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Judgment
Varadachariar, J.—This is an appeal by the South India Railway Company, wherein the company object to some of the items which have
been allowed by the lower Court, out of the claim made by the plaintiff on the basis of a contract between his grandfather and the company, in
connection with the construction of the Shoranur Nilambur Railway. A number of items were claimed, a specified in several sub-paragraphs of
para. 11 of the plaint; some of them have been allowed by the lower Court and some disallowed. In the appeal before us the learned Counsel for
the company has argued only four items. The contractor has also filed a memorandum of objections, taking exception to the lower Court''s
decision in respect of two items, namely, these claimed in sub-paras. 2 and 4 of para. 11 of the plaint,
The main item in dispute between the parties is the one claimed in sub-paras. I to 9 of para.11. There is no dispute as to the amount awardable,
if the right of the plaintiff to make a claim under this head is upheld. The argument has therefore been mainly directed to the question of the
plaintiff''s right to make a claim under this head, on the footing on which he has made it. This in turn involves two questions: (1) as to the proper
construction of the clause under which the Km is made, and (2) whether the Court is altogether precluded from dealing with the matter by virtue of
a decision given by the Chief Engineer of tie Railway, which decision is made final by Clause 41 of the agreement. On, the first question, namely,
the construction of the agreement itself, if it is alone to the Court to deal with it, we up not say much, because the learned opnsel for the appellant
has not seriously contested the view taken on that pifint by the lower Court. But as one two considerations bearing upon this question of
construction will also have a hearing upon the second question, namely, as to the finality of the alleged desision of the Chief Engineer, it is just as
well that we say a few words about it. The difference between the parties is whether in respect of certain banks constructed for the Railway, the
contractor is to claim at what are called through'' rates from ground to formation level or only at what are described as sectional'' rates, There can
be no doubt that according to Clause 19 of the specification form adopted by the company in 1909, only ''sectional'' rates Should have been
provided for But we have the fact that in the present case the, tender, Ex A, was made by the contractor on a printed form supplied by the
company specifically in connection with the construction of the Shoranur Nilambur Railway. For whatever reason it be, it cannot be deemed that
this tender form has in several particulars departed from the details set out in the old specification of 1909. The tender expressly provided for
''through'' rates in certain cases and ''sectional'' rates in certain other oases, and it has not been disputed that in accordance with the terms of that
tender the present claim for ''through'' rates is justified. That tender was accepted by the company''s agent and after that acceptance, the
agreement, Ex B, was entered into between the parties. In view of a suggestion made in the course of the examination of D.W. 1. in the Court
below, namely that the words ''through'' rates ought to have been struck out and that by mistake they have been allowed to remain in the form used
by the Railway, It is necessary to point out that not merely was this not the case put forward by the Railway Company in the written statement but
the reference to through rates is entered in manuscript in the Schedule to Ex. B. Hence, there appears to be no basis for the suggestion that there
was any mistake j or omission to score out some clauses. ""With these preliminary remarks we may come to the few documents which bear upon
the question which was mainly argued before us under this head, namely whether there has been any decision by the Chief Engineer which by
reason of Clause 41 of the agreement could be said to have become final between the parties. It is necessary to refer only to Exs. I-a, KK and II.
Ex I-a is a circular letter addressed by the acting Chief Engineer to all the Executive Engineers and Assistant Engineers working on the Mayavaram
Tranquebar Railway on the 29th October 1925. The material portions of Ex I-a are the following:
Apparently there is some doubt existing about the interpretation of this item which reads: Increment for additional height or depth over six feet with
the sub items (a), (b) etc....
The whole section should not be paid at the initial rate plus the increment for a bank 18 feet high. The printed specification of works, III
Earthwork, para. 19 is quite explicit OH how payments should be made.
