SRI K. MARAPPAN (DEAD) THROUGH SOLE LR. BALASUBRAMANIAN v. THE SUPERINTENDING ENGINEER T.B.P.H.L.C. CIRCLE ANANTAPUR

The Judgment of the Court was delivered by A K.M. JOSEPH, J. 1. These appeals are directed against the judgment rendered by the High court in Civil Miscellaneous Appeal Nos.479, 93, 94, 480, 481 and 95 of 1990 and Civil Revision Petitions Nos.303, 304, 305, 1039, 1040 and 1041 of 1990. The appeals arise out of arbitration proceedings conducted under the Arbitration Act, 1940 B hereinafter referred to as ‘the Act’. By the impugned judgment, the High Court set aside the orders passed by the Sub-Court granting the decree in terms of the Arbitration Award though in a modified way in respect of certain claims raised by the appellant. The Court also rejected the petitions filed by the appellant challenging the decision of the sub- Court refusing to make the Award decree of the Court in regard to certain claim. In short, by the impugned judgment the High court found that the arbitration awards were totally unsustainable in view of Clause 59 of the Agreement.

2Copy pinpoint2. A tender was invited on 18.9.1978 by the respondent- State for carrying out irrigation works. The appellant having quoted the lowest rates which ranged between about 10-12% less than the standards specified rate, appellant entered into Agreement No.10/78-79 on 10/03/1979. Equally, the appellant entered into Agreement No. 11/78-79 on 10/03/1979. He also entered into Agreement No.14/79-80 on 28/06/1979. The work was to be completed within 18 months from the date of handing over the possession. It would appear that the site was handed over to the appellant in regard to Agreement No.10/78-79 on 16.11.1979. As far as the Agreement No.11/78-79 is concerned, the site was handed over on 21.4.1979. The site was handed over to the appellant in regard to Agreement No.14/78-79 on 28.06.1979. Under the agreements, raising various claims, the appellant originally filed claim on F 28.11.1983 before a panel of three arbitrators. The panel rendered its awards. The awards came to be challenged by the appellant and the awards were set aside. An arbitrator came to be appointed on petition filed by the appellant. He entered upon reference on 26.4.1988 and passed three awards on 19.⁸.1988. The appellant had, in fact, raised 9 claims. G The arbitrator rejected claim Nos.6 and 8 whereas he awarded various sums in regard to the other claims. Claim No.9, no doubt, related to interest. The respondent-State filed the applications for setting aside the award under Section 30 and 33 of the Act. The appellant moved suits for making the award decree of the Court under the Act. Certain claims H

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A which were awarded by the Arbitrator, however, did not meet with approval of the learned sub-Judge and he agreed with the respondent- State. It is this judgment which generated the appeals and revision petitions before the High Court which stand decided by the High Court by completely agreeing with the contentions of the respondent-State and holding mainly that the awards are in the teeth of clause 59 of the B Contract.

3Copy pinpoint3. We heard Mr. Ramamoorthy, the learned senior counsel for the appellant and we also heard Ms. Prerna Singh, learned counsel for the respondent.

4Copy pinpoint4. Though various claims have been raised in the appeals, the appellant has finally chosen to press before us only the contentions in regard to Claim Nos.1,3,4,7 and 9. The awards relate to 3 different agreements entered into by the appellant with the respondents but the claims are all identical in their content in regard to all the three agreements though different amounts have been awarded under the same. Therefore, D we may set out the claims with which we are to deal with. Claim No.1 - towards extra lead of 4 kms/6 kms- stone and metal. Claim No.3 – Non-supply of food grains as per the conditions of the agreement. E Claim No.4 – Reimbursement of short supply of cement. Claim No.⁷ – Claim on account of stock of materials accumulated by the contractor for work in the project. Claim No.9 – Interest of 18% per annum under the Interest Act.

5Copy pinpoint5. Learned senior counsel for the appellant would contend that the appellant is certainly entitled to the amounts as awarded by the Arbitrator under these claims. He would submit that the award of the arbitrator is immune from judicial interference unless it be that the arbitrator has misconducted himself or it be that an error apparent on the face of the record is betrayed by the award. It is for the arbitrator to G construe the contract and sift the materials before him. His finding on facts cannot be rendered vulnerable in proceedings under Sections 30 and 33 of the Act. As far as Clause 59 is concerned it is his contention that the said Clause would not stand in the way of the claims as awarded and which are pressed before us being countenanced in law. H

SRI K. MARAPPAN (D) THR.SOLE LR.BALASUBRAMANIAN 165 v. SUPERINTENDING ENGR T.B.P.H.L.C. [K.M. JOSEPH, J.]

6Copy pinpoint6. Per contra learned counsel for the respondent would support A the judgment of the High Court and would contend that Clause 59 of the agreement would bar the claims canvassed by the appellant. Before we deal with Clause 59 it is appropriate to appreciate what happened before the arbitrator, the sub-Court and finally in the High Court. PROCEEDING BEFORE THE ARBITRATOR B Claim No.I-Extra lead

7Copy pinpoint7. The case of the appellant was that the appellant was to quarry and take stones and metal from a specified quarry which was located at a shorter distance than from where the appellant contractor had to actually quarry the stones and metal and thereafter transport the materials to the C work site. This resulted in extra rate and therefore extra expenditure. The claim of the appellant was Rs. 15 per cubic meter. The arbitrator rejected the arguments of the respondent that the appellant on his own went ahead and carried out quarrying from the quarry located further away. The arbitrator also found that the claim was tenable under Section D 70 of the Contract Act. It is accordingly that the arbitrator awarded compensation at the rate of Rs.15 cubic meter for the amounts as claimed. Claim No.III

8Copy pinpoint8. Claim No.3 related to default on the part of department in making supply of food grains. In short, under the food for work programme of the Central Government, food grains were to be made available by the respondent and part of the wages of the works was to be supplied by the appellant in food grains as part of the contractual obligation and it is the case of the appellant that the food grains were not supplied though it was available. Consequently, the appellant had to supply food grains to his workers by procuring the food grains at higher prices from the open market. The arbitrator noted the argument of the State to be that the relevant clause only contemplated making available food grains, if it was available. The arbitrator relied on the correspondence to arrive at the conclusion that though food grains were available it was still not supplied to the appellate. The arbitrator proceeded to award various sums under the three contracts on the basis that the appellant was constrained to expend money for supplying his workers by purchasing food grains from the open market.

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A Claim No.IV

9Copy pinpoint9. As far as claim No.4 is concerned, it related to short supply of cement. Under the contract the arbitrator noted that the department was to supply cement to the contractor. The value of the cement was fixed at Rs.416/- per tonne. It was the case of the appellant-contractor that in breach of its contractual obligation, the department however did not make sufficient supply of cement. In order to achieve progress in the works it is the case of the appellant that he procured cement from outside. He also appears to have pointed out recoveries were made as though supply of cement was effected by the department when it was not the case. The department contended that cement was in fact supplied as per the contract and the contractor was not authorized to purchase cement from outside. Department further contended that contractor did not produce any vouchers. Department further relied on Clause 10 of the contract. Clause 10 provided that no claim for compensation for non-supply of cement would lie. The arbitrator, however, rejected all the contentions of the department and relied on Section 70 of the Contract Act. The non-production of the cement issue register and unstamped receipt by the department led the arbitrator to raise an adverse inference against the department. The arbitrator proceeded to award varying sums under the three contracts. E Claim No.VII

10Copy pinpoint10. Claim No.⁷ which is pressed before us related to a claim on account of material accumulated by the appellant for the work in the project was particularly awarded by the arbitrator. The claim of the appellant was that he had purchased various materials and stocked at F the work site for carrying out the work but the department prevented appellant from carrying out the work and, therefore, the appellant was entitled to the value of the materials which he had collected at his expense. The arbitrator after excluding sand awarded certain sums under the 3 contracts.

