The contractor's claim for compensation due to statutory wage revisions was justifiable, and the FCI had accepted responsibility to compensate the extra expenditure. The court found that the arbitrator did not exceed his jurisdiction in awarding compensation and interest, and the FCI was liable for the consequences of the delay in execution of the contract.

JUDGMENT:

Dr. AR. Lakshmanan, J.

The appellant - Food Corporation of India (hereinafter called the FCI) preferred the bove appeals against the judgment and final order dated 13.08.2002 passed by the Division Bench of the High Court of Judicature at Madras in OSA Nos. 157-159 of 1997 whereby the High Court dismissed the appeals filed by the FCI and passed a decree in terms of the Award together with interest @ 12% p.a. from the date of the decree till the date of the payment. The present dispute and differences arise out of the contract relating to the work of clearing, stevedoring, forwarding, exporting, handling and transport contract and delivery of foodgrains, sugar, flour, for the users, gift, hospital/suppliers and other commodities and gunny/twine bales imported at the Port of Tuticorin at the FCI Storage Godowns in and around Tuticorin for a period of two years from the date of contract i.e. 08.04.1981 in pursuance of Work Order No. SPC.1(1)/80 dated 20.04.1981 issued by the Senior Regional Manager, FCI, Madras. The respondent-contractor/claimant submitted his offer on 20.02.1981along with covering letter. On 07.04.1981, a communication was issued by the FCI to the claimant accepting their offer which had been reduced through negotiation to 397% ASOR. According to the FCI, a perusal of the said tender document shows that in addition to cargo handling work at the Port, the respondent-contractor had to perform various other duties including unloading of food grains from railway wagons, machine-stitching of food grain bags, loading into trucks and other vehicles, etc. etc. According to the FCI, the tender agreement did not provide for any escalation clause and also stated that other than the rates agreed between the parties, the contractor would not be entitled to any other payments. On 01.09.1981, the Tamil Nadu Government issued a notification in the Gazette notifying the settlement arrived at between the Port Users and Cargo Handling labour of Tuticorin Port regarding implementing of the settlement dated 04.01.1981. The respondent, by his letter dated 07.09.1981 to the FCI, pointed out the revision of wages and asked the FCI to review its case for revision of rates and pass necessary orders for revising the rates. The claim for escalation made by the respondent was rejected by the FCI by its letter dated 14.03.1984. The respondent filed O.P. No. 49 of 1986 in the Subordinate Court, Tuticorin for appointment of an Arbitrator in the dispute regarding escalation. The said Court passed an order appointing an Arbitrator in the matter. The High Court of Madras modified the order passed by the Subordinate Court and directed the Managing Director of the FCI to appoint an Arbitrator in terms of contract between the parties. The special leave petition filed against the aforesaid order was dismissed by this Court on 05.05.1989. The special leave petition was filed by the FCI being aggrieved by the finding that the dispute between the parties was an arbitrable dispute, since the only question to be determined was payment of escalation which was not provided for in the contract, therefore, could not have been referred to arbitration Following the dismissal of the special leave petition, the FCI appointed respondent No.2 Mr. B.S.Hegde Joint Secretary and Legal Advisor Government of India as Sole Arbitrator. Respondent No.1 filed Statement of Claim raising several claims. The FCI filed a counter claim. The Arbitrator, on 10.04.1992, passed the Award awarding a sum of Rs.57,10,517/- and Rs. 22,84,207/- under claims (i) and (ii) respectively with interest @ 9% p.a. from 08.08.1989 till date of the award and future interest @ 12% p.a. till date of decree or realization. The FCI filed O.P.No. 350 of 1992 under Section 14(2) of the Arbitration Act praying for a direction to the Arbitrator to file the Award before the High Court so as to enable it to challenge the same. Respondent No.2 filed the Award before the Sub-Court Tuti