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High Court Of Madhya Pradesh
BHAWANI SINGH, ARUN MISHRA
BENGAL TRADING SYNDICATE - Appellant
Versus
UNION OF INDIA - Respondents
MISC. APPEAL 244 Of 1995
Decided On : 05/03/2000
The Court held that the Arbitrator had committed an error apparent on the face of the record in awarding compensation for moorum filling work, as payment had already been made for the same at a higher rate than determined by the Arbitrator. The Court also held that the Arbitrator had exceeded his jurisdiction in awarding compensation for foundation work, as the foundation was included in the original agreement and the contractor had quoted a lumpsum amount for the entire building, including the foundation. Further, the Court held that the Arbitrator had erred in awarding compensation for loss of labour hours and working conditions, as the contractor had agreed to the working conditions in the restricted area and the restrictions imposed were not unreasonable. Lastly, the Court held that the Arbitrator had erred in awarding compensation for prolongation of the contract period, as the contractor had been granted an extension of time and had received escalation of labour and material costs.
Fact of the Case:
The appellant, a construction firm, entered into a contract with the respondent, the Union of India, for the construction of various buildings in an Ordnance Factory. The contract was a lumpsum contract based on IAFW 2249, having 9 parts of Schedule 'a'. The appellant claimed various amounts for extra work and prolongation of the contract period. The Arbitrator awarded certain amounts to the appellant, but the District Judge set aside the award with respect to four items.
Finding of the Court:
The Court held that the Arbitrator had committed an error apparent on the face of the record in awarding compensation for moorum filling work, as payment had already been made for the same at a higher rate than determined by the Arbitrator. The Court also held that the Arbitrator had exceeded his jurisdiction in awarding compensation for foundation work, as the foundation was included in the original agreement and the contractor had quoted a lumpsum amount for the entire building, including the foundation. Further, the Court held that the Arbitrator had erred in awarding compensation for loss of labour hours and working conditions, as the contractor had agreed to the working conditions in the restricted area and the restrictions imposed were not unreasonable. Lastly, the Court held that the Arbitrator had erred in awarding compensation for prolongation of the contract period, as the contractor had been granted an extension of time and had received escalation of labour and material costs.
Issues: 1. Whether the Arbitrator had committed an error apparent on the face of the record in awarding compensation for moorum filling work? 2. Whether the Arbitrator had exceeded his jurisdiction in awarding compensation for foundation work? 3. Whether the Arbitrator had erred in awarding compensation for loss of labour hours and working conditions? 4. Whether the Arbitrator had erred in awarding compensation for prolongation of the contract period?
Ratio Decidendi: 1. An error apparent on the face of the record can be corrected by the Court. The Arbitrator had ignored the fact that payment was already made for moorum filling work at a higher rate than determined by him. Thus, the award suffered a patent error. 2. The Arbitrator cannot exceed his jurisdiction or go beyond the terms of the agreement. The Arbitrator had ignored the express stipulation in the tender document that while quoting lumpsum amount it has to include work of foundation and that with respect to Building No. 5 its nature was also altered to "rcc Floor Plan and Schedule of grade beams." 3. The Arbitrator had erred in awarding compensation for loss of labour hours and working conditions, as the contractor had agreed to the working conditions in the restricted area and the restrictions imposed were not unreasonable. 4. The Arbitrator had erred in awarding compensation for prolongation of the contract period, as the contractor had been granted an extension of time and had received escalation of labour and material costs.
Final Decision: The appeal filed by the appellant is allowed in part. The judgment passed by the learned District Judge with reference to Claim No. 31 (A) is set aside and the award in the sum of Rs. 3,71,241.50 p. passed by the Arbitrator is upheld and is made rule of the Court. Remaining part of the judgment passed by the District Judge is confirmed. However, considering the partial success of the appeal, parties are directed to bear their own costs as incurred in the present appeal.
( 1 ) THE present appeal has been filed by M/s. Bengal Trading Syndicate, the appellant, aggrieved by the order passed by the District Judge, Jabalpur in Civil Suit No. 33-A of 1994 whereby the award passed by the Arbitrator with respect to claims under Item Nos. 3, 5, 31 (a) and 32 was set aside and the award in respect of other claims of the appellant was made rule of the Court. It was ordered that in respect of Claim No. 4 an amount of Rs. 25,584. 91. p. , in respect of Claim No. 7 an amount of Rs. 1,29,645. 00, in respect of Claim No. 36 an amount of Rs. 50,932. 48 p. in respect of Claim No. 9 an amount of Rs. 13,455/-, in respect of Claim No. 12 an amount of Rs. 29,748,54 and in respect of Claim No. 33 (a), 33 (b) and 37 an amount of Rs. 34,560/- shall be paid by the Union of India to the appellant. It was further directed that the Union of India shall pay to the appellant interest at the rate of Rs. 12% per annum from 14-6-1990 to 24-8-1994 on all awards except award in respect of Claim No. 33 (a ). Interest at the rate of 15% per annum from the date of award till realisation was also awarded.
( 2 ) ARBITRATION was resorted whereas certain differences arose between the parties to the contract in respect of certain civil works at Khamaria Factory Jabalpur pertaining to C. A. No. CEJZ/jbl/49 of 86-87. Brigadier S. D. Sohoni was appointed Sole Arbitrator. He was appointed as Sole Arbitrator in the matter by the Engineer-in-Chief, Army Headquarters. Thereafter, vide letter dated 22nd June, 1993 the Arbitrator entered into reference. Hearing was held from 6-6-1994 and the Arbitrator closed the hearing on 8-6-1994. The award was passed on 16-8-1994.
( 3 ) A tender for the contract in question was issued on 22nd Feb. 1986 and the tender was received back on 16th May, 1986. The lowest tender was accepted on 4-12-1986. The amount of lowest tender was Rs. 2,14,65,528. 07 p. The work order was issued on 9-12-1986 to the appellant and the date of commencement of work was 24-12-1986. The date of completion of work contemplated under the contract was 23-9-1988 which was extended upto 15 Sept. 1989 and the work was actually completed on 15th Sept. 1989. It was a lumpsum contract based on IAFW 2249, having 9 parts of Schedule 'a'. Part I of the contract was lumpsum and Part II to IX were item-rate. Scope of the contract was construction of various kinds of shops and buildings in Khamaria Ordnance Factory Jabalpur as contemplated under the agreement.
( 4 ) GENERAL background indicates that the claimants-appellants are old reputed construction firm having long experience with Military Engineering Service. A work of the factory worth Rs. 2. 45 crores was undertaken by the appellant firm in the year 1986-87. According to the claimants, following were the main causes of delay in completion of the present contract in question : (a) "omit and Add" portions were much; (b) Valuation shown in work order No. 4 was wrongly calculated; (c) Clear site was not handed over to the claimants as envisaged in the contract; (d) Site of work was in restricted area and entry and exist created serious problems ; (e) working hours were badly curtailed; (f) Because of an erroneous contour plan used by the respondents foundation designs of most buildings had to be changed; (g) Certain buildings were asked to be handed over to A/c contractor even before their completion; (h) there had been perpetual shortage of cement.
( 5 ) FACTS pertining to Claim Nos. 3, 5, 31 (a) and 32 which are relevant and subject matter of the present appeal are as follows :claim No. 3 :claim No. 3 was laid by the claimant with respect to pricing of Moorum filling work for the road formation under provisional sum. For the road formation, in the contract Moorum filling work was created under Item II-A of the General Summary on Page 70 (R-1 ). Note to Item No. 11-A reads thus :" (A) Rates given in MES Schedule Part II 1980 against Item x 113 and 3874 shall not be applicable f
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