G Claim No.IX

11Copy pinpoint11. Finally, under Claim No.9 which related to interest at 18% under the Interest Act, the interest was awarded at the rate of 12% per annum on all claims from the date of the claim petition namely 23.11.1983.

SRI K. MARAPPAN (D) THR.SOLE LR.BALASUBRAMANIAN 167 v. SUPERINTENDING ENGR T.B.P.H.L.C. [K.M. JOSEPH, J.]

Proceedings before Court under Sections 30/33 and 17 of the Act. A

12Copy pinpoint12. The sub-Court held inter alia as follows: As far as Claim No.I is concerned, namely, extra lead, the sub- Court proceeded to agree with the arbitrator that the appellant is entitled to extra lead. As far as the quantum of extra lead is concerned, the court found that the arbitrator was not correct in fixing the extra lead at Rs.15 B per cubic meter. The reasoning in this regard was that there was no material in support of the same. On the other hand, the Court reasoned that there was a procedure for settling such claims for extra items. As per correspondence, the court found that the difference would only be Rs.3.23 whereas it was found that the arbitrator has awarded at the rate C of Rs.15 which would amount to giving Rs.24 for extra lead of 6 kilometers. This was found to be an error apparent and having regard to the fact that the matter was pending for a long time and the present proceedings constituted the second round of litigation, the court proceeded to modify the amount and direct that the extra lead would be calculated as per the procedure extant. D

13Copy pinpoint13. As far as Claim No.III is concerned namely, the breach found by the arbitrator in the matter of supply of food grains, the court proceeded to set aside the award of the arbitrator. It was found that the misconstruing the contract, the arbitrator had awarded a sum of Rs.93 lakhs in all the three contracts put together which is without any E justification as the arbitrator has exceeded his jurisdiction. Contrary to the finding recorded by the arbitrator the court found that there was no evidence to show that the food grains were available. The Court reappraised A-22 and A-25 and took the view that it did not support the finding by the arbitrator that the food grains were actually available. It F was further found that there is no evidence to show that the appellant had given extra wages for non-supply of food grains by the department. There is no evidence according to the court to show that the appellant had purchased food grains at the open market rates as the appellant had not produced the register to show that he had procured and supplied food grains from outside. The appellant was bound to pay fair wages. G

14Copy pinpoint14. As far as the claim No.IV is concerned, which related to short supply of cement to the appellant, the Court set aside the award passed by the arbitrator.

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15Copy pinpoint15. It was found inter alia by the Court that the appellant did not mention the source through which he had obtained the cement. There was no evidence before the arbitrator to show that the appellant was permitted to bring his own cement and use it in his work. As per the terms of the agreement the appellant was not allowed to use the cement other than the cement supplied by the Government. There is no evidence B before the arbitrator to show any check/measurement taken at the time of alleged use by the Contractor. The tabular statement produced before the arbitrator by the appellant was found to be only theoretical requirement of the quantity of cement for such work.

16Copy pinpoint16. The contractual provisions were ignored by the arbitrator. In C none of the letters written by the officers referred to by the arbitrator in the awards, the Engineers admitted about the alleged use of cement brought from outside by the appellant.

17Copy pinpoint17. There was no clause in the contract permitting the contractor to use his own cement and claim reimbursement. The arbitrator exceeded his jurisdiction.

18Copy pinpoint18. As regards Claim No.VII is concerned, which related to claim for value of the material stored by the appellant at his site, the court proceeded to set aside the award. The case of the appellant appears to have been that he collected the materials on the basis of the assurance of the department that further construction work will be entrusted to him but no letter of assurance was produced. The provisions of the agreement were only for finished work. The Additional Advocate General’s argument that the Government had no objection in the contractor selling away material after paying royalty charges etc. to the Government was noted. F Under Section 70 of the Contract Act, the Government has got option either to pay compensation or restore the material to the contractor.

19Copy pinpoint19. As far as the claim for interest is concerned, the court relying on the judgment of this Court in Gujarat Water Supply & Sewerage Board vs. Unique Erectors (Gujarat) (P) Ltd. & Anr. reported in AIR G 1989 SC 973 and taking the date on which the arbitrator entered upon the reference as 26.4.1988 and the date of the awards as 23.⁸.1988, it was found that for the said period, the arbitrator did not have the power to grant interest on the amount found due. Therefore, the Court set aside the award of interest for the period 26.4.1988 till 23.⁸.1988 in regard to the rest the award of interest was sustained by the Court. The H

SRI K. MARAPPAN (D) THR.SOLE LR.BALASUBRAMANIAN 169 v. SUPERINTENDING ENGR T.B.P.H.L.C. [K.M. JOSEPH, J.]

net result was the Court, partially, allowed the suits and passed modified awards in favour of the appellant whereas it also allowed the petitions filed by the respondent for setting aside the awards in the manner which we have indicated above. The findings of the High Court

20Copy pinpoint20. In the impugned order, the Court has proceeded to allow the appeals filed by the respondent-State and dismiss the revisions filed by the appellant.

21Copy pinpoint21. As far as Claim No.III is concerned which related to non- supply of food grains, it was found as follows: C “Apart from the fact that there is no such total liability on the part of the Government to supply the food grains without which he could have proceeded with. The very clause which has been relied upon by the contractor for supply of the food grains reduced to the effect that clearly such supply would be made only if available, and therefore, it is not the case of the Contractor that D though food grains were available it is not supplied by Government. There is no mention or any evidence in this regard let in on behalf of the contractor. Therefore, it is again the compensation which comes within the bar of Clause 59.”

22Copy pinpoint22. In regard to Claim No.IV, the following is the finding by the E High court: “In the Claim No.4 the reimbursement of non-supply of cement is again is similar such obligation as the one stated to be in the earlier claim and even on this account, nothing has been pointed out on behalf of the contractor on facts or in details as to how it can be taken out from the claim for compensation as barred under Clause 59.”

23Copy pinpoint23. As regards Claim No.I relating to extra lead, the High Court proceeded to hold as follows: “The Claim No.1 relates to extra lead of 4 K.m for stone and metal is again attributable to the alleged delays, laches and breach on the department as complained by the contractor and therefore, such claim once again amounts to a compensation within the parameters of the bar as provided under Clause 59. Since we H

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A have found that the claims under item 2,5,3,4 and 1 exfacie squarely come under the bar of Clause 59 in view of the very maintainability which go to the very root itself, these claims are squarely barred under Clause 59 as held in the aforesaid decision of the Supreme Court in the case of Ramnath International Construction Pvt. Limited (2 Supra).” B

24Copy pinpoint24. It is found that claim No.2,5,3,4,1 is ex-facie case under the bar of Clause 59 and finally it was held as follows: “Having regard to the reasons as given, especially, the authoritative pronouncement by the Apex Court on the very question, we hold that the claims of the contractor are not sustainable and accordingly both the awards of Arbitrator dated 19-06-1985 and 19-06-1968 and the judgement and decree in O.P. No.118 of 1988 dated 07-10-1988 to the extent of awarding claims in respect of the Claims Nos.1,2,3,4,5,7 are set aside and consequently we hold since the very claim being held to be not entitled, question of awarding any interest does not arise.” Decisions and Findings

