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IN THE HIGH COURT OF ORISSA AT CUTTACK

ARBA No.8 of 2002

(Through hybrid mode)

State of Odisha and another

….

Appellants

-versus-

Choudhury Natbar Sahoo

(Dead) and others

….

Respondents

Advocates appeared in the case:

For Appellants:

- Mr. S. N. Das, Advocate

(Additional Standing Counsel)

For Respondent:

- Mr. S. P. Mishra, Senior Advocate

CORAM:

JUSTICE ARINDAM SINHA

JUDGMENT

13.10.2022

1.

Mr. Das, learned advocate, Additional Standing Counsel

appears on behalf of appellant. He submits, the award was made under

provisions in Arbitration Act, 1940. State had challenged the award

under section 33, contending that there was misconduct, as defined in

section 30. The Court below erred in not appreciating contentions

made before it and hence, the appeal.

2.

He submits, the only point for adjudication of the appeal is that

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the tribunal applied 1972 schedule of rates in respect of 2^nd Running

Account (RA) to final bills. He submits, the contract was made on 1^st

May, 1972. Pursuant to respondent having submitted tender on 21^st

July, 1971 per the 1964 schedule of rates. Work order was issued on

26^th April, 1972. The work was abandoned and the contract closed on

6^th July, 1974. Respondent raised and obtained payments till 9^th RA bill

as on 12^th July, 1974. In the circumstances, respondent having had

raised purported claim based on 1972 schedule of rates by letter dated

24^th May, 1974 (marked exhibit 5 in the reference), could not have

been favoured with award on basis thereof.

3.

He relies on order dated 1^st December, 2021 of the Supreme

Court in Civil Appeal no.7738 of 2011 (Pranab Jyoti Das vs. The

General Manager and others), wherefrom paragraphs 4 and 5 are

extracted and reproduced below.

“4. The arguments of the appellant is that Ex.P-12,

schedule of items of work and quantities were revised as

450% above North Signature Not Verified Frontier

Schedule of rates on 5th June, 1992. Digitally signed by

DEEPAK SINGH Therefore, the appellant Date:

2021.12.04 13:00:16 IST Reason:is entitled to 450%

increase as on 5th June, 1992 above the schedule

of rates, over and above the rate quoted by the

appellant.

5. We do not find any merit in the argument raised.

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Ex.P-12 is an internal calculation sheet of the

department which was never circulated or became part

of the schedule of rates. Any noting in the file is not an

order on the basis of which the appellant could lay a

claim for higher rates. The High Court has declined the

claim of the higher rates on good and sufficient

grounds.”

He relies on another judgment of the Supreme Court in South East

Asia Marine Engineering and Constructions Limited vs. Oil India

Limited, reported in (2020) 5 SCC 164, paragraph 30, reproduced

below.

“30. From the aforesaid discussion, it can be said that

the contract was based on a fixed rate. The party, before

entering the tender process, entered the contract after

mitigating the risk of such an increase. If the purpose of

the tender was to limit the risks of price variations, then

the interpretation placed by the Arbitral Tribunal cannot

be said to be possible one, as it would completely defeat

the explicit wordings and purpose of the contract. There

is no gainsaying that there will be price fluctuations

which a prudent contractor would have taken into

margin, while bidding in the tender. Such price

fluctuations cannot be brought under Clause 23 unless

specific language points to the inclusion.”

He submits, said award be set aside in appeal.

4.

Mr. Mishra, learned senior advocate appears on behalf of

respondent contractor. He submits, aggregate sum awarded was

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Rs.4,18,566/- on rejecting most of the claims. Of this, claim, on

account of escalation by reliance on 1972 s