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BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
S. MANIKUMAR, C.T. SELVAM, JJ.
The Superintending Engineer, W.R.O./P.W.D., Thambraparani Basin Circle, Tirunelveli - Appellants
Vs.
K.A. Thomas, Government Engineering Contractor, Karuottuputhempura House, Palakuzha Post, Kothattakulam, Muvattupuzha, Kerala - Respondents
C.M.A.(MD) Nos.1285 and 1301 of 2014 and M.P.Nos.1 and 1 of 2014
Decided On : 01-09-2016
Breach of Contract - Arbitration - [WORK ALLOTMENT] - [Arbitration and Conciliation Act, 1996, Section 34] - The court discussed the disputes between the appellants and first respondents over work allotted to first respondents, which provided for arbitration. The court found that the respondents committed fundamental breach of contract by not providing two successive closure periods, leading to increased costs incurred in delayed work. The claimant was entitled to an increase in contract price, payment of extra costs incurred, and interest on the awarded amounts.
Fact of the Case:
The appeals challenged the judgment of the learned Principal District Judge, Thoothukudi, passed in A.R.O.P.Nos.65 of 2007 and 221 of 2004 on 11.08.2014. The disputes arose over work allotted to the first respondents, which provided for arbitration.
Finding of the Court:
The Court found that the respondents committed fundamental breach of contract by not providing two successive closure periods, leading to increased costs incurred in delayed work. The claimant was entitled to an increase in contract price, payment of extra costs incurred, and interest on the awarded amounts.
Issues: The issues involved breach of contract, entitlement to increased contract price, payment of extra costs incurred, and interest on the awarded amounts.
Ratio Decidendi: The court held that the respondents committed fundamental breach of contract by not providing two successive closure periods, leading to increased costs incurred in delayed work. The claimant was entitled to an increase in contract price, payment of extra costs incurred, and interest on the awarded amounts.
Final Decision: The Civil Miscellaneous Appeals were dismissed, and no costs were awarded. Connected miscellaneous petitions were closed.
C.T. SELVAM, J.
These appeals challenge the judgment of learned Principal District Judge, Thoothukudi, passed in A.R.O.P.Nos.65 of 2007 and 221 of 2004 on 11.08.2014.
2. These appeals arise out of disputes between appellants and first respondents over work allotted to first respondents. Contracts there regards provide for arbitration. Insofar as C.M.A.(MD) No.1285 of 2014 is concerned, initial agreement was in respect of work referred to as package No.TAM-MC-6 for a sum of Rs.1,30,18,700/- and in respect of C.M.A.(MD) No.1301 of 2014, initial agreement was in respect of work referred to as package No.TAM-MC-10 for a sum of Rs.4,35,07,065/-.
3. C.M.A.(MD) No.1285 of 2014:
First appellant/petitioner issued a National Competitive Bidding Notice dated 12.10.1998 for performance of work relating to 'Rehabilitation and Modernization of North Main Canal in Thambaraparani System TAM-MC-6.' First respondent being the successful bidder an agreement dated 30.03.1999 was executed between first appellant and first respondent, for carrying out the work. The agreement provided for arbitration. The work assigned to first respondent was earth work of raising the sides of the embankment and lining the sides and slopes of the North Main Channel in cast-in-situ plain cement concrete of 75 mm thick and random rubble masonry for rehabilitation and modernization of the North Main Channel to increase its water carrying capacity. The possession of site was handed over to the claimant on 30.03.1999 on which date flow of water through the North Main Channel for irrigation/industrial purposes was on. The date of intended completion was 12.07.2000. The use of the North Main Channel for irrigation/industrial purposes normally was not made between 1st of April and 31st of May of a year. The contract between parties stipulated that appellants would provide two closure periods of two months each during which period the main items of work were to be carried out. First respondent claimed that on being informed of acceptance of his bid, he made all requisite arrangements towards commencement and completion of work within the stipulated period. Despite his best efforts, he could not complete the work within the stipulated time owing to non-closure of water channel during the assured closure period of four months. Accepting fault, first appellant extended the period for completion, initially upto 30.06.2001 and thereafter, till 31.05.2002. As appellants defaulted in payment and reference to adjudication was made on 26.02.2001 towards determining amounts payable to first respondent. The Adjudicator filed his report on 27.07.2001. Disputes arose and upon the first respondent raising a claim, the Chief Engineer, PWD/WRO, Madurai Region, Madurai, has appointed the second respondent as a sole arbitrator on 03.10.2001. In support of his claim, first respondent has submitted Exs.C1 to C23 along with a statement of facts and the same were taken on record. First respondent has also submitted an Additional Statement dated 11.02.2002 with rate analysis with reference to 2000-2001 schedule of rates. Appellants submitted a reply to the statement of facts and claims along with a letter dated 06.02.2002 for which a counter has been filed by first respondent on 09.03.2002. As a rejoinder, appellants submitted additional reply statement on 04.04.2002 and an additional counter has been filed by first respondent on 19.04.2002. As required by the Arbitral Tribunal, appellants have produced bid documents with agreement, quarry map, contract data, lead statement, site investigation report and other particulars on 22.11.2002. Preliminary and pre-final hearing were held on 23.01.2002 and 22.02.2002 respectively and the site of work and the quarry were inspected on 19.04.2002 in the presence of higher officials. After affording due opportunity of personal hearing and to adduce evidence, the matter was taken up for final hearing on 19.04.2002.
3.1. The Arbitral Tribunal found as follo
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