Back
2011 Supreme(Mad) 1176
High Court of Judicature at Madras
B. RAJENDRAN
M/s. Chandragiri Construction Company, Rep. By its Partner K.M. Moideen Kunhi
Versus
State of Tamil Nadu rep. by its Secretary to Government Chennai & Others
WP No. 3379 & 3623 of 2009 & M.P. No. 1, 1, 2 & 2 of 2009
Decided on : 03-03-2011
For the Petitioner:R. Krishnamoorthy, Senior Counsel for S. Srinivasan, Advocate. For the Respondents:S. Ramasamy, Addl. Advocate General Assisted by V. Arun, Additional Government Pleader, R. Murali, Government Advocate, M. Vaidyanathan, Advocate.
The main legal point established in the judgment is that disputes between the parties should be referred to arbitration as per the agreement clause 69. The court also emphasized that the rejection of the claim for payment at an enhanced rate was valid and that the plea of malafide against the Superintending Engineer was not proved.
Headnote:
Contract Dispute - Arbitration Clause - Agreement Clause 69 - The court dismissed the writ petitions filed by the contractor to quash the rejection of the claim for payment at the revised rate and the termination of the contract. The court held that the disputes between the parties should be referred to arbitration as per the agreement clause 69. The court also found that the petitioner had not completed the work in time and that the delay was on the part of the petitioner. The court further held that the rejection of the claim for payment at an enhanced rate was valid and that the plea of malafide against the Superintending Engineer was not proved.
Fact of the Case:
The petitioner, a contractor, was awarded a contract to construct a reservoir. The petitioner claimed that the delay in completing the work was due to the department not handing over the entire site and disputes in land acquisition. The department terminated the contract due to slow progress and rejected the petitioner's claim for payment at the revised rate.
Finding of the Court:
The court found that the delay in completing the work was on the part of the petitioner and that the rejection of the claim for payment at an enhanced rate was valid. The court also held that the disputes should be referred to arbitration as per the agreement clause 69. The plea of malafide against the Superintending Engineer was not proved.
Issues: The issues involved the delay in completing the work, rejection of the claim for payment at the revised rate, and the plea of malafide against the Superintending Engineer.
Ratio Decidendi: The court held that the disputes should be referred to arbitration as per the agreement clause 69. The court also found that the delay in completing the work was on the part of the petitioner and that the rejection of the claim for payment at an enhanced rate was valid. The plea of malafide against the Superintending Engineer was not proved.
Final Decision: The court dismissed the writ petitions and held that the disputes should be referred to arbitration as per the agreement clause 69. The rejection of the claim for payment at an enhanced rate was valid and the plea of malafide against the Superintending Engineer was not proved.
1. The dispute involved in both the writ petitions pertains to one and the same contract, therefore, by consent of counsel for both sides, the writ petitions are disposed of by this common order.
2. The first writ petition namely WP No. 3379 of 2009 is filed by the contractor to quash the Government Letter dated 12.12.2009 rejecting the petitioner's claim for payment at the revised rate. The second writ petition is filed to quash the order passed by the 5th respondent on 16.02.2009 by which the fifth respondent terminated the contract with the petitioner and ordered to forfeit the earnest money deposited, besides invoking clause 57.1 and 57.3 of the agreement for not showing progress in the contractual work.
3. According to the petitioner in both the writ petition, the contract was awarded to the petitioner to construct a reservoir across Malattar river in Gudiyatham Taluk and an agreement dated 26.10.2005 was entered into between the petitioner and the department. The contract value awarded in favour of the petitioner was Rs.22,24,84,340/-. The period for completion of the contract was 18 months, the earnest money deposit paid was Rs.10,75,000/- and a sum of Rs.45,00,000/- was offered by means of bank guarantee by the petitioner. According to the petitioner, originally, the site was handed over to them on 30.12.2005 and immediately thereafter, within a short period of four months time, dispute arose between the parties. Under those circumstances, the petitioner filed three writ petitions namely WP No. 3977 of 2006 to quash the resolution of the Tender Award Committee and the consequential order of the Chief Engineer dated 13.01.2006 in respect of the construction of check dam across Palar river; WP No. 45060 of 2007 to quash the termination of contract work dated 04.05.2006 and consequential re-tender notice dated 01.11.2006 regarding the very same work and WP No. 45057 of 2007 to quash the order of the Superintending Engineer, Pollachi dated 10.10.2006 regarding cancellation of registration of the petitioner's name as Class I contractor with the public works department. All these writ petitions were jointly heard by this Court and a common order dated 26.04.2007 was passed in which the petitioner herein was permitted to rectify the defects or sub-standard work in relation to the Malatar river work and liberty was given to the petitioner to participate in the re-tender along with other tenders. Accordingly, the three writ petitions were closed by this Court. Thereafter, on 18.05.2007, the petitioner sought permission to commence the rectification work, as per the common order passed by this Court, followed by a reminder on 07.06.2007. Ultimately, on 25.10.2007, the petitioner was permitted to resume the work as per the order passed by this Court. According to the petitioner, by 18.12.2007, he completed the sub-standard work and also rectified all the mistakes. Thereafter, the petitioner was permitted to carry out the balance work, thereby, the petitioner had completed atleast 35% of the work. In view of the resumed work performed by the petitioner, the petitioner sought to revise the rate of the current year PWD price index by means of letters dated 07.01.2008, 10.01.2008, 16.02.2008 and 16.12.2008. Further, the Superintending Engineer, by his proceedings dated 18.02.2008 extended the time for completion of work upto 18.02.2009, In that letter, it was stated that in so far as approval for the revision of rate is concerned, it will be done at a later point of time only after approval of the work. Since the petitioner's request for consideration of higher price was not approved by the department, the petitioner filed another writ petition in WP No. 27633 of 2008 for a Mandamus directing the respondents to revise the agreement rate as per Public Works Department scheduled rates prevailing for the financial year, corresponding to the work executed by the petitioner, including payment of idling charges as claimed by the