25Copy pinpoint25. Since the impugned decision is based on Clause 59, it is now necessary to refer to the same. It reads as follows: E “59. Delays and extension of time: No claim for compensation on account of delays or hindrances to the work from any cause whatever shall lie, except, as hereinafter defined. Reasonable extension of time will be allowed by the executive Engineer or by the officer competent to sanction the extension for unavoidable F delays, such as may result from causes, which, in the Opinion of the Executive Engineer, are undoubtedly beyond the control of the contractor. The Executive Engineer shall assess the period of delay or hindrance caused by any written instructions issued by him, at twenty five per cent in excess of the actual working period so lost. G In the event of the Executive Engineer failing to issue necessary instructions and thereby causing delay and hindrance to the contractor, the latter shall have the right to claim an assessment of such delay by the superintending Engineer of the Circle whose decision will be final and binding. The contractor shall lodge in H

SRI K. MARAPPAN (D) THR.SOLE LR.BALASUBRAMANIAN 171 v. SUPERINTENDING ENGR T.B.P.H.L.C. [K.M. JOSEPH, J.]

writing with the Executive Engineer a statement of claim for any delay or hindrance referred to above, within fourteen days from its commencement, otherwise, no extension of time will be allowed. Whenever authorized alterations or additions made during the progress of the work are of such a nature in the opinion of the Executive Engineer as to justify an extension of time in consequence thereof, such extension will be granted in writing by the Executive Engineer or other competent authority when ordering such alterations or additions.”

26Copy pinpoint26. It is our view that it will not be open to a contractor to claim compensation which arises on account of the fact that the work is delayed or hindrance caused to the work from any cause whatsoever. To demystify this further, it means that should the work be delayed on account of reasons which are attributable either partially or entirely to the employer namely the respondent herein, the claim for compensation is barred. Equally, the clause interdicts raising claim for compensation by the contractor if the employer poses hindrance to the work. If work gets delayed on account of the contractor himself, it is axiomatic that he cannot claim compensation as it would amount to a person taking advantage of his own wrong. Delay from any cause cannot found a claim for compensation. It may also happen that the work may get delayed not due to the fault of the employer. There may be natural causes such as natural calamities which may cause delay in carrying out the work. Even in such cases, in our view, Clause 59 would cast an embargo against a claim by the contractor. This interpretation gives full play to the words ‘delays from any cause whatsoever’. Equally, if there is hindrance to the work from any cause whatever, a claim for compensation would not lie. F

27Copy pinpoint27. The heading of Clause 59 is ‘delays and extension of time’. While compensation on account of delay and hindrance is impermissible, what Clause 59 provides however, is that reasonable extension of time be allowed. Request for extension of time must arise from causes beyond the control of the contractor. It is further provided in clause 59 that if G delay or hindrance is caused by any written instruction by the Executive Engineer then the period of the delay or hindrance is to be assessed at 25% in excess of the actual working period so lost. It is further provided that if delay and hindrance is caused to the contractor as a result of the H

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A Executive Engineer failing to issue necessary instructions, the contractor will have the right to claim and assessment of the delay by the Superintending Engineer of the Circle. The contractor is to lodge a statement of claim for any delay or hindrance within 14 days from its commencement, failing which no extension for time will be allowed. Still further Clause 59 declares that whenever authorised alterations or B additions which are made during the progress of the work are of such a nature which justify an extension of time, extension can be granted in writing by the Executive Engineer or other competent authority when ordering such alterations or additions. In short, under clause 59 while extension of time on account of delay or hindrance can be granted. C Claim for compensation on account of delay or hindrance on account of any cause will not lie.

28Copy pinpoint28. Now that we have elucidated the true scope of Clause 59, we must ponder whether the High Court was right in placing Clause 59 side by side with Claim No.I and find that claim is in the teeth of Clause 59.

29Copy pinpoint29. Claim No.I as we have already noted relates to claim for extra lead for carrying out the work of quarrying stone and metal from a quarry located at a greater distance from the work site. As far as the said claim is concerned, we would think that it cannot be associated with a delay to the work for any cause whatever within the meaning of Clause

E 59. What is involved in the claim is the right to claim compensation by reason of the fact that the appellant-contractor though had to quarry from the specified quarry under the contract which was located nearer to the work site was compelled to carry out the work of quarrying, both stone and metal, from a quarry located at a greater distance and to transport the same to the work site. The claim is based on the expenditure which the appellant had purported to incur on this score. Though case of delay within the meaning of Clause 59 is sought to be set up, there is no support sought to be drawn from the second limb of Clause 59 which deals with hindrance to the work from any cause whatsoever. Therefore, we can safely confine our focus on the question whether the claim stands barred by virtue of Clause 59 on account of it arising out of delay. In this case, we must further notice that, in fact, before the arbitrator apparently Clause 59 was not as such pressed or at any rate seriously pressed. Before the civil court, in the counter affidavit filed, the State did not lay store by the said contention. It is in the additional counter affidavit filed that the contention based on Clause 59 was apparently raised by the H

SRI K. MARAPPAN (D) THR.SOLE LR.BALASUBRAMANIAN 173 v. SUPERINTENDING ENGR T.B.P.H.L.C. [K.M. JOSEPH, J.]

State. Be that as it may, since the arbitrator is the creature of the contract, and therefore, he is bound by the contract, though late in the day, it may be, that the objection was raised, we cannot rule out the said contention as it is a matter that goes to the root of the matter. In fact, we would approve of the view taken by the High Court in regard to effect of Clause 59 qua Claim Nos.2 and 5. The appellant has, also, not pressed these claims before us. The only aspect which remains is the contention which is urged on behalf of the respondent that Clause 59 would be infringed as escalated amounts are given beyond original period are canvassed by the appellant.

30Copy pinpoint30. We would think that while it is true that the case under Claim No.I extends to the period beyond the original period of the contract C (namely 18 months from the date of handing over of site), the claim cannot be one which is on account of delay from any cause whatsoever. The claim, on the other hand is, on account of the appellant carrying out work of quarrying from a site which was located further away than the site which was specified under the contract. Be it for the original period of the contract or for the period beyond the contract, the appellant has had to quarry from the site located further away. Necessarily in regard to expenses, he must be paid for the difference in the rate. The last area of inquiry would be whether having regard to the fact that the civil court has agreed with the arbitrator that appellant is entitled to extra lead at which rate it should be paid? It is here that we must remind ourselves of the jurisdiction to interfere with an award under the Act. In calculating compensation at the rate of Rs.15/- per cubic meter, has the arbitrator acted without any material? Has he overlooked any contractual injunction? Does the Civil Court have the power to re-appraise the materials in substituting or modifying the award on merits? F

31Copy pinpoint31. In this regard, we must notice the provisions in the Act relating to the power of the court when an award is challenged. Section 15 of the Arbitration Act, 1940 reads as follows: “15.Power of Court to modify award. The Court may by order modify or correct an award- G (a) where it appears that a part of, the award is upon a matter not referred to arbitration and such part can be separated from the other part and does not affect the decision on the matter referred; or H

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A (b) where the award is imperfect in form, or contains any obvious error which can be amended without affecting such decision; or (c) where the award contains a clerical mistake or an error arising from an accidental slip or omission.”

32Copy pinpoint32. Section 16 of the Arbitration Act deals with the power to remit the matter. We may straight away rule out the question of remitting the award having regard to the efflux of time and also improbability the arbitrator being available even otherwise for the purpose of redoing the matter. Coming to Section 15 of the Act, the power available to the Court to modify the award was available inter alia when a part of the award is not referred to arbitration and such part can be separated from the other part and clearly Clause (a) is applicable as it is not the case of either party that the matter relating to the amount to be paid by way of extra lead was not a matter which was referred to arbitration.