Pausing here for a moment, we must point out that this apparently had no reference to any particular contract, but was a kind of instruction
which the Chief Engineer thought fit to issue under para. 19, Section 3, Ex. 4 before him. On the terms of that provision there is hardly any room
for doubt. But it will be impossible to connect Ex. 1-a with the suit contract, not only because no claim had been made under the suit contract at
the date of Ex. 1-a, but also because the suit contract has not followed the language of Ex. 4 in this respect. The next document Ex. KK is a letter,
dated 22nd December 1926, sent by the Chief Engineer to the Executive Engineer of the Shoranur Nilambur Railway. Referring to the question of
payment for earth work the Chief Engineer there says:
This was discussed with you on the 16th instant at Angadipuram. The interpretation to he given to the clause '' these are through rates from ground
to formation level '' is, the rates are through from ground to formation, i.e., on the various steps 0 to 6, 6 to 9, 9 to 12 and so on. It would be
absurd to claim that the first 6 feet in a bank 9 feet: high cost any more to ''V1 throw up than the 6 feet in a bank 6 feet high. In fact it would be the
other way round as there would be leas dressing to do in proportion to the contents.
Here, we must repeat what we have said before, in dealing with Ex. 1-a, that'' this is a kind of executive instruction issued to his own
subordinates before any particular claim had been made so far as the plaint contract was concerned : and even before us, it was not insisted on as
amounting to any decision within the meaning of Clause 41.
On behalf of the appellant, reliance Was chiefly placed upon Ex. 2. There can be no doubt that Ex. 2 was sent after the claim for payment under
the suit contract had been put forward by the contractor But it is important to examine its terms to see whether it can be regarded as a decision
within the meaning of Clause 41. It is admitted that neither Ex. 1-a nor Ex. KK had been communicated, to the contractor, though D.W, 1 says
that, sometime or other, in the course of a conversation between them he might have informed the contractor about the views stated in this
document. In the bill which the contractor submitted, the Executive Engineer seems to have allowed only a much smaller rate as now insisted on by
the company, and the contractor therefore wrote, to the Engineer to say that ho is unable to see why his claim at the higher rate had not been
admitted by the company. (See para. 1, Ex. D-1). We may however mention that in a letter dated 23rd November 1927, sent by the Assistant
Engineer in charge of the Shoranur Nilambur Railway to various contractors including the plaintiff, there is a statement that the calculations for
payment for lift'' have been made in accordance with the Engineer in chief''s instruction and his decision. The letter then goes on to say:
I have therefore to refer you to Clause 41, of your agreement and to ask you to call at the office to sign the final measurements and bills in full
acceptance to enable their being passed for payment.
It. does not however appear that any further light was thrown on this reference to 01. 41, or to the Engineer''s decision, so far as the information
available to the contractors went. Soon after the claim under Ex. D-1 was made, it would appear from the evidence of D.W. 1 that the Sub Office
dealing with matters relating to the Shoranur Nilambur Bailway was closed and all matters relating thereto were dealt with by the Chief Engineer
himself. So far as the record discloses, that appears to be the reason why Ex. D-1 was sent up to the Chief Engineer for disposal. There is nothing
either in the documentary evidence or in the evidence of D.W. 1 to suggest that it was by reason of any request to him to decide a dispute between
the parties in terms Of Clause 41 that the matter was sent up to the Engineer in Chief All that we find from a note (Ex. D-2) on Ex. D-1 is that it
was forwarded to the Engineer in Chief with the statement of remarks by the Assistant Engineer and by D.W. 1. What these remarks are we do
not know as they have not been placed before the Court. It is admitted by D.W. 1 that when Ex. D-1 was received by the Chief Engineer, he
discussed the contractor''s claim with D.W. 1, that the contractor was not present at the discussion, that there was no other evidence before the
Engineer in Chief except what was contained in Ex. D-1 itself and that the Engineer in Chief relied upon his knowledge of the works and the
witness''s knowledge. Under these circumstances, a communication was sent to the contractor giving the answer of the Engineer in Chief to the
claim made in Ex. D-1. That is Ex. 2 In respect of the claim now in question, it states, in para. 1, that
the measurements for lift recorded in the final measurements are in accordance with the agreement and specifications and as per my instructions on
the subject and payment in the manner claimed by you is inadmissible.
