M/S. Associated Construction vs Pawanhans Helicopters Pvt. Ltd

JUDGMENT REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL Nos.3376-3377/2008 (arising out of SLP (C) Nos. 17335-17336/2007) M/s. Associated Construction ..........Appellant Vs. Pawanhans Helicopters Pvt. Ltd. .........Respondent JUDGMENT HARJIT SINGH BEDI,J.

2. The respondent, Pawanhans Helicopters Pvt. Ltd. (hereinafter called "Pawanhans") a Government of India undertaking, floated two tenders for allocation of work for construction of a compound wall and a bridge over a nala. Pursuant to the aforesaid information, several tenders were received and the tenders of the appellant (hereinafter called the "contractor") were ultimately accepted. Pursuant to the aforesaid, two formal agreements providing for the terms and 2 conditions of the contract in the shape of general conditions of the contract and special conditions of the contract governing the execution of work were duly signed on 12th October 1999. As per the contract the work was required to be completed within four months. It appears that on account of some delay which was attributable to Pawanhans, the work did not proceed as per schedule and the contractor accordingly informed Pawanhans by letters dated 15th February 1990, 23rd February 1990, 24th March 1990, 26th June 1990 and 6th July 1990 that the work was getting delayed as the requisite facilities for its completion had not been provided and highlighting several factors attributable to it had supervened which had led to the delay. The contractor also in the meanwhile vide letters dated 27th July 1990 and 6th August 1990 requested the respondent to release the outstanding bills against the work already completed and also requested for the "Virtual Completion Certificate" vide letter dated 25th August 1990. As some work on the compound wall still remained to be completed, the contractor agreed to take up this assignment subject to waiver of the discount of 8.2% 3 which was to be given to Pawanhans till then and the completed works were duly handed over to Pawanhans on the 12th November 1990. The contractor had also submitted a bill dated 23rd June 1991 and it was conveyed to Pawanhans that it expected compensation on account of the variation in the terms of the contract. Pawanhans thereupon advised the contractor to submit a final bill which too was submitted. The bill was verified by Pawanhans and referred to the contractor yet again with objections. The contractor vide letter dated 21st November 1991 disputed the verification as being without any foundation and also reserved its right to seek arbitration. After a protracted correspondence, Pawanhans vide letter of 9th December 1991 advised the contractor to submit a "No Claim Certificate" as a pre-condition for the release of the balance payment. The contractor wrote to Pawanhans that it was in dire need of finances and was being subjected to duress but nevertheless submitted a "No Dues Certificate"

3. The Division Bench then examined the issues raised by the contractor as to whether that "No Due Certificate" had been given under duress and held that there was no evidence to show that the said certificate had been given under duress or coercion and as the certificate itself provided a clearance of no dues, the contractor could not now turn and say that any further payment was still due on account of the second final 9 bill. The Division Bench accordingly allowed the appeal. The matter is before us in these circumstances.

11. We are further of the opinion that clause 43 and 43 (1) and (2) when read together clearly visualize escalation of price on account of reasons beyond the control of the contractor and attributable to the other side. Moreover clause 43 (2) clearly states that the remedy under clause 43(1) would be in 19 addition to such other remedy that may be open to the contractor under the other provisions.

17. We are therefore of the opinion that the judgment of the Division Bench is erroneous and we accordingly set it aside. The judgment of the learned Single Judge is accordingly restored. In the facts and circumstances of the case, in that Pawanhans has taken advantage of a beleaguered contractor, and has behaved in a most unbecoming manner in pushing it ever deeper into the chasm, the contractor will have its costs which are computed at Rs.10,000/-. The appeals are accordingly allowed.