33Copy pinpoint33. Under Clause (c), an award can be modified if it contains a D clerical mistake or there is an error which arises from an accidental slip or omission. There cannot be any doubt that this is not a case where there is clerical mistake or an error arises from an accidental slip or omission. Lastly, the power of the court to modify extend to a case where the award is imperfect in form. Certainly, it is not the situation in the facts of the case. Of course, where the award contains an obvious E error which can be amended without affecting such decision. Court has power to modify. When the Sub court modified the sale at which the amount is to be calculated would affect the ‘decision’ of the ‘arbitrator’. It is not the sale of Rs. 15/ C.M., not an essential part of the ‘decision’ of the arbitrator.

34Copy pinpoint34. In the light of the above discussion and proceeding on the basis that there is no power to modify the award we would consider the legality and correctness of the civil court decreeing the claim in regard to Claim No.1 by modifying the award of the arbitrator.

35Copy pinpoint35. In the award, it is the case of the appellant that the Executive G Engineer has clearly given the rates and arbitrator has found as follows: “2.4 the claimant has claimed Rs.15/ cu.m. The Ld. Arbitrator at vol.2 page 283 has noted: “In fact the Department itself recommended to the Government vide 87 letter of C.E. to Government for sanctioning enhanced H

SRI K. MARAPPAN (D) THR.SOLE LR.BALASUBRAMANIAN 175 v. SUPERINTENDING ENGR T.B.P.H.L.C. [K.M. JOSEPH, J.]

rates because of escalation of costs. The Department had not disputed correctness of extra rate claimed by contractor. On the other hand by its representation and conduct it has accepted the rate as workable rate. The claim is also tenable and legally tenable and legally grantable, applying the principles of Sec.70 of the Contract Act. Hence I find the claim of the contractor for higher rates at Rs.15/ C.M. is just reasonable and legal..” For Agreement No.10, Rs.⁷,68,825/- is awarded. For Agreement No.11, Rs.12,38,250 is awarded and For Agreement No.14, Rs.9,59,325 is award. C The total is Rs.29,66,400/-”

36Copy pinpoint36. The further case of the appellant is that the standard rate for the period stated by the Executive Engineer is Rs.13.75 cu.m. and the contractor has claimed Rs.15/-cu.m. which is accepted by the Department. It is contended by the appellant that as per the finding of D the arbitrator the sub-Court, the extra lead would relate to beyond the agreement period.

37Copy pinpoint37. He had claimed at the rate of Rs.15/- cu.m. which was accepted by the department as is clear from letter dated 23/11/1982 written by the Executive Engineer to the Superintending Engineer. E

38Copy pinpoint38. Appellant drew support from letter dated 23.11.1982 written by the Executive Engineer to the Superintendent Engineer. We may also notice the following statement however in the said letter. “After gaining practical experience it has been found possible to utilize this quarry only for major quantities of two contracts of Sri F DV. Krishna Reddy & Co., against the total No. of seven works for which the stone from that quarry is proposed to be utilized. The quarry from which the stone is being obtained by Sri K. Marappan is at a distance 3.45 KM MR + 1.447 KM CT. He is obtaining the entire metal and stone totally from this quarry.” G

39Copy pinpoint39. The sub Court, on the other hand, has found that the assumption made by the arbitrator about Rs.15/- cu.m. over and above the quoted rates is without any basis. The sub-Court relied on the provisions in the agreement relating to the manner in which the rates were to be derived.

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A The sub Court proceeded to make reference to the clause in the agreement. The Clause reads as follows: “VII. a) Procedure for working out rates for supplemental items: B The contractor is bound to execute all supplemental items that are found essential, incidental and inevitable during execution of main works at the rates to be worked out as detailed below:- i) Supplemental items directly deducible from similar items in the original agreement:- C The rates shall be derived by adding to or subtracting from the agreement rate of such similar items, the cost of difference in quantity of materials or labour between the new item and the similar item in the agreement worked out with reference to the schedule of rates adopted in the sanctioned estimate with which the tenders were compared plus or minus overall tender percentage. ii) New items (a) similar items, the rates of which cannot be directly deduced from the original agreement. b) Purely new items which do not correspond to any item in the agreement. The rates shall be estimate rate plus or minus overall tender percentage. NOTE: The term estimate rate used in (i) and (ii) and (a) & (II) (b) above means the rate of sanctioned estimate with which the tenders were compares, or if no such rate is available in the estimate the rate derived with reference to the scheduled of rates adopted in the sanctioned estimate with which tenders are compared. Whether the need for execution of excess quantity beyond the quantities stipulated in the agreement is noticed, the contractor should give notice in writing to the Exe. Engineer, who will in turn shall obtain orders of the competent authority before commencing execution of the excess quantity of work.

SRI K. MARAPPAN (D) THR.SOLE LR.BALASUBRAMANIAN 177 v. SUPERINTENDING ENGR T.B.P.H.L.C. [K.M. JOSEPH, J.]

For all items of work in excess of the quantities shown in Schedule A ‘A’ of the tender the rate payable for such item shall be either tender rate or SS rates for the items plus or minus overall tender excess accepted by the competent authority whichever is less. The SS rates means the rates with which estimate is prepared for comparing the tender. B

40Copy pinpoint40. Thereafter, the sub court referred to the actual calculation made in Exhibit B.3 the letter dated 23.11.1982 written by the Executive Engineer to the Superintending Engineer which is in fact relied upon by the appellant himself. The sub Court proceeded to find that the difference in rates for 2 kms and 6 kms works out to 3.23 per cu.m. and that the cost of conveyance of material of all kinds RR stones and spass as provided in the estimate is Rs.9.81 per cu.m. which was in accordance with the standard schedule rate for 2 km. lead. The rate fixed for 6 kms lead was Rs.15/- over and above the quoted rates of Rs.⁸.80 which is arrived apparently after deducting actual rate by which the appellant had quoted his rates which was nearly 10-12% less than the estimated rates. The result was that the arbitrator gave Rs.24/- per cu.m. as against Rs.13.75 which is without deduction. In the written submission before us, the appellant has not questioned the applicability of the clause relating to supplemental item in regard to the extra lead. Therefore, we need not be detained by the question whether the provision as such is applicable in respect of claim based on extra lead. If that be so, the question would be whether it is a case whether arbitrator has awarded Rs.15/- in place of Rs.13.75 in which case we would be inclined to agree with the appellant that the award in this regard should be sustained in its entirety. But the question is whether the arbitrator has actually awarded Rs.15/- cu.m. over and above the amount which the appellant already received on the basis of the actual lead in the contract.

41Copy pinpoint41. The arbitrator, in fact, found that the claim of the appellant for higher rates at Rs.15/- per cu.m. is reasonable and legal and on the basis of the tabular statement which was prepared by the appellant and awarded different sums under the three different contracts. It would appear that the claim for Rs.15/- per cu.m. is based on abnormal increase in transport charges due to increase in cost of fuel, automobile spare parts etc. If escalated rates are claimed, then it may attract the wrath of

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A Clause 59. We would think that the claim of extra lead cannot be denied. The claim of Rs.15/- per cu.m., if it is over and above the amount which is already received will be in the teeth of the contractual provision which is relied on by the sub Court for which he has not taken any exception to in which case we would think that the amount as ordered by the sub Court is to be awarded to him under this claim. This means the amount is to be worked out as provided in the letter dated 13.11.1982. In other words, the amount must be awarded on the basis of the cost of conveyance being calculated at the rate of Rs.13.75 and the amount must be calculated and paid. Mindful though we are of the limitation under Section 15 (b) of the Act to modify, we would in the facts of the case, rely on Article 142 to sustain the decision of the Sub Court under this claim. CLAIM NO.III

42Copy pinpoint42. Coming to Claim No.III, namely, on account of non-supply of food grain, we have already found that while the arbitrator has awarded the amount of compensation, the sub Court has set aside the award. The main contention of the State which found favour with the sub Court is that the clause actually provided for supply of food grain provided it is available. The arbitrator found that food grains were not supplied despite the fact that they were available and this finding by the arbitrator was found to be perverse. The claim of the appellant was that under the agreement, the appellant was to supply the labourers a certain quantity of foodgrains as part of the wages. The labourers were also making such demand as it would be beneficial to them also. The appellant therefore had to supply food grains from the market at the market value which led him to incur extra expenditure. The labourers according to appellant were not willing to work otherwise. It is necessary to advert to the actual contractual provisions in relation to supply of food grain. The clause in one of the contract relating to food grains reads as follows: “FOOD GRAINS:

G 1. The cost of the work is estimated to be Rs.1,16,15,713/- approximately. Against this estimate 17,500 quintals of wheat at Rs.115/- per quintal, if available, will be supplied to the contractor for being issued as wages to labourers employed on the work.

