IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 19-8-2009 CORAM THE HONOURABLE MR.JUSTICE M.CHOCKALINGAM AND THE HONOURABLE MR.JUSTICE R.SUBBIAH OSA Nos.441 of 2003 and 274 of 2004 and CMP No.7678 of 2004 in OSA 441 of 2003 Y.Savarimuthu Engineers and Contractors No.30, Viswasapuri 3rd Street Madurai 625 016. .. Appellant in OSA 441/2003 and 1st respondent in OSA 274/2004 vs 1.The State of Tamil Nadu rep. By Secretary Public Works Department Government of Tamil Nadu Fort St. George Chennai 600 009. 2.The Chief Engineer (H) TNUDP, Alandur, Chennai 600 016. 3.The Superintending Engineer (H) TNUDP, Circle Chennai 600 015. .. Respondents 1 to 3 in OSA 441/2003 and appellants in OSA 274/2004 4.S.P.Krishnamoorthy Retired Chief Engineer (Highways) Chairman, Arbitration Committee Tamil Nadu 5.S.Vedachalam Retired Chief Engineer (Highways) Member, Arbitration Committee Tamil Nadu https://hcservices.ecourts.gov.in/hcservices/ 6.N.R.Jayavelu Retired Chief Engineer (Highways) Member, Arbitration Committee Tamil Nadu .. Respondents 4 to 6 in OSA 441/2003 and respondents 2 to 4 in OSA 274/2004 Original Side appeals preferred under Order 36 Rule 1 of the O.S. Rules 1994 read with Clause 15 of the Letters Patent against the order and decree dated 29.10.2003 made by this Court in O.P.Nos.419 and 391 of 2000. For Appellants : Mrs.Kahilavani for Mr.S.Ravichandran for appellant in OSA 441/2003 and 1st respondent in OSA 274/2004 For Respondents : Mrs.V.Bhavani Subbarayan Special Government Pleader (CS) Assisted by Mrs.Shanthi Rakkappan for respondents 1 to 3 in OSA 441/2003 & appellants in OSA 274 of 2004 COMMON JUDGMENT (Judgment of the Court was delivered by M.CHOCKALINGAM, J.) These two appeals challenge a common order of the learned Single Judge of this Court made in O.P.Nos.391 and 419 of 2000 whereby an award made by the arbitrators shown as respondents 2 to 4 in OSA 274/2004, was challenged both by the Contractor and also by the State respectively. 2.The appellant in OSA 441/2003, namely the petitioner in OP No.419/2000, a Contractor, who was awarded the work of widening of 4 lanes Inner Ring Road Madras City. The contract amount was fixed at Rs.1,34,93,368/- and the contract period was fixed at 15 months. The contract was given on 10.11.1988, and the same was completed on 18.11.1991. The contractor has raised certain disputes on the grounds that there was a delay in handing over the site, and also he was entitled to escalation charges and loss of profit. The Government questioning the same made G.O.Ms.No.11/PWD/HN2 dated 1.6.1996, whereby a Committee was constituted consisting of the respondents 2 to 4 as arbitrators. The following claims were made by the contractor. (1) Idling charges for the plants due to default of the department of Rs.19.20 lakhs. (2) Balance payment due to escalated cost of Rs.27.47 lakhs. https://hcservices.ecourts.gov.in/hcservices/ (3) Extra lead charges for the mix from Thiruneermalai site of Rs.3 lakhs. (4) Withheld amount in the bill of Rs.3 lakhs. (5) Loss of overhead charges of Rs.11.70 lakhs. (6) Loss of profit to the extent of work executed of Rs.11.70 lakhs. (7) Interest on the amount due for 13 months at 24% p.a. to the extent of Rs.19.78 lakhs. 3.The said claims were opposed by the Government. After considering the claims, an award was passed by the arbitrators whereby the claims made by the contractor in respect of (1) idling charges, (3) extra lead charges and (6) loss of profit, were rejected, and the claims in respect of escalation charges, refund of withheld amount, loss of overhead charges and interest were allowed. 4.Aggrieved over the denial of the claims, the contractor filed OP No.419/2000, while the Government has filed OP 391/2000 to set aside the award in toto. 5.The learned Single Judge raised the point for consideration and dismissed OP 391/2000 at the instance of the State, and OP 419/2000 by the contractor was allowed in part. Under the claim (5) loss of overhead charges, it was found that the contractor was entitled to Rs.1.92 lakhs, and in respect of claim (3) extra lead charges, he was entitled to Rs.3 lakhs, and as regards claim (1) idling charges, the same was rejected. Hence these appeals. 