Case: K.MARAPPAN (DEAD) THROUGH SOLE LR. BALASUBRAMANIAN Vs. THE SUPERINTENDING ENGINEER T.B.P.H.L.C. CIRCLE ANANTAPUR

of the appellant to produce the ledger has fatal consequences. The matter becomes further aggravated by the failure on the part of the appellant to even produce vouchers or bills in support of the claim to purchase the cement from outside sources. This is even if we are to ignore the fact that there is no written permission for purchase of cement from outside. We proceed on the basis that a contractor may without written permission but for the purpose of the work purchased cement from outside. But certainly, the fact that there are neither vouchers nor any ledger entries nor bills produced which persuades us to hold that the matter may warrant interference with the award under Section 30. We are not inclined to accept the claim. CLAIM NO.VII 87. As regards this claim, the claim appears to be that appellant collected materials and it was lying at the site. Admittedly, the appellant has not used this material for the purpose of doing the work. Only the case set up by the appellant is that he was given an assurance that he will be permitted to carry out the work and therefore, since he has spent money for the same, he must get the amount which is claimed for having spent on the material. We are of the view that insofar as the appellant has not used any of the materials to carry out the work and sets up the claim only on the basis of assurance which has not been admitted, the action of the appellant in purchasing the materials cannot result in establishing his claim for compensation. It is to be noticed that the appellant raised a claim for enhanced compensation. He alleged that there was delay on the part of the respondent on various grounds. This is apart from alleging other factors like breakout of malaria, unfavourable weather and delay in taking decision by the departmental officers, which contributed to escalation in cost. Correspondence was exchanged with the Executive Engineer and the Superintending Engineer, the Superintending Engineer and the Chief Engineer and finally between the Chief Engineer and the Government. It appears that at that stage appellant invoked the arbitration clause and a panel of arbitrators gave their award. In fact, the work itself was stopped. Clause 59 prevents the Court from awarding compensation on account of any factor relating to the delay which may be due to any cause whatsoever. In such circumstances, we are of the view that the appellant has also not made out any cause for compensation in regard to this claim. CLAIM NO.IX 88. As far as the question relating to interest is concerned, the arbitrator has awarded interest at 12% from the date of the claim but excluded interest from commencement of proceeding till date of award. The question relating to interest is no longer res integra as we find that the issue has been dealt with in a recent judgment of this Court in Assam State Electricity Board & Ors. v. Buildworth (P) Ltd. reported in 2017 (8) SCC 146 to which one of us was a party. As long as the agreement between the parties does not prohibit grant of interest and the matter is referred to the arbitrator, arbitrator would have power to grant interest pendente lite. The Court inter alia held as follows: 21. The next aspect of the matter relates to the award of interest for the period from 7-3-1986 to 31-12-1997. The arbitrator awarded a lump sum of Rs.20 lakhs for a period of 11 years. The High Court set aside the award of interest on the ground that Section 29 of the Arbitration Act, 1940 contemplates the award of interest only from the date of the decree. The issue as to whether interest could be awarded for the pre-reference period and pendente lite under the Act of 1940 is not res integra. In Irrigation Deptt., State of Orissa and Ors. v. G.C. Roy (1992) 1 SCC 508 , a Constitution Bench of this Court held that: (SCC pp.533-34, para 44) 44….. Where the agreement between the parties does not prohibit grant of interest and where a party claims interest and that dispute (along with the claim for principal amount of independently) is referred to the arbitrator, he shall have the power to award interest pendente lite. This is for the reason that in such a case it must be presumed that interest was an implied term of the agreement between the parties and therefore when the parties refer all their disputes – or refer the dispute as to interest as such – to the arbitrator, he shall have the power to award interest. This does not mean that in every case the arbitrator should necessarily award interest pendente lite. It is a matter within his discretion to be exercised in the light of all the facts and circumstances of the case, keeping the ends of justice in view. 89. The sub Court set aside the award of interest for the period from 26.4.1988 till the date of the award namely 19.8.1988 which is the pendente lite interest. This is on the basis that arbitrator has no power to award interest on amounts found due. This is purportedly followed in the judgment of this Court in Smt. Aruna Kumari vs Government Of Andhra Pradesh And Anr. reported in AIR 1988 SC 873. This Court took the view that entering upon reference is to be taken as the date of commencement of arbitration proceedings for calculation of interest. And this Court took the view therein that there is no power to grant interest from the date of commencement of arbitration. However, in view of the decision in Jugal Kishore Prabhatilal Sharma vs. Vijayendra Prabhatilal Sharma 1992 (1) SCC 508 as followed in The National Highways Authority vs. Afcons-Apil Joint Venture 2017 (8) SCC 146 , the sub Court was not justified in setting aside interest and the interest as awarded by the arbitrator is restored.