P. Radhakrishna Murthy vs M/S. N.B.C.C. Ltd

(c), (e), (f) and (g). Also, the rejection of claims under 1(d) and 1(e) is upheld and award of Rs.13,050/- and 10,204/- against claims 2(c) and (d) are also upheld. Cross objection filed by the contractor regarding grant of certain items of claims made by him is dismissed and consequently it is held that the contractor will be entitled to Rs.9,01,871.53 with interest at the rate of 12% per annum from 28.12.1987 till the date of deposit of payment by NBCC. Also, the amount paid by the NBCC in pursuance of the interim order passed by the High Court will be adjusted to the amounts payable and if excess has been received by the contractor, then he shall repay the same within three months to NBCC. This Order of the High Court is under challenge in these appeals urging various facts and legal contentions. For the purpose of appreciating the rival legal contentions urged on behalf of the parties the brief facts are stated hereunder.

3. A notice was published in the newspapers by NBCC, Bangalore on 12.1.1985 with the purpose of inviting tenders for construction of five 5000 Metric Ton food storage godowns comprising of Group-I (Civil and Structural Works) and Group-II (internal and external electrification and sanitary work), structures at Bhimavaram, Phase II, West Godawari District, Andhra Pradesh. Pursuant to the said tender notice, the contractor submitted his tender for the said works and the offer of tender was accepted by NBCC.

5. It is the case of the contractor that for any construction work, schedule of rates plays an important role in pre-construction stage like preparation of estimate. To meet this objective, CPWD is publishing DSR since 1931 on regular intervals based on the experiences and latest technologies which can be adopted in the construction sector. The DSR were revised many times in the subsequent years 1977, 1981, 1985, 1989, 1993, 1997, 2002, 2007 and 2010 based on the market rates of materials and labour prevailing during the period. The CPWD Manual is a reference document of CPWD and provides a basic frame work for planning, designing and execution of construction works in CPWD. He further contends that the offer made by the contractor pursuant to the tender notice was accepted and works were awarded in his favour by NBCC on the basis of DSR-1981 and the provisions of CPWD Works Manual apply with all vigor to the case in hand. The contractor entered into a detailed agreement with NBCC on 26.6.1985 incorporating therein certain terms and conditions agreed upon by the parties. The following terms and conditions were agreed upon between the parties:

6. Pursuant to the said agreement, the contractor commenced the work and completed the same. The NBCC had failed to pay the amounts due to him in terms of the agreement referred to above for all the works performed by him. In response to the various representations submitted by the Contractor to the NBCC, it had appointed Shri N.S.L. Rao as sole Arbitrator, in terms of letter No.Engg. (CC/Gen/A/87-1363) dated 15.12.1987 to examine the claims made by the contractor by invoking Clause 25 of the agreement which empowered NBCC to appoint an Arbitrator of their choice. The contractor had submitted the statement of Claims on 25.1.1988 before the Arbitrator claiming under various heads under Claim No. 1 and Claim No.2 and Claim Nos. 3, 4, 5 and 6 and also prayed for interest at the rate of 24% from 28.12.1987 till the date of payment and further claimed a sum of Rs.32,500/- towards the arbitration expenses.

7. NBCC, in response to the said claims of the contractor, filed its reply before the Arbitrator on 22.2.1988. In the written statement filed by the NBCC before the Arbitrator, it was stated for the first time that aforesaid works were undertaken by them on behalf of FCI as their agent and they were liable to pay liquidated damages to FCI on account of purported delay in completion of the works by the appellant etc. The NBCC has denied the liability to pay any amount claimed by the contractor before the Arbitrator and further stated that DSR-1981 does not govern the tender conditions of NBCC and therefore it is not liable to pay amounts to the contractor as per the said rates. The contractor filed his rejoinder statement on 25.3.1988 inter alia stating that the NBCC never disclosed that the FCI was the real beneficiary and NBCC was merely acting as their agent and further stated that the discloser made by NBCC as above came as a rude shock to the contractor.

8. Through the relevant terms and conditions of the agreement entered into between the NBCC and FCI, it has been agreed that the works shall have to follow CPWD Manual as amended from time to time and the NBCC shall be paid 9% of the construction cost as remuneration and it shall not be paid any other charges on whatever account, over and above the said remuneration. Further it was agreed that in the event of failure of execution of works in time, the liquidated damages at 1% of the contract value or part thereof subject to a maximum of 5% of the contract value or the actual amount recovered from the contractor by NBCC shall be payable to FCI. As per the aforesaid terms and conditions between NBCC and FCI, the respondent is an agent of FCI and is required to call for tenders and contract and perform in accordance with the provisions of CPWD Manual and DSR-1981 rates.

9. The Arbitrator, after offering opportunity to both the parties to present their respective cases in detail with all supporting documents passed an award on 17.8.1988 granting the relief in Claim Nos. 1 & 2, items

10. It is the case of the contractor that he suffered from loss of some additional amount which was spent by him on account of delay committed by NBCC in handing over sites for godowns Nos. 10 and 11 as locations of some of the structures were changed after the work was awarded in favour of the contractor. The NBCC had categorically admitted that it could not make timely payments of amounts due and that delayed payments were made. The Arbitrator on the basis of submissions made by the NBCC and admissions made by it, awarded a sum of Rs.8,16,412/- representing 10% as normal provision for profit etc. in respect of claims relating to items (a), (b) and (c) of Claim No.1 and items (a), (b), (e), (f) and (g) of Claim No.2. Against item (c) of Claim No.2 the Arbitrator held that the claimant is also entitled to refund of Rs.13,050/- deducted by NBCC from the contractors bills for late recovery of mobilization advance. As regards item (d) of Claim No.2, the respondents are not entitled to rebate at 2.35% on the claim of Rs.2,39,796.07. The Arbitrator held that the said claim is not correct. The rebate offered by the claimant for prompt payment is 0.1% and as such he has held that claimant is entitled to refund of Rs.10,204/- and accordingly awarded the said claim. The Arbitrator, against claim Nos. 1 and 2 under the aforesaid items, has awarded Rs.8,39,666/- against his claim of Rs.26,93,000/-.

11. Insofar as, claim No.3 is concerned, by recording reasons he granted the same. As claim Nos.3(a) to (d) is concerned against the restricted claim of Rs.18,45,568.90, the Arbitrator has awarded Rs.11,64,396.80 but he had omitted to add 58.5% over and above DSR-1981. Insofar as, Claim No.4 regarding non-reimbursement of losses due to floods is concerned, the said claim was rejected. The claim of interest at the rate of 24% p.a. as item No.5 was rejected by the Arbitrator holding that the interest cannot be granted on the amounts claimed by the contractor on the basis of the judgment of this Court in Executive Engineer (Irrigation) v. Abhadutta Jena AIR 1988 SC 1520.

[pic]