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TMI Blog2022 (11) TMI 1500X X X X Extracts X X X X X X X X Extracts X X X X ..... ising out of the contract. Officers administering the contract will not have any discretion whatsoever to admit or deny escalation after the conditions specified in a contract are satisfied. The Executive Engineer has acted beyond the scope of Clause 3.11(A). Under the clause, if a circumstance beyond the control of the Contractor exists and the Superintending Engineer, in charge of work grants a written order to the effect, a right to seek escalation arises. When the two conditions provided Under Clause 3.11(A) were satisfied, there was no discretion left with the Executive Engineer to impose any further conditions for claiming escalation. The Executive Engineer has certainly acted beyond the scope of the contract. The role of the Executive Engineer was only to forward the decision of the Superintending Engineer and enable the Contractor to raise a claim for escalation. Returning to the facts of the present case, whether the escalation is justified or not is another matter, and it is for the Arbitral Tribunal to decide the admissibility of the claim depending on the evidence on record. That will be a finding of fact, with which is not concerned in the present case. For the reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed quality of materials. Different quarries are shown in Annexure C. The details shown in the Annexure C are only as a guide to the contractor but the contractor before tendering should satisfy himself regarding the quantity and quality available and all other details of Annexure C and provide for any variation in respect of leads, lifts, place and method of quarrying, type of rocks to be quarried and all such other aspects in his tendered rate. Later on any claim whatsoever shall not entertained except where any quarry is changed for circumstance beyond the control of contract under the written order of Superintending Engineer in-charge of work. 6. Though the contract was entered into in 1993, the work was suspended for a long time and it resumed on 18.09.2000. While carrying out the construction work under the contract, the Contractor requested an alternate quarry on 07.03.2002, which was denied by the Executive Engineer on 11.03.2002. The decision of the Executive Engineer was also confirmed by the Superintending Engineer on 12.12.2002 and this has led the Contractor to seek a reference of the matter to arbitration Reference case No. 38/2003. (hereinafter referred to as 'the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n work would not be adversely affected. 9. In compliance with the above-referred letter of the Superintending Engineer, the Executive Engineer granted conditional permission to use the Mahuar quarry under his letter dated 23.12.2002 which stated as under: Permission to collect sand from Mahua river is hereby accorded with following conditions. 1. It is assumed as per Clause 3.11A that provision in the tender rate already exist for extra expenditure due to change in lead, hence no payment for extra lead is admissible in this account, nor any claim on this subject shall be acceptable by this office. xxx 5. No extra time, fate or payment shall be allowed for construction to this change 10. Despite the conditional permission granted by the Executive Engineer, the Contractor for the first time on 10.11.2006 raised a claim of Rs. 5,51,03,040/- towards escalation for the enhanced cost incurred due to the transportation of sand from the Mahuar quarry. The request was rejected by the Superintending Engineer in his letter dated 14.12.2006, stating that: As per the Clause 2.25 of N.L.T. page 50 of the agreement and note Annexure -C page 85 which stat that This statement is only for the guidan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t No. 1. 14. Shri Saurabh Mishra also argued that the letter of the Superintending Engineer dated 12.12.2002 followed by the letter of the Executive Engineer was implicitly accepted by the Contractor in letter and spirit and without any protest. It is only after a period of four years that the Contractor for the first time raised a plea for escalation, claiming an amount of Rs. 5,51,03,040/- under a letter dated 10.11.2006. He would, therefore, argue that this plea should not be permitted to be raised. He finally submitted that while the Superintending Engineer rejected even the belated request on 14.12.2006, the claim for arbitration was beyond the period of limitation as per the contractual terms as the claim was made only on 10.12.2007. 15. Countering the submissions of the State, Ms. Menaka Guruswamy submitted that sand is an essential ingredient for the execution of the contract. Initially, the lead provided for her client was at a distance of 20 kilometers from the Baruanala quarry. The transportation from the lead and the lifting of the sand, together constitute an integral part of the cost. Both these components have a serious impact on the profitability for the Contractor. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms of the contract. 19. The most important submission of the State is that the claim for arbitration is in fact barred by res judicata. We have examined this submission in detail and our findings are as follows. 20. The initial request for a change of quarry was made on 07.03.2002. This request was rejected by the Executive Engineer on 11.03.2002 and the same was confirmed by the Superintending Engineer on 12.12.2002. Without any factual basis justifying the need, or proving circumstances beyond the control of the Contractor, a claim was made for arbitration at the first instance on 24.12.2002. It is this reference that the Arbitrator considered and rejected by his award dated 06.10.2007. As is evident from the above, (a) the request for arbitration was made in 2002 itself, (b) there was no proof of the fact that the Contractor was in a position which is beyond his control, (c) there was no written order by the Superintending Engineer granting sanction for the change of quarry, (d) there were in fact letters of the Superintending Engineer as well as the Executive Engineer rejecting the claim for an alternate quarry. These four factors make all the difference between the first ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve law, has no place in contractual matters unless, of course, the parties have expressly incorporated it as a part of the contract. It is the bounden duty of the court while interpreting the terms of the contracts, to reject the exercise of any such discretion that is entirely outside the realm of the contract. 25. Returning to the facts of the present case, whether the escalation is justified or not is another matter, and it is for the Arbitral Tribunal to decide the admissibility of the claim depending on the evidence on record. That will be a finding of fact, with which we are not concerned. For the reason stated above, we are of the opinion that the Arbitrator was justified in granting the claim for escalation as the conditions precedent for raising a plea for escalation are admittedly satisfied by the inspection report dated 31.10.2002 followed by the letter of the Superintending Engineer dated 12.11.2002. 26. The last submission of Shri Saurabh Mishra that the High Court has acted beyond the scope of Section 19 of the Adhiniyam remains to be considered. Section 19(2) of the Adhiniyam is as under: 19. High Court's power of revision: (1)..... (2) If it appears to the High ..... X X X X Extracts X X X X X X X X Extracts X X X X
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