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]26. It is our view that it will not be open to a contractor to claim compensation which arises on account of the fact that the work is delayed or hindrance caused to the work from any cause whatsoever. To demystify this further, it means that should the work be delayed on account of reasons which are attributable either partially or entirely to the employer namely the respondent herein, the claim for compensation is barred. Equally, the clause interdicts raising claim for compensation by the contractor if the employer poses hindrance to the work. If work gets delayed on account of the contractor himself, it is axiomatic that he cannot claim compensation as it would amount to a person taking advantage of his own wrong. Delay from any cause cannot found a claim for compensation. It may also happen that the work may get delayed not due to the fault of the employer. There may be natural causes such as natural calamities which may cause delay in carrying out the work. Even in such cases, in our view, Clause 59 would cast an embargo against a claim by the contractor. This interpretation gives full play to the words delays from any cause whatsoever. Equally, if there is hindrance to the work from any cause whatever, a claim for compensation would not lie29. Claim No.I as we have already noted relates to claim for extra lead for carrying out the work of quarrying stone and metal from a quarry located at a greater distance from the work site. As far as the said claim is concerned, we would think that it cannot be associated with a delay to the work for any cause whatever within the meaning of Clause 59. What is involved in the claim is the right to claim compensation by reason of the fact that the appellant-contractor though had to quarry from the specified quarry under the contract which was located nearer to the work site was compelled to carry out the work of quarrying, both stone and metal, from a quarry located at a greater distance and to transport the same to the work site. The claim is based on the expenditure which the appellant had purported to incur on this score. Though case of delay within the meaning of Clause 59 is sought to be set up, there is no support sought to be drawn from the second limb of Clause 59 which deals with hindrance to the work from any cause whatsoever. Therefore, we can safely confine our focus on the question whether the claim stands barred by virtue of Clause 59 on account of it arising out of delay. In this case, we must further notice that, in fact, before the arbitrator apparently Clause 59 was not as such pressed or at any rate seriously pressed. Before the civil court, in the counter affidavit filed, the State did not lay store by the said contention. It is in the additional counter affidavit filed that the contention based on Clause 59 was apparently raised by the State. Be that as it may, since the arbitrator is the creature of the contract, and therefore, he is bound by the contract, though late in the day, it may be, that the objection was raised, we cannot rule out the said contention as it is a matter that goes to the root of the matter. In fact, we would approve of the view taken by the High Court in regard to effect of Clause 59 qua Claim Nos.2 and 5. The appellant has, also, not pressed these claims before us. The only aspect which remains is the contention which is urged on behalf of the respondent that Clause 59 would be infringed as escalated amounts are given beyond original period are canvassed by the appellant30. We would think that while it is true that the case under Claim No.I extends to the period beyond the original period of the contract (namely 18 months from the date of handing over of site), the claim cannot be one which is on account of delay from any cause whatsoever. The claim, on the other hand is, on account of the appellant carrying out work of quarrying from a site which was located further away than the site which was specified under the contract. Be it for the original period of the contract or for the period beyond the contract, the appellant has had to quarry from the site located further away. Necessarily in regard to expenses, he must be paid for the difference in the rate.33. Under Clause (c), an award can be modified if it contains a clerical mistake or there is an error which arises from an accidental slip or omission. There cannot be any doubt that this is not a case where there is clerical mistake or an error arises from an accidental slip or omission. Lastly, the power of the court to modify extend to a case where the award is imperfect in form. Certainly, it is not the situation in the facts of the case. Of course, where the award contains an obvious error which can be amended without affecting such decision. Court has power to modify. When the Sub court modified the sale at which the amount is to be calculated would affect the decision of the arbitrator. It is not the sale of Rs. 15/ C.M., not an essential part of the decision of the arbitrator34. In the light of the above discussion and proceeding on the basis that there is no power to modify the award we would consider the legality and correctness of the civil court decreeing the claim in regard to Claim No.1 by modifying the award of the arbitrator40. Thereafter, the sub court referred to the actual calculation made in Exhibit B.3 the letter dated 23.11.1982 written by the Executive Engineer to the Superintending Engineer which is in fact relied upon by the appellant himself. The sub Court proceeded to find that the difference in rates for 2 kms and 6 kms works out to 3.23 per cu.m. and that the cost of conveyance of material of all kinds RR stones and spass as provided in the estimate is Rs.9.81 per cu.m. which was in accordance with the standard schedule rate for 2 km. lead. The rate fixed for 6 kms lead was Rs.15/- over and above the quoted rates of Rs.8.80 which is arrived apparently after deducting actual rate by which the appellant had quoted his rates which was nearly 10-12% less than the estimated rates. The result was that the arbitrator gave Rs.24/- per cu.m. as against Rs.13.75 which is without deduction. In the written submission before us, the appellant has not questioned the applicability of the clause relating to supplemental item in regard to the extra lead. Therefore, we need not be detained by the question whether the provision as such is applicable in respect