SRI K. MARAPPAN (D) THR.SOLE LR.BALASUBRAMANIAN 179 v. SUPERINTENDING ENGR T.B.P.H.L.C. [K.M. JOSEPH, J.]

2. The tenderer shall bear the transport and other incidental charges for the transportation of wheat from nearest F.C.I. Wheat godown to the site of the work. He shall be responsible for the safe custody and storage of wheat at his own cost and ensure issue to the labourers of the quantity of wheat calculated at a price not exceeding Rs.1-25 per K.G. in lieu of the amount of wages payable to them.

3. The contractor shall be responsible to produce the Accounts of receipts, distribution etc., of what to the labourers as and when required by the Engineer incharge of the work.

4. The supply of wheat to the contractor for issue to the labourers will be regulated from time to time according to the assessment of the Engineer in-charge of the work.

5. The department is not liable for any compensation on account of any fluctuation of market price of wheat or deterioration in quality of the wheat. The contractor is bound to accept the agreed quantity of wheat at the stipulated rate, if offered. Similarly, he shall have no claim for the supply of extra quantity of wheat on the ground of excess or enlarged scope of work and where the Department declines to supply extra wheat, no claim for compensation on this account shall be entertained by the E Department.

6. The tender will be deemed to have satisfied himself about the availability of wheat and the rates quoted by him in the tender should take into account that aspect for completing the work according to the specifications and conditions incorporated in the F agreement.”

43Copy pinpoint43. It was further provided that the labourers were to be supplied wheat at a rate not exceeding Rs.125 per quintal but the quantity to be supplied to the labourers and rates are subject to the approval of the Executive Engineer. G

44Copy pinpoint44. The appellant relied particularly on the contents under the heading ‘Negotiation’. It reads as under:

p. 180 Copy page pinpoint

A “NEGOTIATIONS. During further investigation I do hereby agree for the supply of rice in place of wheat. I also agree to receive either wheat or rice or both to the quantity of 17,500 quintals. I also agree for a rate of Rs.115/- per quintal of coarsed rice and Rs.130/- per quintal for fine rice. I also agree to supply coarsed rice at a rate not exceeding Rs.125/- and fine rice not exceeding Rs.140/- per quintal to the labourers. The other conditions and clauses covered by the tender relating to the supply of food grains remain unchanged. In case of short supply of either wheat or rice compared to the quantity of 17,500 quintals, I shall have claim for compensation on this account.”

45Copy pinpoint45. The first thing we have to deal with is whether the High court was wrong in rejecting the said claim. The reason for rejecting the claim by the High Court are as follows:

D 1. There is no such total liability on the part of the Government to supply the food grains without which he (apparently the appellant) could proceeded with.

2. The very clause which has been relied upon by the contractor for supply of food grains reduced to the fact that such supply E would be made only if available and therefore it is not the case of the contractor that though foodgrains were available it is not supplied by the Government.

3. There is no mention of any evidence in this regard let in on behalf of the contractor. It is thereafter that the High Court F holds that therefore it is again the compensation which comes within the bar of Clause 59.

46Copy pinpoint46. At first blush, the claim relating to food grain even as understood by the High court does not appear to have anything to do with compensation for delay. The case based on hindrance also does not G appear to be made. We shall, however, consider the matter in some detail.

47Copy pinpoint47. The High Court has not adverted to the clause in the contract under the heading ‘negotiation’ which we have referred to. Instead the High court has proceeded on the clause which undoubtedly contemplated H

SRI K. MARAPPAN (D) THR.SOLE LR.BALASUBRAMANIAN 181 v. SUPERINTENDING ENGR T.B.P.H.L.C. [K.M. JOSEPH, J.]

supply of food grain only subject to availability. The clause after the negotiation was carried out however brought about the following changes: In place of wheat, the appellant agrees to take either wheat or rice and the price at which it was to be supplied to the workers was also stipulated. The other conditions in the contract relating to the food grain remained unchanged. This means that it could be said that it was subject to availability and we have also referred to clause which provides that appellant is bound to accept the quantity at the stipulated rate, if offered. However, a significant change which was brought about was that in case of short supply of either wheat or rice compared to a specific quantity of 17,500 quintals, the appellant was given the right to claim for compensation. Therefore, this clause, in our view, brings about the change which has not been considered by the High court. Since the sub Court has given other reasons, it may be necessary to consider what sub Court has held.

48Copy pinpoint48. The sub Court takes note of the provisions under the heading ‘negotiation’ which we have referred to except the condition that in case of short supply the appellant will have the right to claim compensation on this account. The sub Court proceeds to hold the conditions are incorporated with a view to cast a duty to receive a particular quantity of food grain in lieu of cash and to supply them to labourers at a stipulated rate and it is for the benefit of the State as the State would receive the food grains under the food for work programmes under the Government of India scheme free of cost. Further, it is for the benefit of the labourers. The sub Court proceeded to further hold that the purpose of the food for work programme was to create employment and the contractor is not to get any benefit out of this condition. The contractor is bound to make record of the food grains received from the Government and supplied to the labourers at the specified rate. He cannot sell the food grains at the market rate. He is the happiest person and need not discharge the burden cast under the condition relating to food grains if food grains are not supplied. The appellant was trying to take advantage of this. There is no promise to supply a particular quantity of food grain. The appellant has no obligation to supply food grains to the labourers if the Government did not provide him food grains. The Sub Court also did not find favour with the contention of the appellant that taking the attractive clause of supply at subsidized rate, he quoted lesser rate and, therefore, for non-supply he is entitled to be compensated. It is found that the appellant is not H

p. 182 Copy page pinpoint

A entitled to compensation as it is not an attractive clause. The Court further found that the arbitrator was carried away by the letters written by the Engineers wherein they have opined that the contractor quoted lesser rates on account of this attractive clause. It would become an attractive clause only if the Engineers concerned permitted the appellant to misutilise the grain by selling the food grain by the contractor in the open market. B The appellant is bound to pay fair wages under the contract (It is true that under the contract clause the appellant shall not pay less than the fair wages).

