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2013 Supreme(HP) 628
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
Before
The Hon’ble Mr. Justice Sanjay Karol, Judge.
Arbitration Case No.9 of 2010 Date of Decision : August 12, 2013.
Satish Kumar Vij versus State of Himachal Pradesh and another
For the Petitioner:Mr. Sumit Raj Sharma, Advocate.
For the Respondents:Mr. R.M. Bisht, Deputy Advocate General and Mr. J.S. Guleria, Assistant Advocate General.
Contractor not entitled to claim compensation for losses incurred due to delay in supply of material as per the terms of the Agreement, and failure to provide evidence of actual loss suffered.
Headnote:
Contract Dispute - Arbitration - Arbitration and Conciliation Act, 1996 - Section 34
Fact of the Case:
Contract awarded for road construction, disputes arose regarding losses incurred by the Contractor, disputes referred for arbitration, Arbitrator passed an award in favor of both parties, Contractor challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996.
Finding of the Court:
Arbitrator's findings upheld, Contractor not entitled to compensation for losses incurred due to delay in supply of bitumen, Court rejected Contractor's claim for damages and compensation, Court found no evidence of actual loss suffered by the Contractor, Court dismissed the petition.
Issues: Dispute over losses incurred by the Contractor, Interpretation of Clause-10 of the Agreement disentitling the Contractor for claim of compensation or damages on account of delay in supply or non-supply of material, Applicability of legal principles regarding claims for losses due to delay by the employer.
Ratio Decidendi: Contractor not entitled to claim compensation for losses incurred due to delay in supply of bitumen as per Clause-10 of the Agreement, Contractor failed to provide evidence of actual loss suffered, Legal principles from previous court decisions applied to determine the entitlement of the Contractor.
Final Decision: The petition is dismissed, Arbitrator's award upheld, Contractor not entitled to compensation for losses incurred due to delay in supply of bitumen.
Sanjay Karol, Judge Contract No.61 of 1998-99 was awarded to Shri Satish Kumar Vij, hereinafter referred to as the Contractor, for the purpose of carrying out work identified as “C/O Sujanpur-Tihra-Sandhole-Marhi-Mandi road (SH:- P/L wearing in km.48/0 to 51/400 and 52/100 to 57/0) and premix carpet in Km.48/0 to 51/400 and 52/100 to 57/0); Agreement No.61 of 1998-99”. The work, which was awarded vide letter No.PW-SKT-AB-Tender/98-13240-50 dated 30.12.98, was to commence on 14.1.1998 and completed within a period of one year, i.e. before 13.1.2000. Though, estimated cost of the work was `10,45,833/- but the tendered amount was of `23,66,113/-. Some work could not be completed within the stipulated period, extension was granted to the Contractor.
2. Disputes, inter alia, with regard to losses incurred by the Contractor for stacking of machinery and idle sitting of labour, arose between the parties. According to the Contractor, bitumen was not supplied by the State within the stipulated period of time, as a result of which work could not be completed.
3.The disputes were referred for arbitration and in terms of the impugned award dated 28.1.2010, the Arbitrator-cum-Superintending Engineer, Arbitration Circle, H.P.P.W.D., Solan, has adjudicated the disputes and passed an award with regard to respective claims and counterclaims of the Contractor and the Executive Engineer (State), to the following effect:
AWARD IN FAVOUR OF CLAIMANANT/CONTRACTOR
Sr. No. Description of claim Amount Demanded Amount finally Awarded Amount interimly awarded and paid Amount now to be paid Remarks
1. Paymentdue for the workexecuted and notpaid (Amount notmentioned by the claimant/ contractor) Rs.73,325/- Rs.73,327/- s.nil
2. Security Amount Rs.1,00,000/- in cash and Rs.26,146/- in the shape of FDR Rs.1,00,000/- in cash and Rs.26,146/- in the shape of FDR Rs.1,00,000/- in cash and Rs.26,146/- in the shape of FDR Rs.nil
3Amountpayableonaccount of lossincurred due tostackingof machineryand idlesitting of labour Rs.19,90,800/- Rs.nil Rs.nil Rs.nil
4 Profit payable to the @15% on anamount of Rs.23,66,133/- Rs.nil Rs.nils.nil claimant
5.Interest pay able on the amount legally payable to theclaimant @24% perannum Simpleinterest@7.5% perannum on an amount of Rs.1,73,325/- for a period of four and a half years till the date of award. Rs.nil impleInterest@7.5% perannum on an amount of Rs.1,73,325/- for a period of four and a half years till the date of award.
6.Amount payable to theclaimantfor engaging theservices of Junior Engineer.
Rs.12,000/- Rs.nil Rs.nil Rs.nil
AWARD IN FAVOUR OF RESPONDNET/EXECUTIVE ENGINEER
Sr.No. Description Amount demanded Amount awarded Remarks
of claim
1 10% compensation for delay under clause-2 of the agreement. Rs.2,36,611/- Rs.nil Counter-claim withdrawn
2. Forfeiture of security amount. Rs.99,990/- Rs.nil Counter-claim withdrawn
4. It is not in dispute that the State has accepted the award. However, Contractor has assailed the same by filing the instant petition under the provisions of Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act).
5. Challenge is to the findings with regard to Claim No.3, loss incurred on account of stacking of machinery and idle sitting of labour. It is argued that from January to April, 1999 since no bitumen was supplied, Arbitrator wrongly interpreted Clause-10 of the Agreement, while rejecting the claim.
6. It is not in dispute that Contractor was supplied 369 drums of bitumen between 28.4.1999 and December, 1999. Arbitrator came to the conclusion that there was sufficient work, which was required to be completed by the Contractor, prior to tarring of the road, for which bitumen was required. Before the Arbitrator, claim set up by the Contractor was insufficient supply of material (bitumen) before June, 1999, but however, before the Court Mr. Sumit Raj Sharma, learned counsel for the Contractor, fairly stated that claim with regard to idle sitting of labou