of claim based on extra lead. If that be so, the question would be whether it is a case whether arbitrator has awarded Rs.15/- in place of Rs.13.75 in which case we would be inclined to agree with the appellant that the award in this regard should be sustained in its entirety. But the question is whether the arbitrator has actually awarded Rs.15/- cu.m. over and above the amount which the appellant already received on the basis of the actual lead in the contract41. The arbitrator, in fact, found that the claim of the appellant for higher rates at Rs.15/- per cu.m. is reasonable and legal and on the basis of the tabular statement which was prepared by the appellant and awarded different sums under the three different contracts. It would appear that the claim for Rs.15/- per cu.m. is based on abnormal increase in transport charges due to increase in cost of fuel, automobile spare parts etc. If escalated rates are claimed, then it may attract the wrath of Clause 59. We would think that the claim of extra lead cannot be denied. The claim of Rs.15/- per cu.m., if it is over and above the amount which is already received will be in the teeth of the contractual provision which is relied on by the sub Court for which he has not taken any exception to in which case we would think that the amount as ordered by the sub Court is to be awarded to him under this claim. This means the amount is to be worked out as provided in the letter dated 13.11.1982. In other words, the amount must be awarded on the basis of the cost of conveyance being calculated at the rate of Rs.13.75 and the amount must be calculated and paid. Mindful though we are of the limitation under Section 15 (b) of the Act to modify, we would in the facts of the case, rely on Article 142 to sustain the decision of the Sub Court under this claim42. Coming to Claim No.III, namely, on account of non-supply of food grain, we have already found that while the arbitrator has awarded the amount of compensation, the sub Court has set aside the award. The main contention of the State which found favour with the sub Court is that the clause actually provided for supply of food grain provided it is available. The arbitrator found that food grains were not supplied despite the fact that they were available and this finding by the arbitrator was found to be perverse. The claim of the appellant was that under the agreement, the appellant was to supply the labourers a certain quantity of foodgrains as part of the wages. The labourers were also making such demand as it would be beneficial to them also. The appellant therefore had to supply food grains from the market at the market value which led him to incur extra expenditure. The labourers according to appellant were not willing to work otherwise. It is necessary to advert to the actual contractual provisions in relation to supply of food grain.43. It was further provided that the labourers were to be supplied wheat at a rate not exceeding Rs.125 per quintal but the quantity to be supplied to the labourers and rates are subject to the approval of the Executive Engineer46. At first blush, the claim relating to food grain even as understood by the High court does not appear to have anything to do with compensation for delay. The case based on hindrance also does not appear to be made. We shall, however, consider the matter in some detail47. The High Court has not adverted to the clause in the contract under the heading negotiation which we have referred to. Instead the High court has proceeded on the clause which undoubtedly contemplated supply of food grain only subject to availability. The clause after the negotiation was carried out however brought about the following changes:In place of wheat, the appellant agrees to take either wheat or rice and the price at which it was to be supplied to the workers was also stipulated. The other conditions in the contract relating to the food grain remained unchanged. This means that it could be said that it was subject to availability and we have also referred to clause which provides that appellant is bound to accept the quantity at the stipulated rate, if offered. However, a significant change which was brought about was that in case of short supply of either wheat or rice compared to a specific quantity of 17,500 quintals, the appellant was given the right to claim for compensation. Therefore, this clause, in our view, brings about the change which has not been considered by the High court. Since the sub Court has given other reasons, it may be necessary to consider what sub Court has held48. The sub Court takes note of the provisions under the heading negotiation which we have referred to except the condition that in case of short supply the appellant will have the right to claim compensation on this account. The sub Court proceeds to hold the conditions are incorporated with a view to cast a duty to receive a particular quantity of food grain in lieu of cash and to supply them to labourers at a stipulated rate and it is for the benefit of the State as the State would receive the food grains under the food for work programmes under the Government of India scheme free of cost. Further, it is for the benefit of the labourers. The sub Court proceeded to further hold that the purpose of the food for work programme was to create employment and the contractor is not to get any benefit out of this condition. The contractor is bound to make record of the food grains received from the Government and supplied to the labourers at the specified rate. He cannot sell the food grains at the market rate. He is the happiest person and need not discharge the burden cast under the condition relating to food grains if food grains are not supplied. The appellant was trying to take advantage of this. There is no promise to supply a particular quantity of food grain. The appellant has no obligation to supply food grains to the labourers if the Government did not provide him food grains. The Sub Court also did not find favour with the contention of the appellant that taking the attractive clause of supply at subsidized rate, he