Durga Charan Rautray vs State Of Orissa & Anr

1. The appellant was entrusted with the construction of balance work of earth dam in connection with the Kharkhai Irrigation Project upto RL 316.50 on 31.12.1975. The estimated cost of the said balance work was Rs.13,78,810/-. As per the contract agreement, the work was to commence on 1.1.1976 and was to be completed on or before 31.7.1976. For some reasons including change in design, the work could not be completed within the prescribed time. The appellant eventually completed the assigned work in July, 1978. This delay in completion of work, according to the appellant, resulted in financial loss to the appellant. In addition to the aforesaid, the appellant had some other grievances as well. Illustratively, the appellant sought payment towards some additional work 2 executed by him, and also, refund of royalty deducted on account of the supply of "morum". All these disputes were raised by the appellant, with the concerned respondent(s). The respondent(s) chose not to entertain the claims raised by the appellant. In fact, all communications addressed by the appellant to the respondents remained unanswered. The appellant then sought reference of his claims for adjudication before an arbitrator. This request of the appellant was also not heeded to. The appellant thereafter obtained a Court order dated 15.5.1981, whereby the disputes raised by the appellant were referred to an arbitral tribunal. The arbitral tribunal examined nine items of claim raised by the appellant.

2. The award rendered by the arbitral tribunal dated 15.9.1998, adjudicated claim item nos. 4, 5, 6 and 9, in favour of the appellant. In so far as claim item no.4 is concerned, the appellant had demanded an additional amount of Rs.2 lakhs on account of price escalation. This claim was based on the fact, that after the work was assigned to him, the State Government had revised minimum wages of labour, and increased the same by 16%. The appellant, accordingly, claimed extra payment of 16% over the gross amount paid in the final bill. The arbitral tribunal held the appellant entitled to Rs.24,380/- towards price escalation. In claim item no.5, the appellant claimed Rs.5,51,173/- towards cost of "morum" supplied, but for which no payment had been released. In this behalf, the appellant claimed carriage of 47,106 cubic meters with 15 kilometers lead, 3 at the rate of Rs.21.35 per cubic meter. While adjudicating the instant claim, the arbitral tribunal found the appellant entitled to the difference between the cost of supply of "morum", as against the cost of supply of "earth". In respect of claim item no.5, the appellant was held entitled to a sum of Rs.78,667/-. In claim item no.6, the appellant demanded a refund of Rs.20,727/- deducted towards royalty from his bills. The aforesaid royalty was allegedly charged on the "morum" supplied by the appellant. The appellant was held entitled to refund of the entire sum of Rs.20,727/- deducted from his bills towards royalty. In so far as claim item no.9 is concerned, the appellant claimed interest at the rate of 18% per annum on the principal claim amount, from the due date till the date of final payment. The arbitral tribunal held the appellant entitled to interest at the rate of 10% per annum on the principal awarded amount of Rs.1,23,724/-, with effect from 19.8.1981 (i.e., the date with effect from which the Interest Act, 1978 came into force) till 5.4.1992. Calculated in the aforesaid terms, the arbitral tribunal awarded interest of Rs.1,31,544/- to the appellant.

4. The "Miscellaneous Case", filed by the respondents was contested by the appellant inter alia by raising a preliminary objection. It was sought to be asserted, that the "Miscellaneous Case" was barred by limitation. The "Miscellaneous Case" filed by the respondents was rejected by the Civil Judge, Senior Division, Bhubaneshwar by accepting the plea of limitation raised by the appellant. The suit filed by the appellant was decreed on 30.4.2002. The award of the arbitral tribunal dated 15.9.1998 was made "rule of the court". The respondents were directed to pay the awarded amount to the appellant, failing which, the appellant was granted liberty to recover the same through Court.

7. Dissatisfied with the judgment rendered by the High Court dated 22.12.2003, the appellant filed a petition for special leave to appeal bearing no.12183 of 2004. Leave was granted on 20.3.2006. Consequently, the matter came to be renumbered as civil appeal no.1735 of 2006.

9. For the reasons recorded hereinabove, we are of the view that the High Court erred in concluding that the appellant having received payment after preparation of the final bill, without having raised any objection, could not have initiated arbitral proceedings. The judgment rendered by the High Court dated 22.12.2003 is, accordingly, set aside. The order passed by the Civil Judge, Senior Division, Bhubaneshwar dated 30.4.2002 is upheld. The instant appeal is accordingly allowed. The respondents are directed to pay the appellant the awarded amount, failing which, the appellant shall be at liberty to recover the same through Court.

10. There will be no order as to costs.

November 1, 2011.