P.K. Singh vs M/S. S.N. Kanungo & Ors

2. From the record of the case it is evident that a contract was entered into between the respondent- 2 contractor and the Andaman and Nicobar Administration through Union of India for execution of the work of extension of runway by 1542 meters (5000 ft.) at Port Blair Airport on 29.12.1995. During the course of the execution of the said contract, dispute arose between the parties regarding payments of bills. The dispute was referred to sole arbitration of Mr. O.P. Goel. The arbitrator made his Award on March 22, 1999 and directed the Andaman and Nicobar Administration to pay to the respondent a sum of Rs.2,81,83,305/- (Rupees two crores eighty one lacs, eighty three thousand, three hundred and five only) with 12% interest per annum from the date of withholding of the amount of Rs.41,42,000/- (Rupees forty one lacs forty two thousand only) till the date of payment.

4. Thereafter, the appellant, who is Executive Engineer, Construction Division II, APWD, South 4 Andaman, addressed a letter to the Superintending Engineer, Construction Circle No. 1, Andaman Public Works Department, on 5.3.2001 giving details of the financial implication of the Award dated 22.3.1999. The appellant received a letter dated March 30, 2001 from the Executive Engineer (PLG), CE's Office, APWD, Port Blair stating that the principal component of the Award might be released to the agency, i.e., the respondent herein, immediately. The appellant thereupon wrote a letter dated 30.3.2001 to the Chief Engineer, APWD requesting that the acceptance of the Award should be communicated with details regarding amount/principal component to be paid. It was also mentioned in the said letter that for delay, if any, in payment of the amount, he would not be responsible. The appellant thereafter addressed another letter on the same day to the respondent requesting it to intimate its acceptance of the Award amount to Rs.2,81,83,305/- in full and final 5 settlement of its claim. The respondent thereupon replied by a letter dated 30.3.2001 to the appellant that it was not willing to accept the amount stated in the aforesaid letter. The appellant, therefore, wrote another letter on 30.3.2001 to the respondent informing that the principal component of the Award of Rs.2,81,83,305/- would be released on the same day and requested the respondent to reconcile with the appellant for mutual understanding about payment of interest. The respondent wrote a letter to the appellant on March 31, 2001 mentioning that it was willing to accept the principal amount of the Award "at present" but the remaining amount of the interest etc. should be released within a fortnight. Thereupon, the appellant addressed a letter dated 2.4.2001 to the Chief Engineer, APWD, Port Blair, forwarding a copy of the letter received by him from the respondent and pointed out that the respondent was unwilling to accept the amount of the Award without interest. The appellant addressed another 6 letter dated 2.4.2001 to the Chief Engineer informing him about the changed stand of the respondent regarding its willingness to accept the principal component of the Award and requested him to communicate the decision regarding payment of interest without further delay.

10. On the facts and in the circumstances of the case, this Court is of the opinion that the judgment impugned cannot be sustained and is liable to be set aside.

11. For the foregoing reasons, the appeal succeeds. The impugned judgment is set aside. The cost, if any, recovered from the appellant be refunded to him. The appeal stands, accordingly, disposed of. 13

12. There shall be no order as to costs.

February 18, 2010.