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TMI Blog2013 (4) TMI 507X X X X Extracts X X X X X X X X Extracts X X X X ..... es appear that the stipulation of 12 months’ period was waived, the contractor having been allowed to do some more work after the expiry of the period, albeit at his risk, by making the recision effective from August 16, 1956. It is evident that the arbitrator has rightly awarded 12% interest as even the Nationalized banks are charging more than 12% on clean loans for commercial activities - Reference to invocation of clause 3-A is irrelevant - The learned Arbitrator has rightly awarded the cost of arbitration in favour of the respondent - Under these circumstances the objection filed by the petitioner are liable to be dismissed. - OMP No.142/2010 - - - Dated:- 2-4-2013 - Manmohan Singh,J. For the Petitioner : Mr. V. K. Tandon, Adv. with Mr. Yogesh Saini Adv. For the Respondent : Dr. G. Lal Adv. JUDGMENT 1. The present objections have been filed by the petitioner under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act ) against the Award dated 20th November, 2009. The respondent raised certain disputes which were referred to the sole Arbitrator before whom the respondent filed its statement of claim. In response ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e rate of Rs.700 quintal. b) Claim No.2 : Rejected. c) Claim No.3 : Rejected. d) Claim No.4 : Rejected. e) Claim No.5 : Rejected. f) Claim No.11 : Rejected. g) Claim No.6 : Under this claim an amount of Rs.1,00,000/- was claimed on account of portion of steel struts that remained embedded in the raft portion and was not fully measured and paid. Allowing this claim partly, the learned arbitrator stated as under : Admittedly, lower portion of the struts weighing 28 quintal was embedded into raft, which was duly measured and recorded. Since the respondent had recorded the measurements of the buried portion, it clearly implied that they were in full agreement with the process followed by the claimant, and they need to be paid and compensated for all such work done by them. As regards contention of the claimant regarding non measurement, the quantity of the struts buried in the second operation, I am not inclined to agree, as the claimant was equally responsible for ensuring correct and timely record of measurements . Accordingly an amount of Rs.57847/- was awarded against this claim. h) Claim No.7 : Whether action of the Superintending Engineer for levying of compensat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsation to the Project Manager also certified that due to delay Govt. has not suffered any damages. vii) The petitioner set at large the time by extending the time unilaterally and thus time did not remain essence of the contract. It is the established law that if time is not the essence of the contract clause 2 becomes inoperative. Therefore, under such circumstances operation of clause 2 to levy compensation was absolutely illegal. viii) Regarding claim 8 under which an amount of Rs.5,00,000/- has been claimed under clause 10(cc). The learned Arbitrator has allowed this claim giving detailed reasons and hence the objections on this claim are totally irrelevant and wrong. Amount under clause 10-cc was payable on the amount of the executed during last four months. (work executed to the tune of Rs.41,74,190/-) ix) Under claim No.10 the respondent has claimed Rs.7,99,000/- for damages. The learned Arbitrator has awarded Rs.5,07,500/- stating detailed reasons. In view of this the objection in respect of this claim is wrong and untenable. x) With regard to Rs.1,00,000/- claim for the cost of arbitration proceedings under claim No.16, the learned Arbitrator has awarded Rs.50,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the submissions of the respondent s counsel are correct. The reasons are given as under : a) As per the agreement the entire work was to be completed within eight months starting from 24th August, 1995 (stipulated date of start), however, due to various breaches committed by the petitioner and hindrances all attributable to the petitioner, the work could be completed only on 28th March, 2000, after a delay of 1435 days. Owning the responsibility of 1309 days delay, the concerned Superintending Engineer granted extension of time upto 23rd November, 1999 without levy of compensation under clause 2 of the agreement and for the remaining period from 24th November, 1999 to 28th March, 2000 (126 days), the concerned Superintending Engineer wrongly and illegally levied compensation of Rs.28,979/- (0.25% estimated amount put to tender). b) Assistant Engineer-in-Charge of the work justified delay of 1595 days against actual delay of 1435 days. Whereas the concerned Executive Engineer and Superintending Engineer reduced the justified period by applying an irrelevant and subjective co-efficient. Even otherwise, as the time was not the essence of the contract clause 2 became inoperative, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon a dispute regarding the breach of conditions the wording of Clause 12 would have been entirely different. It cannot also be argued that a right to adjudicate upon an issue relating to a breach of conditions of the contract would flow from or is inhered in the right conferred to assess the damages arising from a breach of conditions. The power to assess damages, as pointed out by the Full Bench, is a subsidiary and consequential power and not the primary power. Even assuming for argument's sake that the terms of Clause 12 afford scope for being construed as empowering the officer of the State to decide upon the question of breach as well as assess the quantum of damages, we do not think that adjudication by the Officer regarding the breach of the contract can be sustained under law because a party to the agreement cannot be an arbiter in his own cause. Interests or justice and equity require that where a party to a contract disputes the committing of any breach of conditions the adjudication should be by an independent person or body and not by the other party to the contract. The position will, however, be different where there is no dispute or there is consensus between the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AIR 