JUDGMENT

Vipin Sanghi, J.(Oral)

C.M. Nos.34049-50/2019

Exemption allowed, subject to all just exceptions. The application stands disposed of.

C.M. No. 34051/2019

Issue notice. Counsel for the respondent accepts notice. He fairly does not oppose the application. Accordingly, delay in filing the present appeal is condoned. Application stands disposed of.

FAO(OS) 138/2019

1. The appellant assails the order dated 23.4.2019 passed by the learned Single Judge in OMP No. 278/2013 whereby the learned Single Judge has disposed of the objections preferred by the respondent-Central Government Employees Welfare Housing Organization (CGEWHO). The learned Single Judge has interfered with the award made by the learned Arbitrator on two claims, namely, Claim No. 1 of the appellant-contractor for escalation for the period between Letter of Intent (LOI) (27.10.1998) to the date of the signing of the contract agreement (11.7.2001). The other claim interfered with by the learned Single Judge was Claim no. 20 in the counter-claims made by the respondent to claim loss of interest on the awarded amount.

2. It appears that the bid made by the appellant-contractor was accepted by the respondent on 27.10.1998. On 3.11.1998, the Letter of Intent was issued to the appellant. On 31.8.2000 a MOU was entered into between the appellant and the respondent. The contract agreement was signed on 11.7.2001. Thus, evidently there was a time gap of nearly 3 years between the date of acceptance of the bid of the appellant and the date of signing of the contract agreement. The contract agreement contained an escalation clause, which reads as under:

"5. ESCALATION

Cement and Steel will be provided by the Organisation at a fixed rate as shown in Schedule-"B". Any increase in labour charges and cost of materials by an Act of Legislation will be reimbursed in accordance with para 29.0.0 of General conditions of contract. For the purpose of payment of escalation, cost of construction hereafter defined in para 7(b) and 7(c) only shall be reckoned.

6. For the purpose of calculation of escalation, the date of signing of this contract agreement between the Organisation and the Company will be the base date applicable for escalation." (emphasis supplied)

3. The appellant-contractor raised its claim for escalation for the period 27.10.1998 and 11.7.2011 on the ground that delay in execution of the contract agreement was not attributable to the appellant-contractor and the escalation in rates - which has taken place during the said period, be awarded to the appellant. The arbitral Tribunal allowed the said claim partially. The arbitrator awarded the escalation to the appellant i.e. from 31.8.2000 which was a date on which the parties signed the MOU and the date of signing of the contract agreement i.e. 11.7.2001 amounting to Rs.22,78,564/-.

4. The letter of intent dated 03.11.1998 contained the following escalation clause:

"ESCALATION

Labour and Material Escalation shall be payable to you as per the Clause No. 29.0.0 of the General Conditions of Contract. Cost of Cement and Tor Steel will be absorbed by the organisation. The date of signing of the Contract Agreement will be the base date for application of escalation clause." (emphasis supplied)

5. The learned Single Judge held that in the light of the aforesaid, the arbitral Tribunal did not have the jurisdiction to award escalation for the period prior to signing of the contract agreement. The appellant-contractor, to justify the said claim, had sought to rely upon the Minutes of Meeting held between the parties on 17.9.2001 i.e. after the execution of the contract agreement on 11.07.2001. In so far as the aspect of escalation is concerned, it was recorded in the Minutes of the said meeting as follows:

"Escalation

Since the project had been delayed inordinately the issue of escalation payable was put forth by M/s Labh. It was then brought out that since the MOU with CAG was signed on 03.08.2000 escalation in cost bey