There is a note, marked Ex. 2-a in the case, dated 14th February 1928, which purports to be a note by D. W, 1 sending up the draft of Ex. 2,
to the Chief Engineer for approval and signature. It is suggested on the plaintiff''s side, that Ex. 2, has really been prepared by D.W. 1 himself and
sent on'' in the ordinary course with the signature of the Engineer in Chief like any other office communication. D.W. 1 would however state that he
drafted. Ex. 2 under instructions given to him orally by the Chief Engineer. It does not seem to us very material whether the draft was made in one
way or the other The real question for decision is whether in sending Ex. 2, the Chief Engineer could be held to have acted with the consciousness
that he was disposing the matter under Clause 41 of the agreement.
Our attention has been drawn to several cases dealing with the position of architects or engineers whose decision is made final, in respect of
contracts ""whose execution is put under their supervision. It is not necessary to refer to them in detail. There has no doubt been a consensus of
opinion that they are not ""arbitrators'' in the sense in which that term is used in the Arbitration Act, but all the cases recognize that whether called
arbitrators or quasi arbitrators or by any other label, they are, when exercising that kind of power discharging ''judicial'' functions. Decisions of the
Privy Council and of the House of Lords particularly emphasize that engineers placed in that situation, especially when they happen to be the
employees of one of the contracting parties, are in a very delicate and embarrassing situation, and while on the one hand it is true that the other
party is bound by a contract into which he has entered with his eyes open knowing that finality is attached to the decision of an employee of the
other side, that party lis entitled to insist that that person ''should have acted judicially with a full (realisation of the responsibilities of his position. in
dealing with a matter of that kind.
We are not now called upon to define the extent of formal procedure which should be adopted by a person exercising such a power; but the
procedure followed by him is at least important as indicating whether in the particular instance he intended to act only as a servant of one of the
contracting parties or in the conscious exercise of the powers conferred on him by the special terms of the agreement. This aspect of the question is
adverted to by their Lordship3 of the Privy Council in Bombay Burmah Trading Corporation, Ltd. v. Aga Mahomed Khaleel Shirazi (1911) 34
Mad 453, by the House of Lords in Hickman and co. v. Roberts (1913) AC 229 and Bristol Corporation v. John Aird and co. (1913) AC 241.
Two other eases referred to by the learned counsel for the appellant, namely, Bristol Corporation v. John Aird and co. (1913) AC 241 and
Chambers v. Goldthrope (1901) 1 QBD 624 are not much in point. They deal with the question how far an engineer or architect acting under such
circumstances can be held liable for negligence. It is one thing to say that he will not be liable for negligence, but quite another thing to say whether
he could be held to have acted judicially or not, in a particular matter. For instance, an award may be void owing to the fact that certain well
understood rules have not been complied with but, all the same, the arbitrator may not be liable in damages. We therefore think that these two
cases really do not throw any light on the question for decision.
Taking it then, that a Court, called upon to hold any expression of opinion by such an engineer in such circumstances final and conclusive
between the parties, must at least be satisfied that the person was conscious of the fact that he was called upon to exercise that power and was
exercising that power with the sense of responsibility arid judicial independence required for the-purpose, we have given our best consideration to
the circumstances here and we see no reason to differ from the lower Court in the view that it took as to Ex. 2. The evidence does not show that
the Chief Engineer was at all conscious of the fact that the contract in this case differed in very important particulars from the printed specification in
the company''s Standard Book (Ex. 4). Para. 1 of Ex. 2, already quoted only states that the measurements have been prepared in accordance with
the engineer''s instructions on the subject and it is difficult to read it as importing; a further decision that these instructions are right, in view of the
terms of ''the particular contract. It is from this point of view that we attach particular significance to the fact that the contractor had not been heard
at all before Ex. ''2 was sent. It is one thing to say that he agreed to abide by the decision of a person who might have pre-formed views in the
matter, but it is a different thin to say that these pre-formed-views must bind him merely because they are reiterated in a subsequent letter before he
has. had any opportunity to persuade the engineer in favour of his own contention. For these reasons we are unable to hold that Ex. 2 falls within
the terms; of Clause 41 so as to preclude the Court from putting its own construction on the suit contract and giving to the contractor what he is
undoubtedly entitled to under this head under the terms of his contract. (The rest of the judgment is not necessary for purposes of this report).