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2010 Supreme(Mad) 637
High Court of Judicature at Madras
M. CHOCKALINGAM & T. MATHIVANAN
The Superintending Engineer, Highways Department, Chennai Circle, Guindy
Versus
M/s. National Asphalt Products & Construction Company, Nandanam, Chennai & Others
O.S.A. No. 292 of 2005 & C.M.P. No. 18859 of 2005
Decided On :17-02-2010
For the Appellant : Bhavani Subbarayan, Spl. Govt. Pleader (CS).
For the Respondent: R1 - R. Thiagarajan,
The main legal point established in the judgment is that a supplemental agreement must have consensus between the parties to be binding and regulate the original contract.
Headnote:
Supplemental Agreement - Contract Dispute - Contract Law - Arbitration and Conciliation Act, 1996, Section 34 - Section 34 of the Arbitration and Conciliation Act, 1996 - The court discussed the binding nature of a supplemental agreement in a contract dispute and its relevance under Contract Law. The interpretation of the supplemental agreement and its impact on the arbitral award were key in the court's decision.
Fact of the Case:
The appellant sought to set aside an arbitral award related to a contract dispute over supplemental works in a road construction project. The appellant argued that the supplemental agreement, which the first respondent had signed, should be binding and regulate the contract.
Finding of the Court:
The court found that the supplemental agreement was not binding on the first respondent as there was no consensus between the parties regarding the rates stipulated in the agreement. The court upheld the arbitral award and dismissed the appeal.
Issues: The key issue was whether the supplemental agreement was binding on the first respondent and should regulate the contract.
Ratio Decidendi: The court held that the supplemental agreement was not binding as there was no consensus between the parties, and the rates stipulated in the agreement could not prevail over the original agreement. The arbitrator's award was upheld based on this finding.
Final Decision: The appeal was dismissed, and the court upheld the arbitral award in favor of the first respondent.
M. CHOCKALINGAM, J.
1. This intra-Court appeal challenges the order of the learned Single Judge of this Court, dismissing O.P. No.52 of 2003, seeking to set aside the arbitral award dated 5.9.2002.
2. The Court heard the learned counsel appearing for the appellant and also for the first respondent.
3. The short facts leading to the filing of the appeal can be stated thus:-
(i) The first respondent was awarded with a contract of carrying out the work of forming a four lane link road from Pallavaram to join old Mahabalipuram road from KM 0/0 to 10/620. The value of the work was Rs.20,11,73,836/-which was 4.90 per cent above the estimated rate. When the contract was entered into on 18.6.1999, the time for completion of work was fixed as 18 months from the date of handing over of the site i.e. from 28.6.1999. The execution of the work was commenced on 28.6.1999 and the same was completed on 28.12.2000.
(ii) While the work was in progress, two additional works were to be executed. The first respondent raised a dispute as to the rates quoted for the supplemental work and made certain claim in respect of the said work. Since it was denied, the matter was referred to the arbitral proceedings. The Arbitral Tribunal, while conducting the proceedings, after looking into the claims and the evidence adduced thereon, awarded a sum of Rs.50,17,500/- in respect of claim No.1, a sum of Rs.11,86,060/- in respect of claim No.2 and a sum of Rs.6,24,094/-in respect of claim No.3, thus totalling a sum of Rs.68,22,584/- with simple interest @ 18% per annum from the date of award till payment.
(iii) Aggrieved over the said award, the appellant took the matter before this Court by filing O.P. No.52 of 2003, whereby the award was sought to be set aside. On enquiry, learned Single Judge was of the view that the appellant did not make out the case for setting aside the award and hence dismissed the O.P. Under such circumstances, this appeal has arisen before this Court.
4. Advancing arguments on behalf of the appellant, learned counsel would submit that in the instant case, it is true, there was an original agreement entered into between the parties for the work stipulated thereon on 18.6.1999. It is not in controversy that the work was completed as found in the agreement. Pending the execution of the said work, two additional works were to be done and hence, on 27.9.2000, a supplemental agreement was entered into in that regard as to the rates quoted therein. The first respondent has agreed to the said agreement and also signed, pursuant to which he also worked. Now, it is too late for the first respondent to raise any dispute as regards the rates before the Arbitrator, which was not looked into by the Arbitrator.
5. Learned counsel also took this Court to the letter of the department dated 27.3.2000 and also subsequent letter dated 31.8.2000, whereby the rates were fixed. Insofar as the supplemental agreement was concerned, it was signed by the first respondent. Therefore, under the Contract law, he is bound by it. Once there was a concluded contract, all attempts should be made to regulate the contract and it should not be terminated to ones advantage. When all these were brought to the notice of the Arbitrator, they are not looked into when the award was passed. When the appellant put forth all the submissions and placed all the relevant materials before the learned Single Judge, they were not adverted to by the learned Single Judge. Learned Single Judge has taken an erroneous view and it has got to be set aside.
6. Learned counsel appearing for the first respondent has put forth his sincere attempt for sustaining the order passed by the learned Single Judge.
7. The Court paid its anxious consideration on the submissions made by the learned counsel appearing on either side. It is not in controversy that the first respondent was awarded with a contract for forming a four lane link road from Pallavaram to join old Mahabalipuram road fr
