D. P. Wadhwa, J. - (1.) Both the parties are aggrieved by judgment dated February 6, 1989 of the Division Bench of the High Court of Jammu and Kashmir passed in an appeal against judgment dated May 10, 1986 by the learned single Judge of that High Court. While the learned single Judge made the award given under the Arbitration Act, 1940 a rule of the Court and also granted interest, the Division Bench in appeal deleted two claims from the award and also reduced the rate of interest. The award was in favour of Dev Dutt Pandit, the Contractor. He is aggrieved by deletion of two claims and also lowering the rate of interest and the State is aggrieved against the award itself. Thus two separate appeals.
(2.) Tender of the contractor for earth work, excavation, minor drainage crossing, overhead crossing, road bridges and cement concrete lining of Ravi Canal Project was accepted by the State Government and by order dated May 6, 1976 work was allotted to him. The work was to be completed within 18 months, time being the essence of the contract. On May 22, 1976 contractor commenced work. He could not complete the work within the stipulated time. The contract was partially terminated in the structural portion of the work on January 12, 1980. On June 6, 1980 the whole of the contract was terminated because of default committed by the contractor. The contractor filed a petition under Section 20 of the Arbitration Act as the contract stipulated arbitration agreement between the parties. Some of the terms of the contract containing the arbitration agreement, we may reproduce as under: "5. CONTRACT RATES: The contractor shall be paid for the works executed by him under this agreement at the rates specified in Annexure I annexed hereto subject to other terms and conditions embodied in this agreement. 8. VARIATION IN QUANTITIES AND EXTRA ITEMS The quantities shown in the Annexure III to this agreement shall not be taken as final. The Engineer in-charge shall be authorised to direct the contractor to execute extra items not shown in the aforesaid Annexure III or increase/decrease the quantities beyond these described in the said annexures as may be required to be executed and for such increase/decrease quantities the contractor shall be paid at the rates specified in the Annexure I. The quantities shown in the Annexure III may be decreased in detailed drawings to be furnished to the contractor during execution and the contractor shall be paid only for the work done or executed and shall have no claim for any compensation on account of any profit or advantage that might have accrued or that may accrue to him otherwise. 14. FORCE MAJEURE A. The completion schedule is subject to the operation of the Force Majeure Clause which for the purpose of this contract is defined as acts of God, Civil, commotion, sabotage, fires, floods, earthquakes explosions or other catastrophes, epidemics, quarantines, restrictions, strikes, and other labour troubles, embargoes, or other transportation delays beyond the control of the contractor for which only extension in time considered reasonable by the department shall be granted and the contractor shall have no claim for compensation or increase in rates etc. or charges for restoring damages to the work plant or material. 17. DAMAGE TO WORKS From the commencement to the taking over of the works by the Department the contractor shall be responsible for any damage or loss to the works or part thereof caused due to any reason whatsoever. The contractor shall at his own cost repair and make good the loss or damage in every respect to the satisfaction of the Engineer whose certificate in this behalf shall be conclusive proof of the defects etc. having been removed. 19. SETTING OUT The contractor shall be responsible for the true and proper setting out of the works and for the correctness of the positions, levels, bench marks alignments and dimensions in works and for the provisions and maintenance of all necessary instruments, appliances, bench marks and reference marks and labour etc. in connection therewith including charges therefor shall be borne by him. Reference line and bench marks will be set upon at the site of works by the site of works by the department at contractor's costs. The contractor shall at his own cost and responsibility locate and establish temporary bench marks and reference lines for all the structures as may be required for the execution of the works according to the detailed drawings and specifications and as required by the Engineer. The contractor shall provide at his own cost all labour and materials that may be required for checking the works during execution by the staff of Engineer in-charge. Such checks shall not absolve the contractor of his responsibility from carrying out the works strictly according to the detailed drawings and specifications and as per instructions issued to him by the Engineer during the execution of the works. 23. RESPONSIBILITY OF CONTRACTOR Time being the essence of the contract, the responsibility for execution of works within eighteen (18) months in an efficient and workmen like manner and in conformity with the department's drawings and specifications shall be of the contractor. 27. DEVIATIONS, ALTERATIONS ETC. IN THE WORKS The contractor shall not in any way alter the works or any part thereof in respect of designs, quality, materials or specifications without the previous permission in writing of the Engineer. The contractor shall not take advantage of any error or discrepancies occurring in the drawings, designs or specifications but shall report the same to the Engineer who shall make or approve the corrections if necessary. 69. CLAIMS NOT ENTERTAINABLE From the date of allotment of works and taking over on completion by the department no claim shall be entertained in respect of the works under this agreement against the department for, a) Increase in the cost of POL Railway or load freight b) Taxes, duties and octroi, etc. c) Increased wages of labour skilled or unskilled and cost of materials d) Rise in cost of living index e) Business or any other losses, and f) Idle employees on any account whatsoever. 74. ARBITRATION If at any time any doubt, question, dispute or difference whatsoever, shall arise between the contractor and the Government upon or in relation to or in connection with this contract, either of the parties may give to the other notice in writing of the existence of such doubt, question, dispute or difference and the same shall be referred to a person mutually agreed upon by the parties failing such agreement by any officer of the Government as the minister In-charge, P.W. Department, Jammu and Kashmir Government may nominate for arbitration under the Jammu and Kashmir Arbitration Act and rules framed thereunder. The decision of the arbitrator shall be final, conclusive and binding upon the parties. b) The contractor shall not delay the carrying out of works by reason of any reference to Arbitration and shall proceed with the works with all one due diligence and shall until the decision of the arbitrator, abide by the decision of the Engineer or his representative in-charge of the works duly conveyed by him."
(3.) Petition under Section 20 of the Arbitration Act by the contractor was filed on June 12, 1980. On the following day when the petition was taken up without any notice to the State the Court appointed Local Commissioner to take measurements of the work done at the site by the contractor. In the application for seeking interim relief the contractor prayed that "a commissioner may be appointed to go on spot and record the measurements of the work done by the petitioner in presence of the parties" and till then "the respondents may be restrained from changing the status quo at site or disturbing the position of the work already done". Court passed the following order:- "An application has also been moved on behalf of the petitioner which is O.M.P. No. 136 of 1980 with the prayer that measurements of the work done at site may be got recorded by appointing a Commissioner as the work done by him is( ) obliterated. The application is supported by an affidavit. Shri Bashir Ahmed Shah, Ex. Engineer, RandB C/o Chief Engineer, P.W.D., Jammu, is appointed as Commissioner to visit the spot and record the measurements and submit his report within a week. Till the measurements are recorded the respondent will not execute any fresh work. The Commissioner's fee is fixed at Rs. 300/- to be borne by the petitioner." Subsequently Local Commissioner was changed. Local Commissioner submitted his report on December 9, 1980 which formed part of the record. In his petition under Section 20 of the Arbitration Act the contractor claimed a sum of Rs. 39,47,000/- under various heads. This petition was allowed by order dated April 9, 1982. We quote the operative portion of the order as under:- "The disputes mentioned in the application u/S. 20 of the Arbitration Act as well as the objections filed thereto by the other side are, therefore, referred to the aforesaid arbitrator with a direction that he shall enter upon the reference and make his award within four months thereafter in accordance with law. The parties shall be at liberty to raise any further disputes before him provided it is not against the term of the agreement. The parties, however, shall be in possession of the original agreement, shall produce the same before the arbitrator. Copy of the application, the objections filed thereto and a copy of this order shall be provided to the arbitrator. Arbitration petition No. 72 of 1980 stands finally disposed of." ;