SABYASACHI MUKHARJI - (1.) THIS is an application under Article 136 of the Constitution for leave to appeal to this Court from the judgment and order of the High Court of Madhya Pradesh dated 17/04/1985. In order to appreciate the points involved, it is necessary to state that the petitioner entered into a contract dated 31/03/1970 with respondent, State of Madhya Pradesh for the construction of Rip Rap on right bund of Masonary Dam of Tawa Project. The contract could not be completed within the stipulated time because of alleged gross delay on the part of the State, according to the petitioner, in allotment of work and discharge of its obligations under the contract. The petitioner incurred unforeseen expenditure, it is claimed, to the tune of Rs. 5,29,812.00 and approached the Superintending Engineer for payment. Upon refusal of the Superintending Engineer to pay the claim and his refusal to refer the matter to arbitration, the petitioner moved the learned District Judge under Section 20 of the ARBITRATION AND CONCILIATION ACT, 1940 (hereinafter called 'the Act') for filing of the arbitration agreement and for reference of the disputes to the arbitration. On 24/04/1976 the learned District Judge allowed the petitioner's application and directed the respondent, State of Madhya Pradesh to file the agreement in Court and made a reference for specific question to the arbitration. the High Court on 22/09/1976 dismissed the State's appeal against the order of the District Judge. Thereafter in March, 1977 retired Engineer-in-Chief, P.W.D., Bhopal was appointed arbitrator. There was an award dated 29/10/1978 on all the issues referred, partly allowing the petitioner's claim. The award was filed in the Court of the District Judge and the respondent filed objections to the award under Sections 30 and 33 of the Act and the petitioner filed replies. The District Judge made the award a rule of the Court. The respondent appealed to the High Court. The High Court remanded the matter to the District Judge for fresh decision. The District Judge accepted the objections and set aside the award. The High Court by the impugned judgment dismissed the appeal of the petitioner. It is from this judgment of the High Court that the petitioner seeks leave to appeal to this Court.
(2.) AS mentioned hereinbefore by the Impugned judgment and order of the High Court the award has been set aside. The agreement contained an arbitration clause. The work, however, could not be completed within the stipulated time, the period of contract was extended. The contractor attributed delay on the part of the State Government whereas the State Government blamed the contractor. This was a disputed question. While the work was in progress, the contractor was required to meet extra expenditure on labour charges and materials due to revision in wage scales and escalation of prices. Alterations and substitutions of works also led to extra expenses. There were certain items for which rates were not provided but all the same work had to be done. The contractor therefore, advanced claims for compensation. the Superintending Engineer dismissed the claims on the ground that the claims were barred under clause 3.3.15. He also held that some of the claims were not covered by the contract. The contractor sought to invoke the arbitration clause but the opposition to the contract was that the dispute attracting the arbitration clause had not arisen. It was contended that the claim was barred by clause 3.3.15 and it had not been made within the time. It was contended further that there was only one contract and there being no separate agreement for extension of period of the contract the rate as provided in the original contract alone was permissible. AS there was no separate contract no reference under clause 3.3.29 could be made for the enhanced period beyond the period of the contract. Relevant clauses of the contract were as follows : "3.3. 15 Clause 15. Time limit for unforeseen claims : Under no circumstances whatever shall the contractor be entitled to any compensation from Government on any account unless the contractor shall have submitted claim in writing to the Engineer-in-Charge within one month of the cause of such claim occurring. 3.3.29 Clause 29. Decision of Superintending Engineer, to be final except where otherwise specified in the contract. The decision of the Superintending Engineer of the Circle for the time being shall be final, conculsive and binding on all parties to the contract upon all questions relating to the meaning of the specifications, design, drawings and instructions hereinbefore mentioned and as to the quality of workmanship or material used on the work or as to any other question, claim, right, matter or thing whatsoever, in any way arising out of or relating to the contract, designs, drawings, specifications, estimates, instructions, orders, or those conditions or otherwise concerning the work of execution or failure to excecute the same, whether arising during the progress of the work, or after the completion or abadonment thereof. Provided that if the contractor is