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2020 Supreme(Mad) 49
IN THE HIGH COURT OF JUDICATURE AT MADRAS
SENTHILKUMAR RAMAMOORTHY, J.
M/s. IRCON International Limited, (A Government of India Undertaking), Rep. by its Joint General Manager(South), Bangalore - Petitioner
Versus
The Government of Tamil Nadu, Rep. by the Superintending Engineer(H), Villupuram - Respondent
O.P. Nos. 145 of 2017 & 454 of 2018
Decided On : 22-01-2020
For the Petitioner:G. Rajagopalan, Addl. Solicitor General asstd. by V.G. Suresh Kumar, Advocate
For the Respondent:S.R. Rajagopal, Addl. Advocate General – VI asstd. by M. Sricharan Rangarajan, Special G.P.(C.S).
Validity of contractual clauses, limitation period for claims, and applicability of interest rates
Headnote:
The case involved a contract dispute arising from the design and construction of various bridges. The Arbitral Tribunal awarded a sum to the Contractor, which was challenged by both the Employer and the Contractor. The court examined the rejection of certain claims and found that the claims for idling charges and increased cost of materials, labor, and POL were erroneously rejected. The court also analyzed the limitation period for claims and the validity of contractual clauses. It concluded that certain claims were maintainable and not barred by limitation, while others were rejected due to non-compliance with contractual provisions. The court set aside the award for certain claims and upheld it for others, specifying the applicable interest rates.
JUDGMENT :
(Prayer in O.P.NO.145 OF 2017: Original Petition is filed under Section 34 of the Arbitration and Conciliation Act, 1996 to set aside the Arbitral Award dated 18.05.2016 made in relation to disputes arising out of contract agreement No.13/98-00, dated 25.02.1999 in so far as it relates to claim No.6 towards idling charges of men and materials and claim No.8 towards increased cost of material, labour and POL not compensated by normal price variation are concerned.
O.P.NO.454 OF 2018: Original Petition is filed under Section 34 of the Arbitration and Conciliation Act, 1996 to set aside the Arbitral Award dated 18.05.2016 passed by the Sole Arbitrator Justice K.P. Sivasubramaniam (Retd),High Court, Madras.)
1. The claimant in the Arbitration Proceeding is the Petitioner in O.P.No.145 of 2017 and the Respondent in O.P.No.454 of 2018. The respondent in the Arbitration proceeding is the Petitioner in O.P.No.454 of 2018 and the Respondent in O.P.No.145 of 2017. The dispute arises out of a contract for the design and construction/re-construction of various bridges, including the approach roads, and for improvements to junctions, etc.(the Contract). The bid that was submitted by M/s. IRCON International Limited (a Government of India Undertaking) (the Contractor) was accepted by the Government of Tamil Nadu (the Employer) and the Contract for a total value of Rs.18,88,21,844/- was awarded to the Contractor. The work was completed on 30.01.2002 after several extensions of time. Pursuant thereto, the final bill was submitted by the Contractor on 02.04.2002 for a gross sum of about Rs. 19,65,29,973/- and an incremental or net sum of about Rs.59 lakhs, which included additional work claims. This net sum included a sum of about Rs.27,36,191/- towards bill of quantities (BoQ) items. Out of the sum of Rs.27,36,191/-, an aggregate sum of about Rs.10,74,598/- was paid on 21.04.2005 and 03.08.2005. Meanwhile, disputes arose between the parties, a notice was issued on 12.07.2004 by the Contractor(Ex.C-8), which the Contractor claims is a Section 21 notice but this position is contested by the Employer, and the Arbitral Tribunal was constituted pursuant to the orders in a Section 11 Petition. Before the Arbitral Tribunal, the Contractor made claims for an aggregate sum of Rs.14,58,81,219/-. The claims were made under the heads of final bill balance amount, price variation till actual completion of work, additional items of work, refund of retention money with interest thereon, bank charges in relation to the bank guarantees, idling charges for men and machinery, losses on account of overheads and profits, loss due to increased cost of materials, labour and POL not compensated by normal price variation, interest and costs. Upon completion of pleadings, the Arbitral Tribunal framed 19 issues, which are set out at paragraph 21 of the Award. Both parties adduced documentary evidence but no oral evidence: the Contractor filed 108 documents, which were exhibited as Exs.C-1 to C-108, and the Employer filed three documents, which were exhibited as Exs.R1 to R-3. By Arbitral Award dated 18.05.2016 (the Award), the Contractor was awarded a sum of Rs.7,05,47,000/- as against the aggregate claim of Rs.14,58,81,219/-. The said Award is impugned by both the Employer and the Contractor by filing Petitions under Section 34 of the Arbitration and Conciliation Act, 1996(the Arbitration Act).
2. In the Petition filed by the Contractor, namely, O.P.No.145 of 2017, the rejection of claim No.6(idling charges for men and materials) and Claim No.8(increased cost of materials, labour and POL) is challenged by the Contractor. In O.P.No.454 of 2018, the entire Award is under challenge by the Employer.
3. I heard the learned Additional Solicitor General(ASG), Mr.G.Rajagopalan, on behalf of the Contractor and Mr. S.R. Rajagopal, the learned Additional Advocate General(AAG) on behalf of the Employer.
4. The learned ASG first addressed submissions with regard to the reject
