Union of India (Uoi) and ors. Vs. Madani Construction Corporation Private Limited and anr. - Court Judgment

Excerpt:
- - according to respondents, several correspondences followed but without any result and then respondents filed an application before the gm, ner to appoint an arbitrator to adjudicate the dispute as per clause 63(3)(1)(a) of the general conditions of contract but gm did not do so despite lawyer's notice compelling respondents to file the suit praying for issuing notice to appellants to show cause as to why appointment of arbitrator be not made absolute and in case of failure to give reply, arbitrator be appointed by court. m.l. visa, j.1. this appeal, with the consent of parties, has been heard when it was listed under the heading 'for hearing under order 41, rule 11, cpc' for its final disposal at that stage.2. the appellants have filed this appeal against the judgment and decree dated 24.12.1999 and 21.01.2000 respectively, passed by subordinate judge iv, samastipur in title suit no. 77 of 1991/68 of 1999 filed by respondents under section 20 read with section 8 of arbitration act, 1940.3. the case of respondents is that respondent no. 1 is an approved railway contractor and respondent no. 2 is its guarantor and in pursuance of tender notice no. w-l/99 of 1988, dated 27.10.1988 issued by appellant no. 3, the respondents submitted tender for construction of a new railway bridge at a place between raxaul and ramgarhwa railway stations. this tender was accepted and date of commencement was 01.01.1989 and work was to be completed on or before 27.03.1989. respondents started collecting materials and engaging labourers from outside with a view to start the work and complete the same within the stipulated period and since the job was challenging one, the respondents mobilised all the resources to perform the contract within time and moved to the work site with men and materials duly stored near the work site but local inhabitants came to work site in large numbers and did not allow the respondents to carry the work. respondents immediately informed the appellants and requested them to resolve the matter but they were advised by senior dm/s.p.j. not to precipitate the matter. respondent no. 1 wrote letter dated 02.06.1989 to drm (engg.) s.p.j. for compensation for losses suffered due to breach of contract and also informed that respondents had decided to revoke the contract and they received reply that no claim for compensation was maintainable and there was no such provision in the general conditions of contract. according to respondents, several correspondences followed but without any result and then respondents filed an application before the gm, ner to appoint an arbitrator to adjudicate the dispute as per clause 63(3)(1)(a) of the general conditions of contract but gm did not do so despite lawyer's notice compelling respondents to file the suit praying for issuing notice to appellants to show cause as to why appointment of arbitrator be not made absolute and in case of failure to give reply, arbitrator be appointed by court.4. appellants appeared before the court below and opposed the prayer of respondents submitting therein that although tender of respondents was accepted and contract agreement in question was signed by appellant no. 4 on 16.01.1989 although respondents had signed and executed it on 29.12.1988. according to them, the case of respondents that the date of commencement of work was 01.01.1989 is not correct because agreement was executed on 16.01.1989 as such the work could not have commenced prior to execution of agreement. their further case was that the claim of respondents that they moved to start the work with men and materials near the site of work is not maintainable because neither the work order to perform the work was accorded nor the site of work was handed over to the respondents. for the reason for not handing over the site of work to respondents, case of appellants is that it was due to compelling circumstances which were beyond their control. they prayed for dismissal of the suit.5. the court below, after hearing both the parties, decreed the suit and directed the appellants to appoint arbitrator to settle the dispute between the parties within ninety days from the date of order failing which respondents shall be entitled to get arbitrator appointed through the process of court.6. the facts that no work order was issued in favour of respondents, work site was not given to respondents and the construction work was even not started are admitted. it is also an admitted fact that the construction work could not be started because of objections raised by inhabitants of the area where construction of a bridge was proposed. it is not the case of respondents that by any action of appellants, the work could not be started. the learned counsel appearing on behalf of respondents has argued that under clause 64(1) of general conditions of contract, the respondents are entitled to make their grievance before an arbitrator. the relevant portion of clause 64 of general conditions of contract is stated in clause 64(1)(i) which reads as follows:64(1)(i) demand of arbitration-in the event of any dispute or difference between the parties hereto as to the construction or operation of this contract, or the respective rights and liabilities of the parties on any matter in question, dispute or difference on any account or as to the withholding by the railway of any certificate to which the contractor may claim to be entitled to, or if the railway fails to make a decision within 120 days, then and in any such case, but except in any of the 'excepted matters' referred to in clause 63 of these conditions, the contractor, after 120 days but within 180 days of his presenting his final claim on disputed matters, shall demand in writing that the dispute or difference be referred to arbitration. 7. the learned counsel of respondents has further argued that the aforesaid clause states about dispute or difference between the parties as to the construction or operation of contract and because respondents were required to complete the work within a period of three months as per the terms of contract so they brought labourers from outside after making advanced payment to them and they mobilised the materials for taking the same to work site and this amounts operation of the contract. as stated above, no work order or work site was given to respondents and no work was started. the court below in para 15 of its judgment has observed that the situation prevailed at the work site of construction was beyond the control of contractor. the learned counsel of appellants has submitted that the court should have taken note of the fact that the situation was equally beyond the control of appellants also. the respondents have raised a dispute in respect of compensation which they are claiming for preparation made by them before commencement of the work. their demand does not relate to actual construction which was the subject of contract. the learned counsel of appellants, as stated above, has termed the preparation of collecting labourers, materials, etc. as operation of the contract. any preparation made by respondents before receiving work order or work site cannot be termed as operation of the contract. in the present facts and circumstances of the case, respondents are not entitled to get any compensation from appellants because between the parties, there is no difference or dispute arising out of terms of contract. in such situation, the question of appointment of an arbitrator in absence of any dispute between the parties does not arise.8. in the result, this appeal is allowed. the judgment and decree dated 24.12.1999 and 21.01.2000 respectively, passed by court below are hereby set aside.