quoted lesser rate and, therefore, for non-supply he is entitled to be compensated. It is found that the appellant is not entitled to compensation as it is not an attractive clause. The Court further found that the arbitrator was carried away by the letters written by the Engineers wherein they have opined that the contractor quoted lesser rates on account of this attractive clause. It would become an attractive clause only if the Engineers concerned permitted the appellant to misutilise the grain by selling the food grain by the contractor in the open market. The appellant is bound to pay fair wages under the contract (It is true that under the contract clause the appellant shall not pay less than the fair wages)49. It is found that department officers misunderstood the food for work in their letters. The arbitrator relied on such letters as if the Engineers are the master to interpret the term of the contract. It was further found that there is absolutely no basis that food grains were in plenty with the Government. The sub Court further finds that the reliance placed by the arbitrator at Exhibit A.22 for availability was not justified. He referred to Exhibit A.22 with annexure also. The contention of the appellant was that he promised to the labourers that he would pay a portion of their wages by way of food grain at specified rate and he had to supply the food grains at the subsidized rates as promised by purchasing the food grains at higher rates. The sub Court finds that there is no evidence produced before the arbitrator to show that he purchased food grains from the open market and supplied those food grains to the labourers at the subsidized rates. In case of supply of food grains, the appellant was bound to maintain record of proper distribution but the appellant has not produced any such register, it is reasoned by the sub Court. Next it is found that the appellant even it is true that he agreed that the workers are to be supplied a certain portion of the wages in food grains, he cannot fix wages in such a manner that the contractor would get any advantage out of it as it is not contemplated under the scheme. He has to pay the fair wages and besides fair wages he had to provide additional facilities by providing food grains at the subsidized rates. The question of supply of food grains to worker by appellant in the event of non- supply of the same by the Government did not arise. It is further found that there is no provision in the agreement to the effect that in case of failure to supply food grains the Government is liable to compensate the loss that may be sustained on account of failure of the department to supply food grains, and the arbitrator patently exceeded jurisdiction50. The first thing that stands out in the reasoning of the sub-Court is the absence of any reference to the clauses specifically under the heading negotiation which specifically confers a right of compensation in case of short supply of either wheat or rice compared to the quantity of 17,500 quintals (Agreement NO.11/78-79). This means that while the parties contemplated that a part of the wages was to be paid by way of supply of food grains at the stipulated price, the obligation of the appellant was to take the food grain supply from the Food Corporation godown and carry it to the work site. He was to further supply the said food grains to the workers at a higher specified rate in view of the fact that he would incur certain expenses. This undoubtedly was subject to availability. But introduction of the clause in the contract that in case of short supply of either wheat or rice in comparison to the actual quantity which was agreed to be supplied, the appellant will have a claim for compensation on the said count has been missed by the sub Court as also the High Court52. A perusal of the aforesaid averments will reveal that the tender document contemplated supply of wheat of a particular quantity at Rs. 115/- per quintal and the contractor was to supply at Rs.125/- per quintal to workers. Thereafter, it is stated that on a representation made by the contractor there was negotiation and an agreement was arrived at between the contractor and the department. The contractor was to receive the quantity of food grains either as wheat or rice or both. In other words, reference is made to the clause coming under negotiation. It is thereafter stated that in short, the agreement stipulated that the food grains will be supplied at specific rate which were competitive rates as against the rates in the open market. It is further alleged that the contractor took this important and attractive aspect into consideration and submitted his tender at the most competitive rate only on account of the advantage he would derive from the department53. It is to be noted that even according to the appellant, the tender documents provided for supply of wheat. The contract was settled by calling tenders. The appellant submitted his tender which turned out to be the lowest. At the time of submitting his tender the condition relating to the negotiated settlement could not have been there. If that is so, the original tender conditions contemplated supply of wheat at Rs.115/- per quintal, if available. The appellant was to supply the food grains only if the food grains were made available by the Government. Therefore, it is totally untenable for the appellant to set up a case that attracted by the clause which resulted from the representation and negotiation, he submitted his tender. May be at the time of entering into the contract following his representation and negotiation the clause was incorporated which provided for supply of rice or wheat and other terms. In other words, at the time when appellant submitted his tender which may have been lesser than the estimated rate by about 10 to 12%, the negotiated clause was not there. On this score, the case sought to be built up around the clause being attractive cannot be accepted54. Secondly, as regards the supply of food grains, the appellant is not correct in having contended that the appellant was duty bound to supply food