IN THE HIGH COURT OF MADRAS
Varadachariar, J.
South India Railway Co. Ltd.
Versus
S.M. Bhashyam Naidu and Ors.
Decided On : 03.09.1934
Construction - Railway Construction Contract - Clause 41 - Exs. I-a, KK, II, Ex. 2 - Interpretation of contract terms and finality of Chief Engineer's decision
Fact of the Case:
The case involved a dispute between the South India Railway Company and a contractor regarding the items allowed under a contract for the construction of the Shoranur Nilambur Railway. The main dispute revolved around the proper construction of the contract clause and the finality of the Chief Engineer's decision under Clause 41 of the agreement.
Finding of the Court:
The court analyzed various documents, including circular letters and letters from the Chief Engineer, to determine the interpretation of the contract terms and the finality of the Chief Engineer's decision. The court found that the Chief Engineer's decision did not bind the contractor as it did not demonstrate a conscious exercise of the powers conferred by the agreement.
Issues: The main issues were the proper construction of the contract clause and whether the Chief Engineer's decision under Clause 41 was final and binding.
Ratio Decidendi: The court held that the Chief Engineer's decision did not preclude the court from interpreting the contract and granting the contractor what he was entitled to under the terms of the contract.
Final Decision: The court decided in favor of the contractor, ruling that the Chief Engineer's decision did not bind the contractor, and the court was not precluded from interpreting the contract and granting the contractor what he was entitled to under the contract terms.
Varadachariar, J.
1. This is an appeal by the South India Railway Company, wherein the company object to some of the items which have been allowed by the lower Court, out of the claim made by the plaintiff on the basis of a contract between his grandfather and the company, in connection with the construction of the Shoranur Nilambur Railway. A number of items were claimed, a specified in several sub-paragraphs of para. 11 of the plaint; some of them have been allowed by the lower Court and some disallowed. In the appeal before us the learned Counsel for the company has argued only four items. The contractor has also filed a memorandum of objections, taking exception to the lower Courts decision in respect of two items, namely, these claimed in sub-paras. 2 and 4 of para. 11 of the plaint,
2. The main item in dispute between the parties is the one claimed in sub-paras. I to 9 of para.11. There is no dispute as to the amount awardable, if the right of the plaintiff to make a claim under this head is upheld. The argument has therefore been mainly directed to the question of the plaintiffs right to make a claim under this head, on the footing on which he has made it. This in turn involves two questions: (1) as to the proper construction of the clause under which the Km is made, and (2) whether the Court is altogether precluded from dealing with the matter by virtue of a decision given by the Chief Engineer of tie Railway, which decision is made final by Clause 41 of the agreement. On, the first question, namely, the construction of the agreement itself, if it is alone to the Court to deal with it, we up not say much, because the learned opnsel for the appellant has not seriously contested the view taken on that pifint by the lower Court. But as one two considerations bearing upon this question of construction will also have a hearing upon the second question, namely, as to the finality of the alleged desision of the Chief Engineer, it is just as well that we say a few words about it. The difference between the parties is whether in respect of certain banks constructed for the Railway, the contractor is to claim at what are called through rates from ground to formation level or only at what are described as sectional rates, There can be no doubt that according to Clause 19 of the specification form adopted by the company in 1909, only sectional rates Should have been provided for But we have the fact that in the present case the, tender, Ex A, was made by the contractor on a printed form supplied by the company specifically in connection with the construction of the Shoranur Nilambur Railway. For whatever reason it be, it cannot be deemed that this tender form has in several particulars departed from the details set out in the old specification of 1909. The tender expressly provided for through rates in certain cases and sectional rates in certain other oases, and it has not been disputed that in accordance with the terms of that tender the present claim for through rates is justified. That tender was accepted by the companys agent and after that acceptance, the agreement, Ex B, was entered into between the parties. In view of a suggestion made in the course of the examination of D.W. 1. in the Court below, namely that the words through rates ought to have been struck out and that by mistake they have been allowed to remain in the form used by the Railway, It is necessary to point out that not merely was this not the case put forward by the Railway Company in the written statement but the reference to through rates is entered in manuscript in the Schedule to Ex. B. Hence, there appears to be no basis for the suggestion that there was any mistake j or omission to score out some clauses. "With these preliminary remarks we may come to the few documents which bear upon the question which was mainly argued before us under this head, namely whether there has been any decision by the Chief Engineer which by reason of Clause 41 of th
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