49Copy pinpoint49. It is found that department officers misunderstood the food for work in their letters. The arbitrator relied on such letters as if the C Engineers are the master to interpret the term of the contract. It was further found that there is absolutely no basis that food grains were in plenty with the Government. The sub Court further finds that the reliance placed by the arbitrator at Exhibit A.22 for availability was not justified. He referred to Exhibit A.22 with annexure also. The contention of the appellant was that he promised to the labourers that he would pay a portion of their wages by way of food grain at specified rate and he had to supply the food grains at the subsidized rates as promised by purchasing the food grains at higher rates. The sub Court finds that there is no evidence produced before the arbitrator to show that he purchased food grains from the open market and supplied those food grains to the labourers at the subsidized rates. In case of supply of food grains, the appellant was bound to maintain record of proper distribution but the appellant has not produced any such register, it is reasoned by the sub Court. Next it is found that the appellant even it is true that he agreed that the workers are to be supplied a certain portion of the wages in food grains, he cannot fix wages in such a manner that the contractor would get any advantage out of it as it is not contemplated under the scheme. He has to pay the fair wages and besides fair wages he had to provide additional facilities by providing food grains at the subsidized rates. The question of supply of food grains to worker by appellant in the event of non-supply of the same by the Government did not arise. It is further found that there is no provision in the agreement to the effect that in case of failure to supply food grains the Government is liable to compensate the loss that may be sustained on account of failure of the department to supply food grains, and the arbitrator patently exceeded jurisdiction. H

SRI K. MARAPPAN (D) THR.SOLE LR.BALASUBRAMANIAN 183 v. SUPERINTENDING ENGR T.B.P.H.L.C. [K.M. JOSEPH, J.]

50Copy pinpoint50. The first thing that stands out in the reasoning of the sub- A Court is the absence of any reference to the clauses specifically under the heading ‘negotiation’ which specifically confers a right of compensation in case of short supply of either wheat or rice compared to the quantity of 17,500 quintals (Agreement No.11/78-79). This means that while the parties contemplated that a part of the wages was to be paid by way of supply of food grains at the stipulated price, the obligation of the appellant was to take the food grain supply from the Food Corporation godown and carry it to the work site. He was to further supply the said food grains to the workers at a higher specified rate in view of the fact that he would incur certain expenses. This undoubtedly was subject to availability. But introduction of the clause in the contract that in case of short supply of either wheat or rice in comparison to the actual quantity which was agreed to be supplied, the appellant will have a claim for compensation on the said count has been missed by the sub Court as also the High Court.

51Copy pinpoint51. The sub-court has proceeded to find that the case of the contractor appellant that the clause providing for supply of food grains was an attractive clause, was not correct. We are inclined to agree with the said finding. In the claim filed by appellant what is stated inter alia is as follows: “(ii)…………The tender documents provided for supply of wheat at the quantities mentioned above. It also provides that the charges on account of the storage, transportation, the cost of the container as fixed by the Government, and sales tax have to be borne by the contractor. The contract condition also further stipulates that the contractor has to supply the wheat to the labourers consistent with their requirement and at the rates not exceeding Rs.125/- F per quintal. It is also mentioned in the contract that a particular quantity of wheat at Rs.115/- per quintal, will be supplied to the contractor for being issued as wages to labourers employed on the work. On the representation made by the contractor on this clause there was negotiation and agreement was arrived at G between the contractor and the Department to the effect that the contractor will receive the quantity of grains to be supplied either as wheat or as rice or both, further stipulating the rate at which it is to be supplied fixing the rate at Rs.115/- per quintal for coursed rice and at Rs.130/- per quintal for fine rice and also stipulating H

p. 184 Copy page pinpoint

A the rates at which the contractor is to pay to the labourers, retaining the other conditions and clauses covered by the contract relating to the supply of food grains. (iii) In short the agreement stipulates that the food grains will be supplied by the Department to the contractor at the specific rates, which of course are competitive rates as against the rates of the grains to be acquired from the open market. The contractor took this important and attractive aspect into consideration and submitted his tender at the most competitive rate only on account of the advantage he would derive from the department supplying the food grains at specific rates which he would pass on to the labourers.”

52Copy pinpoint52. A perusal of the aforesaid averments will reveal that the tender document contemplated supply of wheat of a particular quantity at Rs. 115/- per quintal and the contractor was to supply at Rs.125/- per quintal to workers. Thereafter, it is stated that on a representation made by the contractor there was negotiation and an agreement was arrived at between the contractor and the department. The contractor was to receive the quantity of food grains either as wheat or rice or both. In other words, reference is made to the clause coming under negotiation. It is thereafter stated that in short, the agreement stipulated that the food grains will be supplied at specific rate which were competitive rates as against the rates in the open market. It is further alleged that the contractor took this important and attractive aspect into consideration and submitted his tender at the most competitive rate only on account of the advantage he would derive from the department.

53Copy pinpoint53. It is to be noted that even according to the appellant, the tender documents provided for supply of wheat. The contract was settled by calling tenders. The appellant submitted his tender which turned out to be the lowest. At the time of submitting his tender the condition relating to the negotiated settlement could not have been there. If that is so, the original tender conditions contemplated supply of wheat at Rs.115/- per quintal, if available. The appellant was to supply the food grains only if the food grains were made available by the Government. Therefore, it is totally untenable for the appellant to set up a case that attracted by the clause which resulted from the representation and negotiation, he submitted his tender. May be at the time of entering into the contract following his representation and negotiation the clause was incorporated

SRI K. MARAPPAN (D) THR.SOLE LR.BALASUBRAMANIAN 185 v. SUPERINTENDING ENGR T.B.P.H.L.C. [K.M. JOSEPH, J.]

which provided for supply of rice or wheat and other terms. In other words, at the time when appellant submitted his tender which may have been lesser than the estimated rate by about 10 to 12%, the negotiated clause was not there. On this score, the case sought to be built up around the clause being attractive cannot be accepted.

54Copy pinpoint54. Secondly, as regards the supply of food grains, the appellant is not correct in having contended that the appellant was duty bound to supply food grain even if the food grains were not supplied by the department. The sub-Court is correct in concluding that appellant was duty bound to supply food grains only if it was supplied to him by the department. This is because despite the clause resulting from negotiation, the other conditions remained intact. A perusal of the clause relating to supply of food grain would show that food grains would be supplied, if available. Again, the words “if offered” is conspicuous. The words in the clause which provided that the appellant shall supply food grain to the labourers is not to be considered in isolation.

55Copy pinpoint55. The sub-Court is not correct in coming to the conclusion that the appellant was bound to pay the fair wages to the workers and he was also liable to offer food grains apart from fair wages. A perusal of the clause makes it clear that what was contemplated was if the food grains were available and supplied, the appellant was to make use of the same supplied it to the workers ‘in lieu of wages’. E

56Copy pinpoint56. There are a few aspects which remain. Firstly, what is urged before us is that the under the negotiated clause the department agreed to supply a definite quantity of food grains. In agreement No.11, it was 17500 quintals. We proceed on the basis that in other two agreements, different quantities as claimed by the appellant was mentioned. We notice F that in the claim while the appellant has referred to the negotiated clause relating to supply of rice and also providing for the quantity, there is no reference to the clause that appellant will be entitled to compensation if there is short supply of food grains. This clause is also not considered either by the sub court or by the High Court. Very interestingly this is what the arbitrator has said. G “It is argued for the Department that agreement clause is that contractor is not entitled for compensation even if there is non supply of food grains. I do not agree with this submission because the words used in the agreement are ‘short supply’. The agreement H

p. 186 Copy page pinpoint

A does not state that the contractor has no claim in case of non supply of food grains. The counsel for the contractor submits that his clause was subsequently negotiated because intention of the parties was that contractor cannot insist on wheat alone or rice alone and if there is short supply either of rice or wheat, then for that short supply contractor has no claim for compensation. I am inclined to agree with the submission of the counsel of the contractor that so called clause in the agreement does not apply and it is not a bar to the contractor claiming compensation.”

57Copy pinpoint57. However, in the contractual provision which we have extracted, we notice that right to claim compensation is reserved to the contractor in case of short supply. But then, the case of the appellant is not of short supply but of non-supply. The appellant in his written submission also in paragraph 3 stated as follows: “The Agreement at Vol.3, Pg.71, 72 refers to this head. At Pg.72 after the head ‘Negotiations’ the clause reads as under: D “….In case of short supply of either wheat or rice compared to the quantity of 17,500 quintals, I shall have claim for compensation on this account.”

