Calcutta High Court Videsh Sanchar Nigam Limited vs Shapoorji Pallonji And Company Limited on 9 April, 2008 Form No. J.(2) In Appeal from its Constitutional Writ Jurisdiction Original Side Present : The Hon'ble Mr. Justice Ashim Kumar Banerjee And The Hon'ble Mr. Justice Tapas Kumar Giri A.P.O No. 455 of 2007 Arising out of A.P.No. 288 of 2005 Videsh Sanchar Nigam Limited Vs Shapoorji Pallonji and Company Limited For the Appellant : Mr. Anindya Kumar Mitra, Senior Advocate Mr. Pratap Chatterjee, Senior Advocate Mr. Abhrajit Mitra Mr. Sakya Sen Mr. Jishnu Chowdhury Mr. Joseph Banerjee For the Respondent : Mr. Hirak Kumar Mitra, Senior Advocate Mr. S.N.Mukherjee, Senior Advocate Mr. Debdutta Sen Mr. Soumen Sen Heard on : February 7, 2008; February 20, 2008; March 05, 2008; March 12, 2008; March 19, 2008 and March 26, 2008; March 28, 2008; March 31, 2008 and April 1, 2008. Judgment on : April 9, 2008. ASHIM KUMAR BANERJEE.J: The appellant Videsh Sanchar Nigam Limited (hereinafter referred to as "VSNL") issued a notice inviting tenders for construction of their office complex at Ultadanga, Calcutta. Shapoorji Pallonji and Company Limited (hereinafter referred to as "SPCL") became the successful tenderer. An agreement was entered into by and between the parties on August 22, 1996. The said agreement also found the parties to abide by General Terms and Conditions of Contract which, inter alia, contained an arbitration clause to resolve future dispute, if any. As per the letter of intent SPCL was to commence work on March 28, 1995 and to finish the construction within 21 months i.e., by December 27, 1996. Despite the stipulated period being over construction could not be completed. Ultimately, the construction was completed and complex was handed over on or before March 31, 1999. According to SPCL, the construction could not be completed earlier in view of noncooperation on the part of the VSNL. VSNL denied such charge. Four letters asking for extension and reply thereto are relevant herein being letter dated February 10, 1999; March 25, 1999; April 28, 1999 and December 27, 1999 appearing at pages 177, 182, 189 and 227 respectively of VolumeI of the brief of documents. By the letter dated February 10, 1999 VSNL contended, the contract is to continue to be in force till the completion of the work or its abandonment. As neither party has abandoned the work, the contract continues to be in force till its completion. In paragraph 3 of the said letter VSNL asked SPCL to submit necessary application for extension of time beyond August 31, 1998. By the said letter it was also pointed out that some important items of work were badly delayed in the later part of 1998 although payments were made from time to time. By the letter dated March 25, 1999 VSNL informed SPCL that final programme for completion of the project had not been received by them. Testing, repairing and other works were still pending. Project management consultancy services would be available only upto March 31, 1999. VSNL stated, we hope all measurements after the execution has been done till date for their processing. SPCL was also advised to speed up the job so that final bill could be submitted. SPCL by their letter dated April 28, 1999 recorded that the work had been completed to the satisfaction of VSNL. They gave details of the cause of delay and prayed for extension upto March 31, 1999 in terms of Clause 9.4 of the agreement. By the letter dated December 27, 1999 VSNL replied to the letter of SPCL, the contents of the said letter are quoted below : "This has reference to your letter NO. SP/GMW/VSNLCAL/99/04281 dated 28th April, 1999 and it is hereby informed that the date of completion of the contract has been extended upto 311297 without prejudice to the rights of the purchaser in the contract. Under the circumstances you are advised to revalidate the Performance Bank Guarantee which is expiring on 311299. This has to be acknowledged before 29th or 30th of this month." Pertinent to note, while granting extension upto December 31, 1997 vide letter dated December 27, 1999 VSNL did not assign any reason as to why the extension was not granted upto 31st March, 1999 as prayed for by SPCL. Parties raised their claims and crossclaims. According to VSNL the contract was for Rs. 21.00 Crores which was subsequently enhanced to Rs. 25.00 crores approximately out of whi