IMPORTANT POINT
A deleted contractual clause cannot be automatically revived upon extension of the contract; explicit agreement is required for revival.

JUDGMENT :

Pushpendra Singh Bhati, J.

1. This Civil Misc. Appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘Act of 1996’) read with Sections 5 & 13 of the Commercial Courts Act, 2015 has been preferred claiming the following reliefs :

“That in light of the submissions made hereinabove, it is most humbly prayed that the present appeal may be allowed and the award dated 15.10.2011 and the order dated 05.07.2023 passed by the Commercial Court, Bikaner in Civil Misc. Case No.03/2023 may kindly be quashed and set aside.

Any other order, which this Hon’ble Court deems fit and proper in the facts and circumstances of the case, may kindly be passed in favour of appellant.”

2. Brief facts of the case, as placed before this Court by Mr.Manish Patel, learned Additional Advocate General assisted by Ms. Mehali Mehta, appearing on behalf of the appellant-State are that the respondent was awarded a contract as per Agreement no.4 in the year 1995-96 vide work order no. 1670 dated 16.06.1995 pertaining to “Renewal with 20 MM on PMC on Hanumangarh – Rawatsar Pallu Road and Thalarka-Munda Road by Paver Finisher”; the work order as awarded was to the tune of Rs.35,17,994/-. The work was to be commenced on 01.07.1995, supposed to be completed within 11 months i.e. till 31.05.1996. Clause 45 of the Agreement, pertaining to the price escalation was in the draft, but stood consciously deleted at the threshold.

2.1. The work was to commence from 01.07.1995 and after extension of the period of contract as per the Clause 12 of the Agreement, the work in question was sought to be completed on 02.10.1998 with the increased cost from Rs.35,17,994/- to Rs.42,09,963/- as per Clause 45 of the Agreement, which already stood deleted. Thereafter, the respondent submitted the bill with regard to escalation of price of the material and labour; the said bill was not accepted by the appellant-State.

2.2. Subsequently, the respondent filed a Misc. Application No. 42/2002 before this Hon’ble Court, wherein the Court appointed a sole Arbitrator vide order dated 21.08.2003. Thereafter, the arbitral proceedings commenced, and the award dated 15.10.2011 was passed in favour of the respondent.

2.3. Being aggrieved by the award dated 15.10.2011, the appellant-State preferred an appeal under Section 34 of the Act of 1996 before the Commercial Court, Bikaner (Revenue Suit No. 03/2023), whereupon the learned Commercial Court vide order dated 05.07.2023 dismissed the appeal and affirmed the award dated 15.10.2011.

3. Thus, being aggrieved by the award dated 15.10.2011 and the order dated 05.07.2023, the appellant-State preferred the present appeal claiming the aforequoted reliefs.

4. Learned counsel appearing on behalf of the appellant-State submitted that Clause 45 of the Agreement was deleted at the time of execution of the contract with the consent of both the parties and the extension of contract was granted after imposing the penalty on the part of the respondent, but the learned Arbitrator has wrongly and beyond the jurisdiction passed the impugned award and the same was upheld by the learned Commercial Court, which is not justified in law.

4.1. It was also submitted that after deletion of Clause 45 of the Agreement, the contract was extended, and that, the said Clause 45 cannot be automatically revived without any specific agreement in this regard; but the learned Arbitrator as well as the learned Commercial Court vide the impugned award and the impugned order respectively, without considering the said vital aspect of the matter, applied the deleted Clause 45.

4.2. It was further submitted that the time extension was granted by the Chief Engineer for completion of the work in question on the recommendation made by the Engineer-in-charge; thereafter, extension was granted after imposing the penalty on the respondent; the same was not in the nature of extension in its strict sense, and the same was granted as per Clause 12 of the Agreem