58Copy pinpoint58. Further, it is relevant for us to notice the discussion by the arbitrator regarding the quantum of compensation. The arbitrator relies upon the Statement No.3 appended to claim No.III wherein he has shown the prevailing rate of rice in the open market during the period November 1979 to October 1982. The amount which he has paid for the labourers for purchase of food grain on the basis of rates in the open market, the price of food grain payable to labourers for purchase of food grain as per the agreement condition and the extra amount involved due to non supply of food grain by the department. The arbitrator found that the statement shows that the extra amount paid varies between Rs.162/- and Rs.211/- per quintal in the said period. On striking an average, it came roughly to about Rs.185/- per quintal which the appellant paid to the workers for non supply, finds the arbitrator. Further the arbitrator found that the labourers cannot purchase rice from the fair price shops because they were not rice card holders. The arbitrator referred to the communication to the Executive Engineer dated 23.⁷.1987 wherein he has stated that 1000 to 1200 workers work daily in each works and the rates for the food grain in the open market are increasing day by day, H

SRI K. MARAPPAN (D) THR.SOLE LR.BALASUBRAMANIAN 187 v. SUPERINTENDING ENGR T.B.P.H.L.C. [K.M. JOSEPH, J.]

therefore he has no hesitation in awarding price increase by restricting it A to 180% though the contractor’s statement shows 185%. Thereafter, the arbitrator awarded as follows: “The quantity agreed to be supplied by the Department namely rice to the contractor under agreement No.10 is 13,200 quintals, under agreement No.11, it is 17,500 quintals and under agreement B No.14, it is 20,000 quintals. In the tabular statement contractor claimed difference of rates for 15,521 quintals under agreement No.10 and 20,804 quintals under agreement No.11 and 22,195 quintal under agreement No.14. Thus he claimed higher rates for 58,520 quintals where as the Department agreed to supply him a total quantity of 50,700 quintals is multiplied by Rs.180.00 being C the difference in price he has incurred an additional expenditure of Rs.91,26,0000.00. Accordingly he is entitled to compensation for Rs.23,70,000.00 under agreement No.10/1978-79 and Rs.31,50,000.00 under agreement No.11/1978-79 and Rs.26,00,000.00 under agreement No.14/1979-80.” D

59Copy pinpoint59. The arbitrator refers to Exhibit P.1 to P.4 letters. Arbitrator also refers to Exhibit B.3 to B.⁷ letters wherein it is stated that contractor was suffering as he has incurred expenditure on this account as there was a condition in the agreement to give food grains as part of the wages and his aspirations and objectives were not fulfilled because he has quoted less rates. The arbitrator make reference to the negotiations where rice took the place of wheat and thereafter the arbitrator enters the finding that the rice was available. He relies on Ex.A-27 where the Executive Engineer speaks about 1000 to 1200 workers working daily at each work and the rates for food grains in the local market was increasing day by day. According to the arbitrator, there is correspondence that abundant quantity of food grains was available but no adequate arrangements were made to supply the food grains to the contractor. In the letter written by the Chief Engineer to the State Secretary, he notes the case of the appellant that the appellant has quoted lesser rates relating to supply of food grain at stipulated issue rates. The quantum in the three contracts is noted as also the rate and the amount, the value in rupees is noted. The Superintending Engineer has agreed that the food grain could not be supplied since allotment was not received even though there is stipulation in the agreement to supply food grain if available. The aspirations of the appellant could not be fulfilled, it is stated. It is noted H

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A that the price structure of various materials is increased from the date of tender i.e. 10.11.1978. In relation to wheat it is shown an increase of 147%. There is an increase in the case of rice to the extent of 178%. This letter is written on 30.11.1982 Exhibit B-7.

60Copy pinpoint60. First letter written by appellant is dated 30/06/1979. In the said letter this is what he says: “I had requested on several times for the supply of food grains but so far no food grains were supplied to me. I request to make arrangement for the early supply of food grains. In this connection, I wish to state that I had engaged labours on the term that food grains will be supplied to them as a part of their wages and I am supplying food grains to them by purchasing in the local market. Hence, urgent action may be taken for the supply of food grains early otherwise, I have to invest extra finance…”

61Copy pinpoint61. Therefore, the case set up by him is that he has purchased food grains from local market and supplied. In the letter dated 27/08/1980 he states inter alia that he had engaged labourers on terms that rice or wheat will be supplied to them as a part of their wages. He complains that no food grains was supplied. Then he says on the terms agreed to by him he had paid the price of the quality of rice that was cheapest in the market. As can be seen in the second letter the case appears to be that he was paying the labourers the price of rice and he is departing from the case that he was supplying the food grains.

62Copy pinpoint62. In the next letter dated 16/07/1981 he states that he had to go in for additional finance on account of non-supply of food grains. He repeats the same complaint about huge financial outlay on account of non-supply at the specific rate of Rs.115/- per quintal which was actually available, in the last letter dated 07/10/1982.

63Copy pinpoint63. We are of the view that the sub Court is right in holding that the correspondence referred to by the arbitrator did not show that the food grains were actually available with the department and department was only trying to get the food grains from the administration with which the food grains was available. As long as there is some material which substantiated appellants claim before the Arbitrator, the Court hearing the petition under Article 30 and 32 would not reappraise the material to come to the conclusion that the arbitrator went wrong in arriving at a finding of fact. At the same time, if virtually there were no material then H

SRI K. MARAPPAN (D) THR.SOLE LR.BALASUBRAMANIAN 189 v. SUPERINTENDING ENGR T.B.P.H.L.C. [K.M. JOSEPH, J.]

it becomes a case of no evidence. No doubt the contractual provision which provides that the appellant is to keep accounts and produce accounts relating to receipts and distribution may assume relevance when appellant receives food grains from the department and distributes. But at the same time the appellant is putting up the claim for compensation and that too a claim which runs into a fairly large sum. There would certainly be material to evidence the actual purchase and further actual supply to the workers or payment as alleged. Even assuming everything that the appellant says is correct about the fact of the negotiated settlement, there is virtually no material except the appellants statement that the appellant paid for the price of food grains to the workers. Further, the claim involves payment of price of rice at escalated rates for period beyond the contract also and it invites the wrath of Clause 59. We would therefore think that the award of the claim by the arbitrator cannot be sustained. CLAIM NO.IV

64Copy pinpoint64. As regards, claim No. 4 is concerned, it arises from alleged short supply of cement. First of all, we have to find as to whether it is hit by the embargo contained in Clause 59 and also advert to the finding of the High Court. In this regard, the High Court holds that the obligation is similar in nature to the earlier claim, namely, claim no. 3 and nothing is pointed out on behalf of the appellant on facts or in details as to how it can be taken out of Clause 59. We have to ascertain what exactly is the claim raised by the contractor.