grain even if the food grains were not supplied by the department. The sub-Court is correct in concluding that appellant was duty bound to supply food grains only if it was supplied to him by the department. This is because despite the clause resulting from negotiation, the other conditions remained intact. A perusal of the clause relating to supply of food grain would show that food grains would be supplied, if available. Again, the words if offered is conspicuous. The words in the clause which provided that the appellant shall supply food grain to the labourers is not to be considered in isolation55. The sub-Court is not correct in coming to the conclusion that the appellant was bound to pay the fair wages to the workers and he was also liable to offer food grains apart from fair wages. A perusal of the clause makes it clear that what was contemplated was if the food grains were available and supplied, the appellant was to make use of the same supplied it to the workers in lieu of wages56. There are a few aspects which remain. Firstly, what is urged before us is that the under the negotiated clause the department agreed to supply a definite quantity of food grains. In agreement No.11, it was 17500 quintals. We proceed on the basis that in other two agreements, different quantities as claimed by the appellant was mentioned. We notice that in the claim while the appellant has referred to the negotiated clause relating to supply of rice and also providing for the quantity, there is no reference to the clause that appellant will be entitled to compensation if there is short supply of food grains. This clause is also not considered either by the sub court or by the High Court.63. We are of the view that the sub Court is right in holding that the correspondence referred to by the arbitrator did not show that the food grains were actually available with the department and department was only trying to get the food grains from the administration with which the food grains was available. As long as there is some material which substantiated appellants claim before the Arbitrator, the Court hearing the petition under Article 30 and 32 would not reappraise the material to come to the conclusion that the arbitrator went wrong in arriving at a finding of fact. At the same time, if virtually there were no material then it becomes a case of no evidence. No doubt the contractual provision which provides that the appellant is to keep accounts and produce accounts relating to receipts and distribution may assume relevance when appellant receives food grains from the department and distributes. But at the same time the appellant is putting up the claim for compensation and that too a claim which runs into a fairly large sum. There would certainly be material to evidence the actual purchase and further actual supply to the workers or payment as alleged. Even assuming everything that the appellant says is correct about the fact of the negotiated settlement, there is virtually no material except the appellants statement that the appellant paid for the price of food grains to the workers. Further, the claim involves payment of price of rice at escalated rates for period beyond the contract also and it invites the wrath of Clause 59. We would therefore think that the award of the claim by the arbitrator cannot be sustained64. As regards, claim No. 4 is concerned, it arises from alleged short supply of cement. First of all, we have to find as to whether it is hit by the embargo contained in Clause 59 and also advert to the finding of the High Court. In this regard, the High Court holds that the obligation is similar in nature to the earlier claim, namely, claim no. 3 and nothing is pointed out on behalf of the appellant on facts or in details as to how it can be taken out of Clause 59. We have to ascertain what exactly is the claim raised by the contractor65. The claim in brief is as follows:Cement is one of the items to be supplied by the Department at specific issue rates. The appellant, accordingly, perceiving the same as attractive quoted 10 to 12% lesser than the estimate rate. Cement was to be supplied at the issue rate of Rs.416/- per metric tonne. Right from the beginning, there was short supply. The appellant had no other option but to get cement from other sources. Large quantities were so brought from other sources. The Department being aware agreed specifically and by conduct that they will recoup the cement. The appellant had no intention to give cement free to the Department. The quantity of cement used by the contractor for the project had been quantified and noted in the measurement book and the USR (Unstamped Receipt). The quantity of cement supplied by the Department is correctly noted in the cement issue register maintained by the Department. Recoveries had been effected without the actual issue of such quantity by the Department as evidenced by the document like USR and other entries. The appellant appended a tabular statement of quantity of cement used for the work, the quantity which was issued by the Department and the balance quantity which constituted the basis of the claim66. The arbitrator in regard to the said claim finds inter alia that in the letter dated 17.08.1980, the Engineer had stated that there is short supply and he was bringing cement from other sources and action may be taken to return the extra quantity of cement. He notes that in the counter of the Department, there is no denial about the quantity of work done by the appellant and also the quantity of cement used by him by bringing from other sources. He further finds that it is stated that the exact short supply of cement can be shown only after taking all measurements. The details in the claim statement which also include, apparently, the tabular details was not denied in the counter. Though, the cement issue register and the USR were called for by the appellant, they were not produced. Adverse inference was drawn. The arbitrator further noted that in the bill the quantity of cement used has been recovered, though the quantity has not been issued and in the last