- (1.) These four cross appeals, by special leave, are directed against two judgments and orders, both dated 3.3.1999, rendered by the High Court of Judicature Andhra Pradesh at Hyderabad in Appeals No.2206-2207 of 1996 and 236-237 of 1998. The State of Andhra Pradesh, the first defendant in the suit and plaintiff, namely, M/s. Pioneer Builders, Engineers and Contractors, Hyderabad, hereinafter referred to as "the contractor" are the appellants before us. Since the factual matrix and the questions of law involved in all the appeals are common, these are being disposed of by this judgment. However, we shall refer to the facts of Civil Appeal No.6115/1999 as illustrative.
(2.) Sometime in the year 1988, the Superintending Engineer, Srisailam Right Branch Canal (for short "SRBC"), defendant No.2 in the Suit, issued notice inviting tenders from pre-qualified bidders of eligible source countries, which included India, for the work of excavation, lining and construction of structures of SRBC. It was a time bound project supported by credit loans from the International Development Association and International Bank for Reconstruction and Development.
(3.) The tender of the contractor being the lowest, he was awarded the work valued at Rs.8, 42, 93, 617/-. A formal agreement was executed. Time for completion of the work was thirty six months from the date of handing over of the site. Clause 57 of General Conditions of Contract laid down the procedure for resolution of disputes. It reads thus: "57. RESOLUTION OF DISPUTES: 1) Settlement of claims for Rs.50, 000/- and below by Arbitration. All disputes or differences in respect of which the decision, if any, of the Engineer or Employer has not become final and binding as aforesaid, shall on the initiative of either party in dispute be referred to the adjudication as follows: a) Claims upto a value of Rs. 10, 000/-, Superintending Engineer S.R.B.C., Circle No.III Banganapalli at Nandyal b) Claims above Rs. 10, 000/- & upto Rs.50, 000/- Chief Engineer, Major Irrigation, Hyderabad The arbitration shall be conducted in accordance with the provisions of Indian Arbitration Act of 1940 or any statutory modifications thereof. 2. Settlement of claims above Rs.50, 000/-, All claims of above Rs.50, 000/- are to be settled by a court of competent jurisdiction by way of Civil Suit.";