Case: State of Haryana Vs. M/s. Shiv Shankar Construction Co. &amp; Anr

from Palwal Aligarh Road to the present road and the heavy traffic of 24418 PCUS per day was plying on the road as against the design of 3364 PCUS per day and therefore the contractor was required to incur additional expenditure at Rs.45,000/- per km per month. It is submitted that the amount awarded by the Arbitrator at Rs.45,000/- per km per month cannot be said to be rewriting the contract with respect to the amount payable than what was specified in the contract i.e. Rs.1,000/- per km per month. 7.3 However, Shri Ranjit Kumar, learned Senior Advocate appearing on behalf of the contractor is not in a position to justify the award by which the Arbitrator has awarded the payment at Rs.45,000/- per km per month even beyond the time period of additional traffic i.e. up to 31.05.2010 i.e. till the end of the contract. 8. We have heard the learned senior counsel appearing on behalf of the respective parties at length and given our thoughtful consideration. 9. That the contractor was awarded the contract for maintenance, etc. The contract amount was for Rs.5,26,59,688/-. The rate of maintenance of the road as accepted was Rs.12,000/- per km per annum or Rs.1,000/- per km per month. The maintenance contract was valid up to 31.07.2010. When the contract was entered into, the contract was meant for only 3364 PCUS per day. However, due to diversion of traffic from Palwal Aligarh Road to the present road, the contractor was required to incur additional expenditure on the maintenance due to increase in the traffic and plying the additional commercial vehicles. Therefore the contractor claimed the amount towards additional expenditure for maintenance which was due to increase in the traffic and plying more commercial vehicles. On appreciation of evidence the Arbitrator has determined the loss at Rs.45,000/- per km per month (claim Nos.1 and 8). 9.1 The case on behalf of the appellant that as in the statement of claim, the claimant claimed an amount of Rs.1,03,50,263/- under the claim Nos. 1 and 8 and the Arbitrator has awarded Rs.1,51,95,400/-, the same is in far excess of amount claimed and therefore the award is in excess of amount claimed has no substance. When the statement of claim submitted by the contractor is seen, it is specifically stated by the claimant that the amount of Rs.1,03,50,263/- has been worked out up to May, 2007 and the details of expenditure beyond May, 2007 will be submitted during the course of hearing. It is specifically stated that expenditure incurred up to May, 2007 works out to Rs.1,03,50,263/-. Therefore, the amount awarded by the Arbitrator cannot be said to be in excess of the claim. 9.2 Now so far as the submission on behalf of the appellant that the Arbitrator exceeded the scope of reference while awarding an amount beyond 19.05.2007 – the date on which the High Court appointed the sole Arbitrator is concerned, the same has no substance. The case on behalf of the appellant that the Arbitrator ought to have restricted the claim either up to 06.03.2006 – the date on which the contractor invoked the arbitration clause or 23.04.2007, the date on which the High Court appointed the sole Arbitrator or at least up to 19.05.2007 – the date on which the Arbitrator entered into reference, is concerned, it is required to be noted that the claim made by the Arbitrator was till the traffic was diverted which was up to January, 2008. Therefore, the Arbitrator was justified in awarding the amount beyond the aforesaid periods and till the additional traffic was diverted due to the closure of Palwal Aligarh Road. 9.3 Now the submission on behalf of the appellant is that by awarding Rs.45,000/- per km per month the Arbitrator has rewritten the contract with respect to the amount payable than what was specified in the contract. It is urged that under the contract mutually agreed contractual rate was Rs.1,000/- per km per month and therefore any amount higher than Rs.1,000/- per km per month is beyond the terms and conditions of the contract, is also without substance. It is noted that at the time when the contract was entered into the mutually agreed, the rate fixed was Rs.1,000/- per km per month and the estimated traffic was 3364 PCUS per day. The cause of action arose subsequently due to diversion of traffic from Palwal Aligarh Road and plying of more heavy vehicles due to which the contractor was required to incur additional expenditure for maintenance of the road. Therefore, the contractor was entitled to the loss on account of the additional expenditure incurred for maintenance of the road due to increase in the traffic because of the closure of the Palwal Aligarh Road and diversion of the traffic to the present road. Therefore, by no stretch of imagination it can be said that there was rewriting the terms of the contract as submitted on behalf of the appellant. 9.4 In view of the above findings, none of the decisions of this Court relied upon by the learned senior counsel appearing on behalf of the appellant are applicable to the facts of the case on hand as the same are not of any assistance to the appellant. 9.5 However, at the same time Shri Divan, learned Senior Advocate, appearing on behalf of the appellant is justified in submitting that the Arbitrator ought not to have awarded an amount of Rs.45,000/- per km per month beyond the time period of additional traffic. The Arbitrator has awarded the loss/amount at Rs.45,000/- per km per month up to 31.05.2010 i.e. till the end of the contract which is wholly impermissible diversion of the additional traffic ceased to exist w.e.f. January, 2008. Therefore, the Arbitrator ought not to have awarded any amount beyond the above time period beyond January, 2008. To that extent the award passed by the Arbitrator can be said to be perverse and to that extent the present appeals are required to be allowed.