bill, more quantity was given representing part reimbursement. The letters of the Department were also found to support the case of the appellant. Referring to the objection in the counter that no vouchers were produced by the appellant, it was brushed aside as immaterial as it is found that it is proved that he was bringing cement from other sources to complete the work except a small quantity under Agreement No.14. Reliance is placed on Section 70 of the Contract Act. The argument without a plea in the counter by the Government pleader that the appellant was saving cement out of the quantity supplied by the Department was found untenable on the basis that engineers would not have permitted it. As far as, clause 10 of the Agreement prohibiting any claim for compensation for non-supply or delayed supply, the arbitrator found that appellant is only asking for return of cement brought by him and used in the construction on the assurance of the Department that it will be reimbursed. In total 3790 metric tonnes of cement were found to be brought by the appellant. Rejecting the claim of the appellant for market rate and applying the departmental issue rate of Rs.416/- per tonne different amounts were awarded under the three different contracts67. We would think that this claim cannot be said to be hit by clause 59 as appellant is not claiming compensation for any delay. On the other hand, his case is that, contrary to the agreement that he would be supplied the cement it was not supplied and he had to use cement by spending money from his pocket and he only wanted that cement actually used which is in excess of the cement issued to be given to him. More importantly, the amount awarded is at the rate fixed in the original contract and no escalation is given70. Let us see what the contract has really provided for. We are doing this for the reason that the Sub-Court set aside the award in regard to this claim. The appellant filed revisions against the judgment of the Sub-Court. We have noticed that essentially, the High Court proceeded based on the Bar under Clause 59. The matter has not been dealt with as such by the High Court. Here also after finding that Clause 59 will not come in the way of the claim, we could have remitted back the matter to the High Court for consideration of the matter. Having regard to the long efflux of time, we are undertaking the task of considering the matter71. A perusal of the contractual provisions which we have referred to yields the following inevitable result. Cement is a scarce material to be supplied by the Department. The appellant was to maintain separate ledger for the item for which cement was supplied by the Department. The issue price was Rs.416/- per metric tonne. The cost of cement at the said rate was to be recovered from the appellants bill at the issue rate. Thus, if the value of the work is Rs.100/- and the value of the cement is Rs.5/-, the appellant would get only Rs.95/-72. The next question is the effect of the other provisions which we have quoted. We have already noted that there are theoretical requirements in regard to the use of cement. It is not unnatural for the Department to prescribe for the theoretical requirement. This is to ensure that it is used exactly as per the theoretical requirement so that the structure on the one hand is built in a safe manner and at the same time nothing in excess is used so as to avoid wastage of scarce material. There are three situations which are contemplated. In the first situation, it is provided that if materials are drawn according to the schedule and are short used then the excess quantity is to be returned to the Department in good condition and for the same the contractor will not get any payment. Furthermore, if the short- used material is not returned to the Department, their cost will be recovered at the market rate or at the issue rate which is greater plus wastage charges and sales tax. An example which we may take, would be if the requisite specifications is that 10 metric tonnes of cement is to be drawn and he draws 10 metric tonnes but he actually used only 8 metric tonnes there will be a short use of 2 metric tonnes which he would have to return to the Department73. The second situation is where the materials are drawn in excess of theoretical requirements. The contract contemplates that in such a situation, the excess drawn quantity must be returned to the Department in good condition and otherwise there will be recovery at the issue rate plus 100% surcharge or market rate whichever is higher plus storage and taxes74. The third situation contemplated is that if the materials are short drawn or short used it is specifically provided that in such a situation, the saving due to short drawal/ use should be secured to the Government by recovering the cost thereto at issue rate from the contractor. Thus, in the example, we have taken if 10 metric tonnes is actual quantity as per the specifications which can be drawn but if only 8 metric tonne is drawn by the contractor while he was to use 10 metric tonnes, the saving due to short drawal was secured to the Government by recovering the cost thereto at the issue rate from the contractor. This means that instead of 10 metric tonnes, if 8 metric tonnes is drawn, the contractor would still be liable for recovery from his bill for the entire 10 metric tonnes, though, he has actually drawn only 8 metric tonnes. In respect of short used material, though, properly drawn the recovery would be in addition to the recovery for the cost of materials which is returned as we have noted above. Further, the contract contemplates that if materials are required to be procured by the contractor, he must maintain separate ledger for each of the item which are so required to be procured by the contractor75. This would mean that if the appellant had indeed secured cement from outside, the appellant was obliged under the Contract to maintain a separate ledger. Further the Contract contemplates that there could be recovery from the bill of the Contractor for the cost of cement which is actually not supplied to