65Copy pinpoint65. The claim in brief is as follows: Cement is one of the items to be supplied by the Department at specific issue rates. The appellant, accordingly, perceiving the same as attractive quoted 10 to 12% lesser than the estimate rate. Cement was to be supplied at the issue rate of Rs.416/- per metric tonne. Right from the beginning, there was short supply. The appellant had no other option but to get cement from other sources. Large quantities were so brought from other sources. The Department being aware agreed specifically and by conduct that they will recoup the cement. The appellant had no intention to give cement free to the Department. The quantity of cement used by the contractor for the project had been quantified and noted in the measurement book and the USR (Unstamped Receipt). The quantity of cement supplied by the Department is correctly noted in the cement H

p. 190 Copy page pinpoint

A issue register maintained by the Department. Recoveries had been effected without the actual issue of such quantity by the Department as evidenced by the document like USR and other entries. The appellant appended a tabular statement of quantity of cement used for the work, the quantity which was issued by the Department and the balance quantity which constituted the basis of the claim. B

66Copy pinpoint66. The arbitrator in regard to the said claim finds inter alia that in the letter dated 17.⁸.1980, the Engineer had stated that there is short supply and he was bringing cement from other sources and action may be taken to return the extra quantity of cement. He notes that in the counter of the Department, there is no denial about the quantity of work done by the appellant and also the quantity of cement used by him by bringing from other sources. He further finds that it is stated that the exact short supply of cement can be shown only after taking all measurements. The details in the claim statement which also include, apparently, the tabular details was not denied in the counter. Though, the cement issue register and the USR were called for by the appellant, they were not produced. Adverse inference was drawn. The arbitrator further noted that in the bill the quantity of cement used has been recovered, though the quantity has not been issued and in the last bill, more quantity was given representing part reimbursement. The letters of the Department were also found to support the case of the appellant. E Referring to the objection in the counter that no vouchers were produced by the appellant, it was brushed aside as immaterial as it is found that it is proved that he was bringing cement from other sources to complete the work except a small quantity under Agreement No.14. Reliance is placed on Section 70 of the Contract Act. The argument without a plea in the counter by the Government pleader that the appellant was saving cement out of the quantity supplied by the Department was found untenable on the basis that engineers would not have permitted it. As far as, clause 10 of the Agreement prohibiting any claim for compensation for non-supply or delayed supply, the arbitrator found that appellant is only asking for return of cement brought by him and used in the construction on the assurance of the Department that it will be reimbursed. In total 3790 metric tonnes of cement were found to be brought by the appellant. Rejecting the claim of the appellant for market rate and applying the departmental issue rate of Rs.416/- per tonne different amounts were awarded under the three different contracts. H

SRI K. MARAPPAN (D) THR.SOLE LR.BALASUBRAMANIAN 191 v. SUPERINTENDING ENGR T.B.P.H.L.C. [K.M. JOSEPH, J.]

67Copy pinpoint67. We would think that this claim cannot be said to be hit by A clause 59 as appellant is not claiming compensation for any delay. On the other hand, his case is that, contrary to the agreement that he would be supplied the cement it was not supplied and he had to use cement by spending money from his pocket and he only wanted that cement actually used which is in excess of the cement issued to be given to him. More B importantly, the amount awarded is at the rate fixed in the original contract and no escalation is given.

68Copy pinpoint68. The Sub-Court, however, set aside the award. The Sub-Court finds as follows: - Cement is a controlled commodity and it could not be purchased from outside, without valid permit. It was found that the appellant did not produce any document to show that cement was actually purchased from outside. The source was not mentioned. The appellant did not produce any permission from the Department for purchasing cement from outside. Even if purchased, it was to be checked by check measure but there was no check measurement. The tabular statement shown by the appellant, only represents the theoretical requirement in the quantity of cement. He referred to the contractual provisions in this regard which we will refer to. In the letters of the Officers, there is no reference about the use of cement by the appellant which was brought from outside. The letters written by the appellant also complained only of inadequacy of supply of cement and there is no mention of use of cement which he brought from outside. More importantly, he referred to the contractual provision to find that the Government is entitled to recover the cost of theoretical quantity which is not used and use of any lesser amount in comparison to theoretical amount would only enure to the Department. F

69Copy pinpoint69. We must refer to the contractual provision which has not been referred to by the Arbitrator. The contract provides that cement will be supplied at cost by the Department inter alia and the cost of cement issued will be recovered from the contractor’s bill at the rate specified. The contract also contains the theoretical requirement of important materials which include cement which are set out. The rate of recovery G is shown as Rs.416/- per metric tonne. However, the important aspects which weighed with the Sub-Court are contained in the following provisions relating to the scarce materials like cement. It reads as follows:-

p. 192 Copy page pinpoint

A “The contractor is expected to use the scarce materials like cement and steel as per the theoretical requirements shown above. A schedule of quantities of important materials like steel cement etc., required for execution in accordance with the requisite specifications is appended hereto for which recovery will be affected. If these materials drawn according to a schedule are short used, the excess quantity so drawn should be returned to the Department in good condition and no payment will be made to the contractor therefore. If they are not so returned to the department, their cost will be recovered at the market rate prevailing at the time of supply or the issue rate whichever is greater plus storage charges plus sales tax if leviable. If materials are drawn in excess of theoretical requirements indicated in the appended schedule, the excess quantity should be returned to the Department in good condition. If they are not so returned to the Department their cost will be recovered at issue rate plus 100% surcharge or market rate whichever is higher plus storage and sales tax if leviable. If materials are either short drawn or short used (though drawn according to schedule) (1) the savings due to short drawal/ use should be secured to Government by recovering the cost thereof at issue rate from the Contractor. In the case of materials short used, though drawn according to schedule this recovery will be in addition to the recovery to be made for the cost of materials not returned as stipulated above. The Executive Engineer will decide the approximate requirements of explosives. If they are drawn in excess of the same, the excess quantity should be returned in the Department in good condition. If they are not so returned to the Department their cost will be recovered at issue rate plus 100% surcharge over from the contracting bill. G The Contractor should maintain separate ledgers for each of the items which are either supplied by the Department or required to be procured by the Contractor and permit the Exec. Engineer or his authorized subordinate or scrutinize the Registers any time and note in account of the materials on hand.” H (Emphasis supplied)

SRI K. MARAPPAN (D) THR.SOLE LR.BALASUBRAMANIAN 193 v. SUPERINTENDING ENGR T.B.P.H.L.C. [K.M. JOSEPH, J.]

70Copy pinpoint70. Let us see what the contract has really provided for. We are doing this for the reason that the Sub-Court set aside the award in regard to this claim. The appellant filed revisions against the judgment of the Sub-Court. We have noticed that essentially, the High Court proceeded based on the Bar under Clause 59. The matter has not been dealt with as such by the High Court. Here also after finding that Clause 59 will not come in the way of the claim, we could have remitted back the matter to the High Court for consideration of the matter. Having regard to the long efflux of time, we are undertaking the task of considering the matter.

71Copy pinpoint71. A perusal of the contractual provisions which we have referred to yields the following inevitable result. Cement is a scarce material to be supplied by the Department. The appellant was to maintain separate ledger for the item for which cement was supplied by the Department. The issue price was Rs.416/- per metric tonne. The cost of cement at the said rate was to be recovered from the appellant’s bill at the issue rate. Thus, if the value of the work is Rs.100/- and the value of the cement is Rs.5/-, the appellant would get only Rs.95/-.

72Copy pinpoint72. The next question is the effect of the other provisions which we have quoted. We have already noted that there are theoretical requirements in regard to the use of cement. It is not unnatural for the Department to prescribe for the theoretical requirement. This is to ensure that it is used exactly as per the theoretical requirement so that the structure on the one hand is built in a safe manner and at the same time nothing in excess is used so as to avoid wastage of scarce material. There are three situations which are contemplated. In the first situation, it is provided that if materials are drawn according to the schedule and are short used then the excess quantity is to be returned to the Department F in good condition and for the same the contractor will not get any payment. Furthermore, if the short-used material is not returned to the Department, their cost will be recovered at the market rate or at the issue rate which is greater plus wastage charges and sales tax. An example which we may take, would be if the requisite specifications is that 10 metric tonnes G of cement is to be drawn and he draws 10 metric tonnes but he actually used only 8 metric tonnes there will be a short use of 2 metric tonnes which he would have to return to the Department.