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IN THE HIGH COURT OF JUDICATURE AT MADRAS
M.M. SUNDRESH, J.
M/s. Chennai Petroleum Corporation Limited, Teynampet, Represented by its Deputy General Manager M. Sankaranarayanan - Petitioner
Versus
M/s. HES Infra Private Limited - Respondent
O.P. No. 429 of 2016
Decided On : 26-03-2018
Arbitration and Conciliation Act, 1996 – Section 34 – Arbitration – Petitioner herein is a Public Sector Undertaking. – In pursuant to the decision made to construct a compound wall, the petitioner floated a tender inviting bids – The value of the contract was Rs.13,91,98,977/- to be completed within nine months from the date of advice to commence the work. – Respondent emerged as the lowest bidder and thus, became successful. – A Fax of Acceptance dated 22.11.2010 was issued to the respondent by the petitioner requiring it to mobilize resources. – Thereafter a Letter of Acceptance was issued on 01.12.2010. – The site was handed over to the respondent on 06.12.2010. – Held, There is yet another issue which will have to be considered with respect to the award made for the RCC work done under water. Once again the Tribunal has committed a grave error in going into the said issue. – The respondent did not raise any bill followed by a claim. There was no material produced except filing some document, which according to the learned counsel for the petitioner, was not furnished to him and that too, at the time of reserving orders. – This factum has already been recorded by the Tribunal itself. – Now, the very documents sought to be relied upon are being questioned by the petitioner. – When a claim itself is disputed and there is no such specific claim made, the Tribunal ought not to have ventured to go into it without even the other side being heard. – Therefore, while setting aside the amount awarded for the RCC work done under water, liberty is given to the respondent to raise it separately in an independent proceeding. – Petitioner has also filed a counter claim. This claim is for liquidated damages and interest. Law is quite settled that for claiming liquidated damages, there has to be sufficient material. Actual loss has to be assessed. – Onus is on the claimant to prove. As the petitioner did not prove it, the Tribunal has rightly rejected it. – Further more, if that is the case, the petitioner cannot rely upon even the No Claim Certificate issued by the respondent. – Court is inclined to interfere with the award to the extent indicated above as it is a fit case to exercise the power under Section 34 of the Arbitration and Conciliation Act, 1996, in the light of the law laid down by the Apex Court in Oil & Natural Gas Corporation Ltd. Vs. Saw Pipes Ltd., (2003) 5 SCC 705 and Associate Builders Vs. Delhi Development Authority, (2015) 3 SCC 49. – Accordingly, this original petition stands allowed except item No.3 dealing with the profit for reduced scope of work, while giving liberty to the respondent raise a claim for Item No.6 through a separate and independent proceeding – Petition Allowed
The petitioner herein is a Public Sector Undertaking. In pursuant to the decision made to construct a compound wall, the petitioner floated a tender inviting bids. The value of the contract was Rs.13,91,98,977/- to be completed within nine months from the date of advice to commence the work.
2. The respondent emerged as the lowest bidder and thus, became successful. A Fax of Acceptance dated 22.11.2010 was issued to the respondent by the petitioner requiring it to mobilize resources. Thereafter a Letter of Acceptance was issued on 01.12.2010. The site was handed over to the respondent on 06.12.2010.
3. The following are the relevant clauses contained in Letter of Acceptance dated 22.11.2010, Special Conditions of Contract and the General conditions of Contract.
“12.0 FIRM PRICE:
Subject to Clause 11.2 above, the Contract Price shall remain FIRM and fixed till the completion of work and no escalation in prices on any account shall be admissible to the CONTRACTOR.”
This clause clearly specifies that the contract shall remain 'firm' till the completion of the work with no room for escalation of price under any contingencies.
“56.0 SPECIAL INSTRUCTIONS AND INFORMATION TO THE BIDDERS:-
(f) It is anticipated that the local people, living in the area in which the construction of compound wall is proposed, may create certain problems for doing this work. Tackling these problems by way of arranging adequate police protection rests with the executing agency. CPCL, in no way, will come to the assistance of the executing agency except giving authorization letter, if required to be given to any Government bodies, based on the request from the contractor.
(g) If the work cannot be started or is interrupted during any stage of the execution due to whatsoever reasons, it shall be the responsibility of the Contractor to handle such interruption. In case of stoppage of work due to any reason other than contractor's fault, CPCL may give only extension of time for completing the work, if the reasons for delay are genuine. No compensation whatsoever on any other account except extension of time for genuine reasons will be entertained or admissible under this contract. The bidders have to take care of the same while quoting the rates.
(h) The rate quoted by the successful bidder shall be inclusive of to take care of the above provisions and no separate payment or claim for non-familiarity of the above will be entertained or admissible.”
4. The aforesaid come under Clause 56, which deals with special instructions and information to the bidders. These sub-clauses make it clear that it is the look out of the respondent to undertake the work anticipating obstruction and trouble. Incidentally, the rate quoted is expected to cover such an eventuality. Therefore, anticipated disturbance has also been factored into the price quoted. From this, it is rather very apparent that the respondent was quite aware of the ground reality, which has been put in clear terms by the petitioner.
5. The General Conditions of Contract (GCC) deals with interpretation of contract documents under Section 3, which is as follows:
3.3. ORDER OF PRECEDENCE OF DOCUMENTS:
3. 3.1 The Contract Documents shall be interpreted in the following order of precedence, that is to say, in the event of any inconsistency, the document later in precedence shall stand modified/abrogated by the document(s) higher in precedence.
(i) Fax of Acceptance/Letter of Acceptance along with Schedule of Rates and Statement of Agreed Variations and its enclosures;
(ii) Special Conditions of Contract;
(iii) General Conditions of Contract;
(iv) Relevant Standards/ Technical Specifications;
(v) Drawings;
(vi) Any other documents listed as forming part of the Contract Documents.”
6. Hence primacy is given to the Fax of Acceptance/Letter of Acceptance as against Special Conditions of Contract and General Conditions of Contract and others. Therefore, in case of any conflict between the documents, preference will have to be gi
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