the contractor and it will be based on the theoretical requirement as we have already referred to above. Thus, the mere fact that there has been excess recovery meaning thereby that without issuing the cement to the appellant the amounts have been recovered would not mean that the appellant would be able to substantiate his claim that there was inadequate supply of cement. That is a matter which must be substantiated with reference to other material76. But there are two situations which can arise. Cement may be available with the Department and the Contractor draws only lesser quantity than provided in the specifications which is based on technical requirements. In such a case, undoubtedly the Clauses which we have adverted to would apply. What however would be the position if cement is not available and consequently the Contractor is not supplied and he is not in a position to draw cement. In such a scenario also, will it be a case of drawal of cement by the Contractor which is less than the specified quantum? It would be so, but it may have different implications77. At this juncture, we may look at the correspondence which may throw light. In the letter dated 30.06.1979 written by the appellant to the Executive Engineer, we find there is no mention even about the inadequate supply of cement. Next letter is dated 26.07.1980. This is a letter where reference is made to all the three contracts. There is a reference in this letter no doubt about the purchase of cement from other sources. He seeks return of the cement so that extra quantity of cement may be reimbursed. There is no reference to any particular quantity and there is no reference to which the other sources are78. The next letter is dated 16.07.1981. Here the reference is made to Agreement No.10/78-79. In this letter there is no complaint about the cement. Finally, there is letter dated 07.10.1982 which is addressed by the appellant to the Superintending Engineer. Here the reference is made to the Agreement No.11/78-79. No doubt in the body of the letter he also adverts to the other contracts. Substantially, the letter is one where he makes various complaints and finally, he makes a claim for enhancement. Here he says in this letter that there is inadequate and irregular supply of cement which affected his steady progress of work during 1979, 1980 and 1981. He says inadequate supply caused him substantial loss to the work done. A look at the correspondence by the departmental officers at this juncture may be not out of place80. From the correspondence, it would appear that the officers proceeded on the basis that there is a shortage of cement. Therefore, this appears to be a case where sufficient cement may not have been supplied to the appellant. However, it is to be remembered under Clause 10 of the agreement no right to compensation lies for short supply of cement. Here the case of the contractor appellant which is accepted by the arbitrator is that this is not a case where compensation for short supply of cement is made by the appellant. All that the appellant is seeking is to be given, is the quantity of cement, which he brought from other sources or the monetary equivalent81. We proceed on the basis that the claim for return of the cement does not involve infraction of Clause 10 which forbids compensation on account of short supply of cement. The question, however, arises whether the arbitrator has misconducted himself in arriving at the amount of cement supposedly brought from other sources by the appellant to carry out the work. As far as the monetary equivalent is concerned as we have already noted it is at the issue price fixed under the contract itself and it is not an escalated amount so the measure of the amount of reimbursement may not attract Clause 59. The only point, therefore, which remains is whether there was any basis for the arbitrator to have found that the appellant had indeed brought the quantity of cement from other sources and used it for the works in question82. The arbitrator has proceeded on the basis of the admitted correspondence between the officers to find that there is shortage of cement. The sub-court on the other hand finds that none of the correspondence by the officers indicate that the appellant was given permission to buy cement from outside. There is no indication in any of the letters written by the appellant which the other sources were from which he was procuring cement. The most important obstacle for the appellant is the clause in the contract which has been referred to by us and which is referred to by the sub-Court, namely, for procuring cement by the contractor, he must maintain ledger and which may be open to scrutiny by the officer as and when demanded. In this case, the appellant has not produced any ledger showing purchase of cement from other sources. There is no written permission produced to purchase cement from other sources. No voucher has been produced by the appellant to establish purchase of cement from outside83. The arbitrator, however, has found that even non-production of vouchers is not material as it is proved that appellant has purchased cement from outside. There are two things which apparently the arbitrator has taken note of. The arbitrator finds that there is no denial about the quantity of the work done by the contractor and also about the quantity of cement used for bringing from other sources. It is stated in the counter affidavit that exact short supply of cement can be shown only after taking over of measurement. It is further found that measurement was already taken. The second aspect is arbitrator finds that as the unstamped receipt and the cement issue register though called for by the appellant was not produced, adverse inference must be drawn. If the matter as alleged is not denied or is admitted then it may not be necessary to adduce evidence to prove the same. This principle is equally applicable before the arbitrator as it is before the court of law. Perhaps it is all the more applicable in the case of proceedings before an arbitrator84. We are in one sense handicapped by the fact that the