IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH F.A.O. No. 1640 of 2008 Date of Decision : December 11, 2008 Yashpal Dahiya, Contractor .....Appellant Versus State of Haryana and another .....Respondents CORAM : HON'BLE MR JUSTICE T.P.S. MANN Present : Mr. Rajender Singh Malik, Advocate T.P.S. MANN, J. On 30.3.1996, construction work was allotted to the appellant- Contractor who was required to start the work on 2.4.1996 and complete it within a period of six months, i.e. upto 1.10.1996. The time limit was extended upto 25.9.1997 but the work could not be completed. No further extension was allowed. This led to a dispute between the Contractor and the respondent-Department which was referred to the Arbitrator in terms of Clause 25(a) of the contract. The Arbitrator gave his award dated 2.4.2002 as per which the Contractor was required to pay Rs. 3,26,185/- to the Department on account of Clause 3(c) of the contract. The Contractor filed an objection petition under Section 34 of the Arbitration and Conciliation F.A.O. No. 1640 of 2008 -2- Act, 1996 (hereinafter referred to as ‘the Act’) for setting aside the award but the same was dismissed by District Judge, Sonipat on 11.2.2008. Hence, the present appeal under Section 37 of the Act. Clause 2 of the contract required the Contractor to strictly observe the time allowed for carrying out the work as entered in the tender. This clause reads as under :- “Clause 2. The time allowed for carrying out of work as entered in the tender shall be strictly observed by the Contractor, and shall be reckoned from the date on which the order to commence work is given to the Contractor. The work shall throughout the stipulated period of the contract be proceeded with all due diligence (time being deemed to be the essence of the contract on the part of the Contractor) and the Contractor shall pay as compensation on amount equal to one per cent which the Executive Engineer may levy on the amount of the estimated cost of the whole work as shown by the tender for every day that the work remains un-commenced, or unfinished, after the proper dates. And further to ensure good progress during the execution of work the Contractor shall be bound, in all cases in which the time allowed for any work exceeds one month to complete one-fourth of the whole of the work before one-fourth of the whole time allowed under the contract has elapsed, one-half of the work before one-half F.A.O. No. 1640 of 2008 -3- of such time has elapsed and three-fourth of the work before three-fourth of such time has elapsed. In the event of the Contractor failing to comply with this condition, he shall be liable to pay as compensation an amount equal to one per cent which the Executive Engineer may levy on the said estimated cost of the whole work for everyday that due quantity of work remains incomplete provided always that the amount of compensation to be paid under the provisions of this clause shall not exceed ten per cent of the estimated cost of the work as shown in the tender. The Superintending Engineer on representation in writing from the Contractor, may reduce the amount of compensation and his decision in writing shall be final. The various situations arising out of the Contractor rendering himself liable to pay compensation were to be resolved in three different ways which were described in Clause 3 of the agreement as follows :- “Clause 3: In any case in which under any clause or clauses of this contract, the Contractor shall have rendered himself liable to pay compensation amounting to the whole of his security deposit (whether paid in one sum or deducted by installments) the Executive Engineer on behalf of the Government shall have power to adopt any of the following courses, as he may deem best suited to the interests of Government. F.A.O. No. 1640 of 2008 -4- (a) To rescind the contract (of which rescission notice in written to the Contractor under the hand of the Executive Engineer shall be conclusive evidence) and in which case the security of the Contractor shall stand forfeited and be absolutely at the disposal of Government. (b) To employ labour paid by the Public Works Deptt. and to supply materials to carry out the work, or any part of the work debiting the Contractor with the cost of the labour and the price of the materials (of the amount of which cost and price a certificate of the Executive Engineer shall be final and conclusive against the Contractor) and crediting him with the value of the work done, in all respects in the same manner and at the same rates as if it had been carried out by the Contractor under the terms of his contract; the certificate of the Executive Engineer as to the value of the work done shall be final. (c) To measure up the work of the Contractor, and to take such part thereof as shall be unexecuted out or his hands, and to give it to another Contractor to complete. in which case any expenses which may be incurred in excess of the sum which would have been paid to the original Contractor if the whole F.A.O. No. 1640 of 2008 -5- work had been executed by him (of amount of which excess the certificate in writing the Executive Engineer shall be final and conclusive) shall be borne and paid by the original Contractor and may be deducted from any money due to him by Government under the Contractor or otherwise, or from his security deposit or the proceeds of sale thereof or a sufficient part thereof.” On account of the Contractor not completing the work even within the extended period, i.e. upto 25.9.1997, the contract was rescinded vide order dated 25.8.1998 in terms of Clause 3 and ultimately, the work was re-allotted to another Contractor on risk and cost basis. Accordingly, on the basis of the available evidence, the Arbitrator concluded that an amount of Rs. 3,26,185/- as on 28.3.2002 was due which was to be paid by the Contractor to the Department. It is submitted on behalf of the Contractor that the work was started in right earnest and the excavation of s/s tank completed before the monsoons set in but cement and steel were supplied in sufficient quantity only in May and June, therefore, the excavated portion could not be secured and was filled up with the rain-water. The Department had produced in its evidence the bin cards of cement and steel which showed that they were available in good quantity during 5/96 onwards but it was the Contractor who did not come forward to F.A.O. No. 1640 of 2008 -6- complete the work after 7/96 and even when extension of time was granted upto 25.9.1997. In view of the above, no interference is called for in the impugned order passed by District Judge, Sonipat whereby objection petition filed by the Contractor against the award dated 2.4.2002 was dismissed. The appeal has no merit and, resultantly, dismissed. ( T.P.S. MANN ) December 11, 2008 JUDGE satish