Judgment:

M.L. Visa, J.

1. This appeal, with the consent of parties, has been heard when it was listed under the heading 'For Hearing under Order 41, Rule 11, CPC' for its final disposal at that stage.

2. The appellants have filed this appeal against the judgment and decree dated 24.12.1999 and 21.01.2000 respectively, passed by Subordinate Judge IV, Samastipur in Title Suit No. 77 of 1991/68 of 1999 filed by respondents under Section 20 read with Section 8 of Arbitration Act, 1940.

3. The case of respondents is that respondent No. 1 is an approved railway contractor and respondent No. 2 is its guarantor and in pursuance of Tender Notice No. W-l/99 of 1988, dated 27.10.1988 issued by appellant No. 3, the respondents submitted tender for construction of a new railway bridge at a place between Raxaul and Ramgarhwa Railway Stations. This tender was accepted and date of commencement was 01.01.1989 and work was to be completed on or before 27.03.1989. Respondents started collecting materials and engaging labourers from outside with a view to start the work and complete the same within the stipulated period and since the job was challenging one, the respondents mobilised all the resources to perform the contract within time and moved to the work site with men and materials duly stored near the work site but local inhabitants came to work site in large numbers and did not allow the respondents to carry the work. Respondents immediately informed the appellants and requested them to resolve the matter but they were advised by Senior DM/S.P.J. not to precipitate the matter. Respondent No. 1 wrote letter dated 02.06.1989 to DRM (Engg.) S.P.J. for compensation for losses suffered due to breach of contract and also informed that respondents had decided to revoke the contract and they received reply that no claim for compensation was maintainable and there was no such provision in the general conditions of contract. According to respondents, several correspondences followed but without any result and then respondents filed an application before the GM, NER to appoint an arbitrator to adjudicate the dispute as per Clause 63(3)(1)(A) of the General Conditions of Contract but GM did not do so despite lawyer's notice compelling respondents to file the suit praying for issuing notice to appellants to show cause as to why appointment of arbitrator be not made absolute and in case of failure to give reply, arbitrator be appointed by court.

4. Appellants appeared before the court below and opposed the prayer of respondents submitting therein that although tender of respondents was accepted and contract agreement in question was signed by appellant No. 4 on 16.01.1989 although respondents had signed and executed it on 29.12.1988. According to them, the case of respondents that the date of commencement of work was 01.01.1989 is not correct because agreement was executed on 16.01.1989 as such the work could not have commenced prior to execution of agreement. Their further case was that the claim of respondents that they moved to start the work with men and materials near the site of work is not maintainable because neither the work order to perform the work was accorded nor the site of work was handed over to the respondents. For the reason for not handing over the site of work to respondents, case of appellants is that it was due to compelling circumstances which were beyond their control. They prayed for dismissal of the suit.

5. The court below, after hearing both the parties, decreed the suit and directed the appellants to appoint arbitrator to settle the dispute between the parties within ninety days from the date of order failing which respondents shall be entitled to get arbitrator appointed through the process of court.

6. The facts that no work order was issued in favour of respondents, work site was not given to respondents and the construction work was even not started are admitted. It is also an admitted fact that the construction work could not be started because of objections raised by inhabitants of the area where construction of a bridge was proposed. It is not the case of respondents that by any action of appellants, the work could not be started. The learned Counsel appearing on behalf of respondents has argued that under Clause 64(1) of General Conditions of Contract, the respondents are entitled to make their grievance before an arbitrator. The relevant portion of Clause 64 of General Conditions of Contract is stated in Clause 64(1)(i) which reads as follows:

64(1)(i) Demand of arbitration-In the event of any dispute or difference between the parties hereto as to the construction or operation of this contract, or the respective rights and liabilities of the parties on any matter in question, dispute or difference on any account or as to the withholding by the Railway of any certificate to which the contractor may claim to be entitled to, or if the Railway fails to make a decision within 120 days, then and in any such case, but except in any of the 'excepted matters' referred to in Clause 63 of these conditions, the contractor, after 120 days but within 180 days of his presenting his final claim on disputed matters, shall demand in writing that the dispute or difference be referred to arbitration.

7. The learned Counsel of respondents has further argued that the aforesaid clause states about dispute or difference between the parties as to the construction or operation of contract and because respondents were required to complete the work within a period of three months as per the terms of contract so they brought labourers from outside after making advanced payment to them and they mobilised the materials for taking the same to work site and this amounts operation of the contract. As stated above, no work order or work site was given to respondents and no work was started. The court below in para 15 of its judgment has observed that the situation prevailed at the work site of construction was beyond the control of contractor. The learned Counsel of appellants has submitted that the court should have taken note of the fact that the situation was equally beyond the control of appellants also. The respondents have raised a dispute in respect of compensation which they are claiming for preparation made by them before commencement of the work. Their demand does not relate to actual construction which was the subject of contract. The learned Counsel of appellants, as stated above, has termed the preparation of collecting labourers, materials, etc. as operation of the contract. Any preparation made by respondents before receiving work order or work site cannot be termed as operation of the contract. In the present facts and circumstances of the case, respondents are not entitled to get any compensation from appellants because between the parties, there is no difference or dispute arising out of terms of contract. In such situation, the question of appointment of an arbitrator in absence of any dispute between the parties does not arise.

8. In the result, this appeal is allowed. The judgment and decree dated 24.12.1999 and 21.01.2000 respectively, passed by court below are hereby set aside.