dissatisfied with the final decision of the Superintending Engineer in respect of any matter, he may within 28 days after receiving notice of such decision give notice in writing to the Superintending Engineer requiring that the matter may be referred to the arbitration and furnishing detailed particulars of the dispute or difference specifying clearly the point at issue. If the contractor fails to give such notice within the period of 28 days as stipulated above the decision of the Superintending Engineer already given shall be conclusive and binding on the contractor. In case an arbitration is to be held it shall be effected by an arbitrator to be appointed by the State Government whose decision shall be final, conclusive and binding. If the work under the contract has not been completed when a dispute is referred to arbitration, work shall continue during arbitration proceedings if it is reasonably possible and no payment due to contracter should be withheld on account of arbitration proceedings unless it is required by the arbitrator. 3.3.32 Clause 32. Action where no specification : In case of any class of work for which there is no such specification as is mentioned in Rules, such work shall be carried out in accordance with the specification approved by Superintending Engineer/Chief Engineer, or applicable to works in the district and in the event of there being no such specification, then in such case the work shall be carried out in all respect in accordance with the instructions and requirements of the Engineer-in-Charge. 3.3.33 Clause 33. Definition of work : The expression "works" or "work" where used in these conditions shall, unless there be something either in the subject or context repugnant to such construction be constructed and taken to mean the works by or by virtue of the contract contracted to be executed, whether temporary or permanent, and whether original, altered, substituted or additional. 3.3.34 Clause 34. Claim for quantities entered in the tender or estimate : Quantities shown in the tender are approximate and no claim shall be entertained for work executed being either more or less than those entered in the tender estimate." The learned single Judge as mentioned hereinbefore of the High Court after exhaustive discussion dismissed the appeal and upheld the order. Being aggrieved the petitioner went up in appeal before the Division Bench and the Division Bench on consideration of the matter dismissed the appeal. The Division Bench considered the following issues raised before the District Judge : 1. Whether the contractor had incurred extra costs towards wetting and washing of stones used in masonry of Group- II Tawa Masonry Dam? 2. Was the petitioner entitled to payment of this extra costs of Rs. 1,20,355.00 ? 3. Whether the petitioner contractor had to incur extra cost of material and labour to the tune of Rs. 14,72,456.00 within the contract period for executing work assigned to it ? 4. Whether the contractor had incurred extra cost of Rs. 8,84,336.00 for the work beyond the contract period due to unforeseen circumstances ? 5. Whether the petitioner's claim on both the counts was in whole or in part of it was barred by time in terms of clause 3.3.15 ? 6. Whether the contract was rendered ineffective in terms of Section 56 of the Contract Act due to unexpected change in the market rate of material and labour charges ? 7. Was the claim not entertainable in accordance with the terms of the contract under clauses 3.3.32,3.3.33 and 3.3.34 during the extended period of contract ? 8. Was the work delayed because of the presence of shell-zone in the foundation which factor was not made known to the contractor ? 9. Whether the contractor was entitled to extra costs of damages for the delay caused on account of shell-zone ?
(3.) THE Division Bench came to the findings as follows : 1. THE contractor did incur expenditure on wetting and washing of stones in Masonry Group-II Tawa Masonry Dam but this was according to agreement. 2. THE petitioner is not entitled to the payment of the extra costs of Rs. 1,20,355.00. 3. THE petitioner/contractor did incur an extra cost of Rs. 14,72,456.00 within the contract period for executing the assigned work. 4. THE petitioner/contractor did incur an extra cost of Rs. 6,81,796.00 for the work done beyond the contract period due to unforeseen circumstances. 5. THE petitioner is entitled to the claim to the extent of Rs. 2,65,000.00 against Issue No. 3 and Rs. 6,81,796.00 against Issue No. 4 above and the same is not barred by time in terms of clause 3.3.15. 6. THE contract was not rendered ineffective in terms of Section 56 of the Contract Act due to abnormal rise in the market rates of materials and labour. 7. THE claim under reference cannot be ruled out merely because of the provisions of clauses 3.3.32, 3.3.33 and 3.3.34. 8. Yes, the work was delayed due to the presence of shell-zone in the foundations, a factor which was unforeseen and was not made known to the contractor. 9. THE contractor is entitled to claim extra cost due to the delay caused on account of the shell-zone in foundations. ;