together. Facts are being mentioned from Suit n0. 3078-A/96

( 2 ) M/s Continental Construction Ltd. (for short the applicant) seeks the award of the arbitrator to be made a rule of the court and for a decree in terms of the award to be passed. The applicant contends that he does not wish to file any objection to the award dated 15. 12. 1996. In pursuance of the notice having been issued the objector (the Food Corporation of india) has filed the objections. The award is purported to be assailed on various grounds to be considered hereinafter. Needless to state that in the reply filed all the objections and the pleas raised are being controverted.

( 3 ) ON 22/03/1999 this court had framed the following issues:-

1. whether the impugned award is liable to be set aside for the reasons stated in the objections? 2. Relief, if any?

( 4 ) ISSUE No. 1: The evidence had been lead by affidavits filed by the parties.

( 5 ) BEFORE proceeding further it would be appropriate to consider the nature of the award and the reasons given by the learned arbitrator. The learned arbitrator refers to thee facts which led to the disputes between the parties. An agreement was arrived at and three works at Moga, Jagraon and Mandi gobindgarh which were to be finished on 10/10/1977 were assigned. The sites were handed over only on 29/02/1980 at Moga, 31/03/1980 at jagraon and 4/12/1979 at Mandi Gobindgarh. The claimants had urged that despite nine years after taking over the works and gainfully using the silos, the objectors have failed to settle the final bill and claim the balance amount. It had also been claimed that the objectors have not settled the bill for the extra item, substituted items, price variations etc. The claims as such regarding items numbering 11 had been disputed and when the matter was REFERRED TO by this court to the learned arbitrator it is not disputed that this court had further directed that the arbitrator could consider if the claim was within time or not. The arbitrator had framed the issues and with respect to the plea of the objectors as to whether the claim is barred by time, the learned arbitrator with respect to the contention that the applicant did not seek the arbitration within time in terms of clause 12. 1 held that the procedure contemplated under clause 12. 1 could only be adopted during the course of the work and not thereafter. It was further held that the engineers had failed to do their duty and had left the site and no useful purpose would have been served by referring the matter to the Engineer and therefore, the contention of the objectors that the arbitration had not been claimed within time was rejected. As regards the claim being otherwise time barred reference was made to the adhoc payment of Rs. 1 lakh and findings returned were that the claim is within time. with respect to the dispute as to who was responsible for delay the arbitrator found that there was delay on the part of the objectors in release of the construction drawings. As regards non-availability of the steel it was noted that there was non-availability of quantity and quality of steel. The objector themselves permitted the use of different type of steel. It was further held that number of drawings were revised and parties were equally responsible in this regard for delay. The arbitrator also considered as to whether time was the essence of the contract and concluded that the time was put at large and question of imposing liquidated damages did not arise. Thereupon different items were considered with respect to the claims laid by the applicants and allowing some of them, the award had been passed against the objectors to the tune of Rs. 25,91,801. 76 with interest at the rate of 10% p. a. in favour of the applicant and against the















































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