The arbitrator has the power to award compensation to the builders for the additional cost of execution, and the measure of damages is the difference between the contract price and the market price of goods at the time when the contract was broken.

AVADH BEHART ROHATGI

( 1 ) TAIWAN Construction Company is a firm of builders and contractors (the builders ). They entered into an agreement with the respondent Union of India for the construction of a multi-storeyed office building in New Delhi.

( 2 ) UNION of India had invited tenders for this work. The work was confined to the construction of ground, first, second, third and fourth floors. The Government in its invitation for tenders had quoted their estimated cost of work. According to them this work was to cost Rs. 41,17,513.

( 3 ) THE builders submitted their tender quoting 15. 46 per cent above the estimated cost. Their tender was accepted, being the lowest. An agreement in writing was executed. Work was awarded to the builders on January 6, 1970.

( 4 ) IN terms of the contract building work was to be commenced by the builders within 15 days from the date of the award of the work. The work was to be completed within a period of 18 months, that is, by July 20, 1971.

( 5 ) THE builders started the work. But the work could not be completed by the stipulated date because of the breach of contractual obligations on the part of the Union of India. In their letters dated June 2, 1971 (C-15), July 26, 1971 (C-17) and July 26, 1971 (C-18) the builders wrote to the Government that they were unable to complete the work within the stipulated time as there was delay on the part of the Government in giving them possession of the site and in the supply of drawing and because the work had to be suspended by reason of some acts and omissions of the Government. They also said that since the time had expired the work could not be continued except on increased rates as per the price prevailing in the market.

( 6 ) THE Government did not accept this stand of the builders. They said that the builders were contractually bound to do the work at the stipulated rates and that all that they, the builders, could ask for was extension of time in terms of the contract which could be given if the Government were satisfied that there was a case for extension.

( 7 ) THE result of the correspondence was that nothing was decided. The builders went on with the work. They completed the work. Then they made their claim for Rs. 8,18,136. 89.

( 8 ) THE ground of the claim was this. In respect of the fifth and sixth floors of this very building the Government had invited tenders in the month of June and July 1971. This firm of builders again submitted their tender. The estimated cost given by the Government was Rs. 7,87,188. The builders quoted in their tender 60. 70 per cent above the estimated cost as their rates. The highest tender which the Government received was for 66 per cent above the estimated cost. But since the builders tender was the lowest it was accepted by the Government on August 9, 1971. The builders claimed that for the work of the ground, first, second, third and fourth floors which remained undone till July 20, they would charge from the Government 45. 21 per cent over and above the contracted rates. The figure of 45. 21 was arrived at by taking the difference of the second contract and the first contract i. e. 60. 70 per cent and 15. 49 per cent. The value of the work which remained to be done after July 20, 1971 was of the order of Rs. 18,09,637. The builders claimed an amount of Rs. 8,18,136. 89 in addition to the sum of Rs. 18,09,637. The Government did not accept the claim. The contract contained the usual arbitration clause. It is clause 25. It is a very long clause. I will not read the whole of it. In so far as it is material it says :

"except where otherwise provided in the contract all questions and disputes relating to the meaning of the specifications, designs, drawings and instructions herein before mentioned and as to the quality of workmanship or materials used on the work or as to any other question, claim, right, matter or thing whatsoever, in any way arising out of or relating to the contract, designs, drawings, specific

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