Government Of Madhya Pradesh & Others vs Munnalal Pannalal Constructions

This revision under Section 19 of Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983 (for short ‘Adhiniyam, 1983’) is directed

against the award dated 10.4.2001 passed by Madhya Pradesh Arbitration Tribunal, Bhopal (for short ‘Tribunal’) in Reference Case

No.33/1988.

On a dispute arising from an agreement for construction of earthen dam from R.D. 668 M to R.D. 1500 M of Kanhargaon Tank Project, District

Chhindwara, non-applicant, viz., Munnalal Pannalal Constructions filed a reference under Section 7 of the Adhiniyam, 1983 before the Tribunal.

Out of seven claims, the Tribunal allowed Claim No.4, based on construction of rock toe consisting of Item No.3 and 3(a) and Claim No. 7 for price

escalation.

As per non-applicant, the rate of work has been mentioned as Rs.60/- per cubic metre for construction of rock toe. Non-applicant has reduced the

rate of 9th and 10th running bill from Rs.60/- per cubic metre to Rs.39.69/- per cubic metre. Similarly, 13th to 16th running bills were also reduced

from Rs.60/- to Rs.39.69/- per cubic metre. Non-applicant has challenged this reduction as arbitrary. Tribunal has allowed Claim No. 4 and held that

non-applicant is entitled to get a sum of Rs.1,57,553/- under the head of Claim No.4.

Under the head of Claim No. 7, non-applicant has claimed that extension of time has been granted to them without any penalty, therefore,

applicants cannot deny escalation of price. Learned Tribunal has allowed the Claim No.7 of non-applicant and held that they are entitled to get a sum

of Rs.46,017.50/-under Claim No.7.

As to Claim No. 4, the Tribunal found that the work executed by the Contractor in respect of Item No. 3 and 3(a) of Schedule ‘G’ was in

accordance with the terms of agreement and there was no justification for the employer to have reduced the rate of work. The Tribunal, accordingly,

awarded sum of Rs. 1,57,553/- towards Claim No.4.

As to Claim No.7, Tribunal found the Contractor entitled for the escalation for extended period attributed to the employer.

Applicants have challenged the award passed by the Tribunal before this Court. It is contended that : â€

(i). Tribunal failed to take into consideration General Condition-6, and 18(b). As per the said Clause, applicants can reduce the rate from Rs.60/- m³

to Rs.39.69/- m³, as stones used in the contract are not quarried but were picked up.

 (ii) Learned Tribunal failed to consider that number of warnings were given to the petitioner, thereafter, decision was taken to reduce the rates as

petitioner continued to use picked up stones for contract work.

(iii) Non-applicant was himself responsible for not completing the work within stipulated time. He cannot take advantage of the same for getting

escalation of price.

(iv) The amount of unfinished work was more than Rs. 60 lakhs, therefore, Superintending Engineer, who is subordinate to Chief Engineer cannot

decide the issue as same is beyond his pecuniary jurisdiction, hence, it was Chief Engineer who exercised the power for extension of time. In view of

above, order has rightly been passed by Chief Engineer and it cannot be said to be without jurisdiction.

(v) Non-applicants themselves admitted that there will be no escalation of price and they also received final bills, therefore, escalation of price was

wrongly allowed by the Tribunal.

The non-applicant, however, opposes the contentions and supports the reasons given given by the Tribunal in allowing Claim No. 4 and 7.

Considered rival submissions and perused the record.

As to contention (i) : â€" General Condition 6 and 18(b) provides that Engineer-in-Charge may reject at any stage the work which he considers to

be defective in quality and shall not be debarred from rejecting materials not in accordance with contract by reason of his having previously passed

them in an unworked condition. Any portion of the work or materials rejected shall be removed from the work site at the contractors expense, upon

written instructions to that effect by the Executive Engineer, Kanhargaon Tank Project Division, Chhindwara. Replacement of such work or material

shall be made at the contractors expense. In lieu of removing the work or material which are not in accordance with the contract, the Executive

Engineer Kanhargaon Project Division, Chhindwara may allow such work or materials to remain, and in that case such work be paid at the reduced

rates as may be decided by Superintending Engineer. Applicants have not taken any ground that the work which was completed by the non-applicant

in respect of rock toe was defective or defective material was used. In absence of any ground that work done in respect of rock toe or material used

for construction of rock toe was defective, the Ground (i) is not available to the applicant and same is rejected.

As to contention (ii) : â€" Learned Tribunal in the award has specifically mentioned that warnings were given to the non-applicant that he is using

picked up stones in place of quarried stones therefore he will be paid at reduced rates. Non-applicant has immediately raised an objection before the

authority that payment for material at a reduced rate is not acceptable to him. Thereafter, non-applicant was made payment of running bills at the rate

of Rs. 60/- per cubic metre. Non-applicant was made to believe that his objection was sustained. Since applicants had made payment to the petitioner

after giving him warning at the rate of Rs.60/- therefore Ground (ii) also does not have any force and same is rejected. Applicants in the civil revision

were unable to show whether quantity of picked up stones were measured and how picked up stones were differentiated from quarried stones. In

absence of same, Tribunal has rightly rejected the grounds raised by the applicants. Applicants have made payment to the non-applicant in respect of

running bill No.1 to 8 at the rate of Rs.60 per cubic metre after giving warning to the non-applicant and after receiving his objection to reduce the rate,

therefore, no fault can be found in the award passed by Tribunal.

As to contention (iii), (iv) & (v) : - It is argued by the counsel for the applicants that non-applicant himself was responsible for the delay for which

he cannot be allowed escalation of price. Applicants had allowed extension of time without imposing any penalty on the non-applicant. As non-

applicant was allowed extension of time without penalty therefore, non-applicant is entitled to get escalation of price. Non-applicant has made

averment that there was heavy rain and rainy season was extended and water was collected in dam due to rain and therefore, non-applicant was

unable to do the work in stipulated period. No order was passed by Superintending Engineer that escalation of price shall not be admissible. The order

passed by Chief Engineer is bad as Chief Engineer has no jurisdiction to pass such order. As per Clause 28 of general conditions contract matters

regarding materials, workmanship removal of improper work, interpretation of contract specifications, mode of procedure and carrying out of the work

shall be taken care of by Superintending Engineer in writing and shall be final and binding on parties. Applicants have not filed any document to show

Superintending Engineer has passed an order. It is argued by the counsel appearing for the applicants that superintendent engineer does not have

jurisdiction to pass orders in respect of work valuing more than Rs. 60 lakhs. Applicants were unable to show that order has been passed by

Superintending Engineer and later, same has been approved by Chief Engineer, therefore, Tribunal has rightly held that in absence of order by

Superintendent Engineer, escalation of price ought to have been awarded to the non-applicant.

In view of aforesaid discussion and considering the grounds which have been raised by the applicants and non-applicant in this revision, there is no

merit in the civil revision filed by the State Government, hence, the same is hereby dismissed. No costs.