6.Advancing the arguments on behalf of the appellants in OSA 274/2004, the learned Special Government Pleader for the State would submit that the learned Single Judge has not considered that the arbitral tribunal's power to adjudicate the dispute emanates only from the reference, and hence the tribunal should have adjudicated the issue only within the scope of reference; that the learned Single Judge has also committed an error in relying on a judgment of the Division Bench of this Court; that actually there was no escalation clause in the contract, and therefore, the contractor was not eligible for any escalation; that in such circumstances, the counter claim made by the appellant's side, should have been accepted; that on merits the claim for a sum of Rs.1,32,824/- awarded by the arbitral tribunal under the head of loss of overhead charges should have been disallowed; that the specific stand of the department before the tribunal was that the contractor has "already built in the cost" of overheads into his quoted price; that the same was as per the contract condition clause 3A of Column 3; that any further payment over and above would amount to double benefit to the contractor; that having upheld the payment of escalation beyond the period of original completion of the contract, the arbitral tribunal erred in allowing the overhead charges also which could only amount to double benefit to the contractor, and hence the learned Single Judge should have set aside the award made by the arbitral tribunal in that regard; that the amount has also been increased from Rs.1,32,824/- to Rs.1.92 lakhs; that the arbitral tribunal has https://hcservices.ecourts.gov.in/hcservices/ allowed a sum of Rs.1,32,824/- on the ground that soon after the execution of the contract, the contractor in his claim statement to the department on 27.5.1992, had made a claim of only Rs.1,32,824/-; that thereafter, without prejudice even if the contractor is held to be eligible for any amount under the head of loss of overhead, the same ought to have been confined only to Rs.1,32,824/-; that upholding the award of arbitral tribunal in allowing a sum of Rs.2,95,567/- on the claim by the contractor towards quality control charges of testing was erroneous; that it was against the terms of conditions between the parties and was liable to be set aside; that the learned Single Judge has allowed a claim of Rs.3 lakhs under the head 'extra lead' when the same has not even been claimed by the contractor, in OP 419/2000; that the contractor has consciously given up the claim on the head of lead charges; that awarding a sum of Rs.3 lakhs to the contractors was actually without appreciation of the contract conditions; that the contractor has also not proved by way of positive evidence, and under the circumstances, the order of the learned Single Judge has got to be set aside. 7.Advancing arguments on behalf of the appellant in OSA 441/2003, the learned Counsel would submit that as far as the first claim was concerned, the Government did not hand over the site to the contractor immediately; that as early as 18.11.1991, the contractor addressed a letter to the Chief Engineer, Highways, TNUD Project, in which he has stated that the possession of the site was given only on 10.7.1989 after a delay of 8 months; that the designs and drawings for the culvert and re-alignment for the road portion were not supplied; that after taking over the site, the pre-levels should have been given for proceeding with the work, but that was given only on 25.9.1989, and that too for part of the site only; that the rest of the levels were approved only on 4.11.1989; that apart from that, there were many obstructions on the site like electricity board post, telephone post, transformer and encroachment made by the petty shop owners due to which the work was delayed and since the contractor incurred loss, he is entitled to claim escalation; that the learned Single Judge has rejected the claim on the ground that the contractor had not produced any documentary evidence to establish that the machineries which had been hired were stationed in the work site, and further the arbitral tribunal has found that documentary evidence for payment of hire charges to the owners of the plant and machinery had not been produced and therefore the claim was rejected; that it is pertinent to point out that in the claim statement, the contractor had given the statement showing the idling