CONTINENTAL CONSTRUCTION CO LIMITED Vs. STATE OF MADHYA PRADESH

JUDGEMENT

(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.) THE Division Bench came to the findings as follows :