appellant has not produced the counter affidavit filed by the State before the arbitrator. It is true that if the case pleaded by the State amounts to admission that the cement was brought from outside by the appellant and the matter was only regarding the measurement to be carried out that may give the impression that the arbitrator particularly having regard to the non-production of the unstamped receipt and cement issue register despite being called for had some justification for coming to the conclusion that the appellant had procured cement from outside. Then the further question would be the only quantity of cement which was purported to be bought from outside by the appellant85. State definitely has a case, however, that there is no evidence by the appellant having procured cement from outside sources as he has not produced vouchers as that is seen dealt with by the arbitrator. The exact quantity of cement purchased from outside is not pleaded. Instead what the appellant contended for and what was accepted by the arbitrator was that the quantum of cement which was used could be found out from the quantum of work done. This is clear from the statement even on the basis that when a particular quantum of work is done, as per the theoretical requirement for cement involved in such work, the quantity of cement actually used by the appellant has been arrived at and after deducting the quantum of cement which was actually issued, the balance amount of cement which the appellant has used for the work from outside source has been arrived at. We have referred to the contractual provision and it would be hazardous to arrive at the amount of cement, used from other sources based on quantum of work done86. But arbitrator overlooks the fact that under the contract the appellant was supposed to make entries in the ledger. A party is supposed to produce the best evidence or rather the evidence which under the contract is contemplated. The failure on the part of the appellant to produce the ledger has fatal consequences. The matter becomes further aggravated by the failure on the part of the appellant to even produce vouchers or bills in support of the claim to purchase the cement from outside sources. This is even if we are to ignore the fact that there is no written permission for purchase of cement from outside. We proceed on the basis that a contractor may without written permission but for the purpose of the work purchased cement from outside. But certainly, the fact that there are neither vouchers nor any ledger entries nor bills produced which persuades us to hold that the matter may warrant interference with the award under Section 30. We are not inclined to accept the claim87. As regards this claim, the claim appears to be that appellant collected materials and it was lying at the site. Admittedly, the appellant has not used this material for the purpose of doing the work. Only the case set up by the appellant is that he was given an assurance that he will be permitted to carry out the work and therefore, since he has spent money for the same, he must get the amount which is claimed for having spent on the material. We are of the view that insofar as the appellant has not used any of the materials to carry out the work and sets up the claim only on the basis of assurance which has not been admitted, the action of the appellant in purchasing the materials cannot result in establishing his claim for compensation. It is to be noticed that the appellant raised a claim for enhanced compensation. He alleged that there was delay on the part of the respondent on various grounds. This is apart from alleging other factors like breakout of malaria, unfavourable weather and delay in taking decision by the departmental officers, which contributed to escalation in cost. Correspondence was exchanged with the Executive Engineer and the Superintending Engineer, the Superintending Engineer and the Chief Engineer and finally between the Chief Engineer and the Government. It appears that at that stage appellant invoked the arbitration clause and a panel of arbitrators gave their award. In fact, the work itself was stopped. Clause 59 prevents the Court from awarding compensation on account of any factor relating to the delay which may be due to any cause whatsoever. In such circumstances, we are of the view that the appellant has also not made out any cause for compensation in regard to this claim. CLAIM NO.IX88. As far as the question relating to interest is concerned, the arbitrator has awarded interest at 12% from the date of the claim but excluded interest from commencement of proceeding till date of award. The question relating to interest is no longer res integra as we find that the issue has been dealt with in a recent judgment of this Court in Assam State Electricity Board & Ors. v. Buildworth (P) Ltd. reported in 2017 (8) SCC 146     to which one of us was a party. As long as the agreement between the parties does not prohibit grant of interest and the matter is referred to the arbitrator, arbitrator would have power to grant interest pendente lite.89. The sub Court set aside the award of interest for the period from 26.4.1988 till the date of the award namely 19.8.1988 which is the pendente lite interest. This is on the basis that arbitrator has no power to award interest on amounts found due. This is purportedly followed in the judgment of this Court in Smt. Aruna Kumari vs Government Of Andhra Pradesh And Anr. reported in AIR 1988 SC 873. This Court took the view that entering upon reference is to be taken as the date of commencement of arbitration proceedings for calculation of interest. And this Court took the view therein that there is no power to grant interest from the date of commencement of arbitration. However, in view of the decision in Jugal Kishore Prabhatilal Sharma vs. Vijayendra Prabhatilal Sharma 1992 (1) SCC 508     as followed in The National Highways Authority vs. Afcons-Apil Joint Venture 2017 (8) SCC 146  , the sub Court was not justified in setting aside interest and the interest as awarded by the arbitrator is restored.