charges per day, and as per the statement it was coming to Rs.6000/- per day; that there was sufficient evidence on record to show that there were 320 days for which the department was liable to pay the idling charges; that he made a claim of Rs.19.20 lakhs; that the rejection of the claim by the atbitral tribunal and also the affirmation by the learned Single Judge were not correct which has got to be set aside; that as far as the claim 6 was concerned, a sum of Rs.11.70 lakhs was claimed; that the same was also rejected; that when the tenders were called for and awarded, the contract stipulated that the entire work was to be completed in 15 months; that on that basis, the contractor worked out https://hcservices.ecourts.gov.in/hcservices/ his overheads at 10% and the profit at 10% on the contract value; that accordingly, overheads and expenditure were regulated; that since the completion period was prolonged from 15 months to 28 months and since by virtue of the conditions of the contract, the contractor was not permitted to move out his men and materials, and he lost Rs.0.90 lakhs per month, and therefore the total loss was Rs.11.70 lakhs; and that the appellant was entitled to this amount; but the learned Single Judge without assigning proper reasons has rejected the same. The learned Counsel in support of her contentions relied on a decision of the Apex Court reported in 2007 (2) SCC 720. 8.The learned Counsel would further add that in similar cases in OSA Nos.312 and 313 of 2002 by a judgment dated 28.3.2002, the claim of similarly placed contractor has been allowed, and hence, all these claims have got to be ordered. 9.This Court paid its anxious consideration on the submissions made and also looked into all the materials and in particular, the order under challenge. 10.As could be seen above, the appellant contractor was awarded with the work of widening of 4 lanes Inner Ring Road of Madras City. Admittedly, the contract value was fixed at Rs.1,34,93,368/- and the contract period was 15 months. Though the work was given on 10.11.1988, the same was completed on 18.11.1991, and thus there was a delay of 13 months. When certain disputes were raised by the contractor, the Government denied the same, and the arbitral committee was appointed, before whom the contractor made 7 claims, out of which the arbitral tribunal rejected the claims 1, 3 and 6, which compelled the contractor to file OP No.419/2000. Equally in respect of the claims which were found in favour of the contractor namely claims 2, 4, 5 and 7, the State was aggrieved and has filed OP No.391/2000. 11.As far as the first claim of Rs.19.20 lakhs towards idling charges for the plant and machinery was concerned, according to the contractor before the learned Single Judge and equally here also, it was due to default committed by the department by causing delay. The learned Single Judge has affirmed the rejection of the claim made by the arbitral tribunal on the ground that no documentary evidence was adduced in order to accept the same. The learned Single Judge has also pointed out that as per the claim of idling charges in respect of the machinery, the contractor had hired all machineries except one tipper, but in order to prove the same, he has not produced any documentary evidence to establish that these machineries were stationed in the work site, and thus he has incurred loss in that aspect, and under the circumstances, it cannot be accepted. It is not in controversy that the work was given on 10.11.1988. Since the site was not handed over immediately, the contractor has addressed a letter to the Chief Engineer, Highways, wherein he has categorically stated that the possession was given only on 10.7.1989 after a delay of 8 months. It was also contended that the designs and drawings for the culvert and re-alignment for the road portion were not supplied, https://hcservices.ecourts.gov.in/hcservices/ and even after taking over the site, the pre-levels were given only on 25.9.1989, and that too only for a part of the site. The obstructions were also to be removed, and thus there was delay. The claim was rejected solely on the ground that no documentary evidence was produced showing that the machineries were either hired or stationed in the work site. But, in the claim statement, the contractor has pointed out that the contractor was to bear Rs.6000/- per day towards idling charges, and there were 320 days for which the department was liable to pay. Merely because on the ground of non- production of documentary evidence, the entire claim, in the considered opinion of this Court, cannot be rejected. But, at the same time, claim of Rs.19.20 lakhs towards idling charges at the rate of Rs.6000/- and also that too for 320 days cannot be accepted in full. However, this Court feels that it could be fixed at Rs.10 lakhs. 