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

Explanation:
1[ds]9. That the contractor was awarded the contract for maintenance, etc. The contract amount was for Rs.5,26,59,688/-. The rate of maintenance of the road as accepted was Rs.12,000/- per km per annum or Rs.1,000/- per km per month. The maintenance contract was valid up to 31.07.2010. When the contract was entered into, the contract was meant for only 3364 PCUS per day. However, due to diversion of traffic from Palwal Aligarh Road to the present road, the contractor was required to incur additional expenditure on the maintenance due to increase in the traffic and plying the additional commercial vehicles. Therefore the contractor claimed the amount towards additional expenditure for maintenance which was due to increase in the traffic and plying more commercial vehicles. On appreciation of evidence the Arbitrator has determined the loss at Rs.45,000/- per km per month (claim Nos.1 and 8).9.1 The case on behalf of the appellant that as in the statement of claim, the claimant claimed an amount of Rs.1,03,50,263/- under the claim Nos. 1 and 8 and the Arbitrator has awarded Rs.1,51,95,400/-, the same is in far excess of amount claimed and therefore the award is in excess of amount claimed has no substance. When the statement of claim submitted by the contractor is seen, it is specifically stated by the claimant that the amount of Rs.1,03,50,263/- has been worked out up to May, 2007 and the details of expenditure beyond May, 2007 will be submitted during the course of hearing. It is specifically stated that expenditure incurred up to May, 2007 works out to Rs.1,03,50,263/-. Therefore, the amount awarded by the Arbitrator cannot be said to be in excess of the claim.9.2 Now so far as the submission on behalf of the appellant that the Arbitrator exceeded the scope of reference while awarding an amount beyond 19.05.2007 – the date on which the High Court appointed the sole Arbitrator is concerned, the same has no substance. The case on behalf of the appellant that the Arbitrator ought to have restricted the claim either up to 06.03.2006 – the date on which the contractor invoked the arbitration clause or 23.04.2007, the date on which the High Court appointed the sole Arbitrator or at least up to 19.05.2007 – the date on which the Arbitrator entered into reference, is concerned, it is required to be noted that the claim made by the Arbitrator was till the traffic was diverted which was up to January, 2008. Therefore, the Arbitrator was justified in awarding the amount beyond the aforesaid periods and till the additional traffic was diverted due to the closure of Palwal Aligarh Road.It is noted that at the time when the contract was entered into the mutually agreed, the rate fixed was Rs.1,000/- per km per month and the estimated traffic was 3364 PCUS per day. The cause of action arose subsequently due to diversion of traffic from Palwal Aligarh Road and plying of more heavy vehicles due to which the contractor was required to incur additional expenditure for maintenance of the road. Therefore, the contractor was entitled to the loss on account of the additional expenditure incurred for maintenance of the road due to increase in the traffic because of the closure of the Palwal Aligarh Road and diversion of the traffic to the present road. Therefore, by no stretch of imagination it can be said that there was rewriting the terms of the contract as submitted on behalf of the appellant.9.4 In view of the above findings, none of the decisions of this Court relied upon by the learned senior counsel appearing on behalf of the appellant are applicable to the facts of the case on hand as the same are not of any assistance to the appellant.9.5 However, at the same time Shri Divan, learned Senior Advocate, appearing on behalf of the appellant is justified in submitting that the Arbitrator ought not to have awarded an amount of Rs.45,000/- per km per month beyond the time period of additional traffic. The Arbitrator has awarded the loss/amount at Rs.45,000/- per km per month up to 31.05.2010 i.e. till the end of the contract which is wholly impermissible diversion of the additional traffic ceased to exist w.e.f. January, 2008. Therefore, the Arbitrator ought not to have awarded any amount beyond the above time period beyond January, 2008. To that extent the award passed by the Arbitrator can be said to be perverse and to that extent the present appeals are required to be allowed.