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TMI Blog2017 (2) TMI 1546X X X X Extracts X X X X X X X X Extracts X X X X ..... for 1988-89 [EST rate 2% below for CSR 1989-90 Office building - Rs. 9.98 lakhs Residential quarters - Rs. 4.06 lakhs Total - Rs. 14.04 lakhs 4. Time limit - 18 months Date of commencement - 7.3.1990 Date of completion - 6.5.1992 5. E.M.D. Rs.20,500-00 [Bank guarantee-Syndicate Bank] 6. S.D. - Rs. 1,02,285-00 7. Work done - Rs. 9.44 lakhs [6th R.A. Bill]" Since the contractor had not completed the work within the stipulated period, notice was issued by the respondents and finally action was taken to rescind the work at the risk and cost of the contractor as per the tender condition. The appellant/contractor in his letter dated 6.3.1992 brought to the notice of the respondents that the Department is responsible for the delay in not executing the work within the stipulated period. It was contended that change of site, exchange of plan of floor, slab beams and failure to provide water facilities were the major cause for the delay in completing the work. Accordingly, demanded the damages. Denying the same, the department rejected the contractor's demand. 3. The Arbitr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the court below erred in holding that the amount claimed by the appellant/contractor is equivalent to the tender amount and 25% of the tender amount can be allowed as additional cost. The court below failed to appreciate that the tender was of the years 1989-90 and cost of manpower etc., was shot up by 100% in the year 1992 to 1994. The appellant was required to bear the extra cost than estimated in the tender. Thus, it was contended that the delay was caused by the respondents in not furnishing the material, plan and further shifting the site for the construction of the building of conservator of forest office. Due to the said delay, the damages were caused to the appellant/contractor. As such, it was claimed by the appellant to award a sum of Rs. 18,06,439/- with interest at 18% per annum from 9.3.1994 till the date of payment along with cost of arbitration of Rs. 1,00,000/-. The said claim was properly appreciated by the Arbitrator, third respondent herein and a sum of Rs. 14,68,239/- was awarded with interest at 18% per annum along with Arbitrator cost of Rs. 50,000/-. The said Award is based on the appreciation of material evidence on record and is in conformity with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsustainable. Thus, she sought to confirm the impugned Judgment and order dismissing the appeal. 7. Heard the learned Counsel for the parties and perused the original records. 8. The claims made by the contractor before the Arbitrator are as under: "Claim No.1: Payment on account of losses suffered by the Claimant on overheads, incidentals, Establishment, supervision and infrastructure expenditure due to the reduced productivity during the originally stipulated time viz upto 6.5.1992 Rs. 83,300=00. Claim No.2: Payment on losses of profit suffered by the Claimant due to reduced productivity of progress during the originally stipulated period viz upto 6.5.1992 Rs. 83,300=00. Claim No.3: Payment on losses suffered by the Claimant due to idle labour, advances paid to the labourers but not recovered and lost due to the delays caused by the Department Rs. 177300=00. Claim No.4: Payment on losses suffered by way of idle machinery which could not be recovered by the claimant due to the delays caused by the Department Rs. 98500=00 Claim No.5: Payment on extra expenses incurred by the claimant on procurement of water at the new site of Quarters construction Rs. 24,000=0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akhs and for residential quarters Rs. 4.06 lakhs. Admittedly, the construction work commenced by doing excavation work in August 1990. Even assuming that there was change of site as regards the construction of the residential quarters is concerned, the machinery, manpower would have been used for the construction of the office building for which there was no alteration or modification of the site. The estimation of cost was based on the tender notification relating to the year 1989-90. Cost in the year 1992 cannot be expected to have been shot up by 100% as claimed by the claimant/appellant. If the change of site was made by the respondents 1 and 2 for the construction of the residential quarters, nothing precluded or prevented the appellant/contractor to commence the work with the office building. If the appellant had taken effective steps to commence the work on time, the delay in completion of the work would have been avoided. Waiting for handing over of site to construct the residential quarters, not putting up with the excavation of work to lay down the foundation for the office building also resulted in delay of completion of the work. Hence, the department cannot be accused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted supra, the arbitrator's award being patently illegal, unreasonable, contrary to public policy, the Court below exercising the power under Section 34(2) of the Act is sustainable. At any stretch of imagination, it cannot be construed as mere re-appreciation of evidence. 14. In the case of 'SUDHIR BROS vs. DELHI DEVELOPMENT AUTHORITY AND OTHERS' in FAO [OS] No.389/2008 [DD 20.03.2009], the Arbitrator awarded escalation to the extent of 25% only based on the evidence, CPWD cost index, other contracts awarded placed on record by the claimant awarded by the Delhi Development Authority during the relevant period which was upheld by the division Bench of the Delhi High Court. Based on this judgment, the court below determined the escalation charges/damages to the extent of 25% of the tender amount. 15. The Arbitrator, after having held that there has been a short increase in prices of materials, the Department cannot compel the contractor to carry out the work on the same rates on which he had agreed to the same within the stipulated period, cannot evaluate the 'short increase' equal to that of tender amount. Escalation cannot be granted on assumptions and presumptions. Awarding esc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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