12.As far as the denial of claim 6 'loss of profit to the extent of work executed for Rs.11.70 lakhs' is concerned, this Court is unable to see any merit in that claim. The learned Single Judge has affirmed the award in respect of the claim of loss of overhead charges to the extent of Rs.11.70 lakhs. The learned Single Judge has pointed out that the contractor is not entitled to the loss of profit as if he has incurred any loss. If the claims made by the contractor under claims 5 and 6 are allowed, it would be nothing but allowing the identical claims which are shown on two heads, and hence this Court is unable to see any merit in that contention. 13.As far as the claim 2 was concerned, it was for the balance payment due to escalated cost. It is not in controversy that the Government had executed a supplementary agreement on 12.1.9993 long after the bill and made the payment of Rs.10,72,661/- only on 29.1.1993. The same was also received by the contractor under protest. It is true that he has not taken any action to recover the alleged amount; but it should not be forgotten that he received the final bill under protest. Even the payment of Rs.10,72,661/- was not only paid under protest, but also after the supplementary agreement was entered into. 14.As far as the claim 3 as to the extra lead charges was concerned, as per the agreement, the Government was to provide all the materials in 7 ½ kms from the work site, but actually the contractor was to bring the materials from a place which was away from the work site, and the contractor had actually incurred more expenses. In this regard, the Government had no satisfactory answer. Thus the learned Single Judge has recorded that for the extra lead charges, Rs.3 lakhs was to be ordered and rightly too. 15.Equally, as far as the claim 4 for refund of the withheld amount was concerned, the learned Single Judge has pointed out that the arbitral tribunal has found that the contractor has not committed any default in making any provision for the test; but there was no proof on the side of the Government that he has carried out those tests. The Government was not able to show that there was any specific condition that the contractor should bear those costs. https://hcservices.ecourts.gov.in/hcservices/ Hence the recovery of the amount by the department was arbitrary, and he was entitled for the refund of Rs.2,95,567/- which would represent retention amount. 16.Insofar as claim 5, the contractor was entitled to claim the same since the full unobstructed site which was the basic requirement for the work, was not available. The arbitral tribunal awarded only for Rs.1,32,824/- on that count. The learned Single Judge has pointed out that the contractor was entitled to Rs.1.92 lakhs though lesser amount has been awarded by the tribunal. This Court is of the view that the same need not be disturbed. 17.Equally as regards the contentions put forth by the State for setting aside the order of the learned Single Judge, this Court is unable to notice any merit in the same, and the appeal by the State is liable to be dismissed. 18.In the result, OSA 441/2003 is partly allowed setting aside the order of the learned Single Judge in respect of claim 1, and the appellant is entitled to Rs.10,00,000/- (Rupees ten lakhs only) under that claim. In other respects, the order of the learned Single Judge is confirmed. OSA No.274 of 2004 is dismissed. The parties shall bear their own costs. Consequently, connected CMP is closed. Sd/- Asst. Registrar. /True Copy/ Sub-Asst. Registrar. nsv To: 1. The Sub. Asst. Registrat, Original Side, High Court, Madras. + 1 cc to Spl. Govt. Pleader (cs) SR.No.39953. + 2 cc to Mr.Ravichantran, Advocate, SR.No.40395, 40394 AKR (CO) A.S./31.08.2009 OSA Nos.441/2003 and 274/2004 https://hcservices.ecourts.gov.in/hcservices/