1987 SC 1359. There, it was contended that when the State is one of the contracting parties and seeks to recover damages for breach of that contract, the State cannot be a Judge in its own cause and cannot be its own arbiter to determine the liability and quantum of damages. Upholding the contention, the Apex Court held as follows at pages 1361-1362: of AIR : The terms of Clause 12 to do not afford scope for a liberal construction being made regarding the powers of the Deputy Commissioner to adjudicate upon a disputed question of breach as well as to assess the damages arising from the breach. The crucial words in Clause 12 are and for any breach of conditions set forth hereinbefore, the first party shall be liable to pay damages to the second party as may be assessed by the second party. On a plain reading of the word, it is clear that the right of the second party to assess damages would arise only if the breach of conditions is admitted or if no issue is made of it. If it was the intention of the parties that the officer acting on behalf of the State was also entitled to adjudicate upon a dispute regarding the breach of conditions the wording in Clause 12 would have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity to pay damages is thus fastened where there is breach of contract. However, when a dispute arises as to whether the contract has been broken or not. that dispute cannot be settled by one of parties to the contract for, he cannot be an arbiter in his own cause. The dispute may have to be referred to an arbitrator or the matter has to be settled in a Court of law. This principle applies to the Government also as a party to the contract. Where the breach of the contract is admitted i.e. where there is no dispute that the contract has been broken by one of the parties, the Government as the party entitled to claim compensation for the breach need not wait for a determination by any outside agency as to whether there was any breach of contract. In that event, the question of damages alone remains to be considered. A sum can be named in the contract as the amount to be paid in case of breach, an amount in liquidation of the claim for compensation. The contract can thus provide for liquidated damages in the event of breach and the Government claiming that amount as compensation for the admitted breach committed by the other party to the contract, need not seek the aid of Court or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med. The decision contemplated under Clause 16.2 of the agreement is the decision regarding the quantification of the Liquidated Damages and not any decision regarding the fixing of the liability of the supplier. It is necessary as a condition precedent to find that there has been a delay on the part of the supplier in discharging his obligation for delivery under the agreement. It is clear from the reading of Clause 15.2 that the supplier is to be held liable for payment of liquidated damages to the purchaser under the said clause and not under Clause 16.2. The High Court in this regard correctly observed that it was not stated anywhere in Clause 15 that the question as to whether the supplier had caused any delay in the matter of delivery will be decided either by the appellant/BSNL or by anybody who has been authorized on the terms of the agreement. Reading Clause 15 and 16 together, it is apparent that Clause 16.2 will come into operation only after a finding is entered in terms of Clause 15 that the supplier is liable for payment of liquidated damages on account of delay on his part in the matter of making delivery. Therefore, Clause 16.2 is attracted only after the supplier ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounsel for the appellant relied on the decisions of this Court in Vishwanath Sood vs. UOI [(1989) 1 SCC 657] and General Manager, Northern Railway vs. Sarvesh Chopra [(2002) 4 SCC 45]. These cases, we are afraid, will not be of any help to the appellants being distinguishable on facts and having different contractual clauses. We may note that Clause 16.2 cannot be treated as an excepted matter. This is because admittedly, it does not, provide for any adjudicatory process for decision on a question, dispute or difference, which is the condition precedent to lead to the stage of quantification of damages nor is it a no claim or no liability clause. In Vishwanath Sood's case (supra), it was held by this Court that a particular claim of the government was excluded because the Superintendent Engineer acted as the revisional authority to decide disputes between the two parties by an adjudicatory process, there being a complete machinery for settlement of the disputes in the relevant clause and most importantly, the Superintendent Engineer had the discretion on consideration of the facts and circumstances including mitigating facts, held no damages was payable. Again in the case of Sarv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner found that delays are attributable to the petitioner only, Engineer Incharge recommended the case of extension time stating clearly that extension be granted without levy of compensation. 11. On the basis of evidence/facts placed before the learned Arbitrator by both parties, the learned Arbitrator held that the so called undertaking on Extension of Time Proforma was extracted under duress and coercion. Such findings of the learned Arbitrator cannot be disputed now under the present petition. 12. While deciding the claim(s) the learned Arbitrator has given reasons for his finding and adjudication. As time was not the essence of the contract, as it was set at large through unilateral extensions, as per law if time is not the essence of the contract, notice under Section 55 of Contract Act, 1872 is not required. This fact is clear from the second para of Section 55 of the Contract Act, 1872. See M/s. Hind Construction Contractors by its sole proprietor Bhikamchand Mulchand Jain (Dead) by L.R. s Vs. State of Maharashtra, AIR 1979 Supreme Court 720. Relevant para 9 reads as under : 9. Having regard to the aforesaid material on record, particularly the clause in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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