IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
F.A.O. No. 1640 of 2008
Date of Decision : December 11, 2008
Yashpal Dahiya, Contractor
.....Appellant
Versus
State of Haryana and another
.....Respondents
CORAM : HON'BLE MR JUSTICE T.P.S. MANN
Present : Mr. Rajender Singh Malik, Advocate
T.P.S. MANN, J.
On 30.3.1996, construction work was allotted to the appellant-
Contractor who was required to start the work on 2.4.1996 and complete it
within a period of six months, i.e. upto 1.10.1996. The time limit was
extended upto 25.9.1997 but the work could not be completed. No further
extension was allowed. This led to a dispute between the Contractor and
the respondent-Department which was referred to the Arbitrator in terms of
Clause 25(a) of the contract. The Arbitrator gave his award dated 2.4.2002
as per which the Contractor was required to pay Rs. 3,26,185/- to the
Department on account of Clause 3(c) of the contract. The Contractor filed
an objection petition under Section 34 of the Arbitration and Conciliation
F.A.O. No. 1640 of 2008 -2-
Act, 1996 (hereinafter referred to as ‘the Act’) for setting aside the award
but the same was dismissed by District Judge, Sonipat on 11.2.2008.
Hence, the present appeal under Section 37 of the Act.
Clause 2 of the contract required the Contractor to strictly
observe the time allowed for carrying out the work as entered in the tender.
This clause reads as under :-
“Clause 2. The time allowed for carrying out of work as
entered in the tender shall be strictly observed by the
Contractor, and shall be reckoned from the date on which
the order to commence work is given to the Contractor.
The work shall throughout the stipulated period of the
contract be proceeded with all due diligence (time being
deemed to be the essence of the contract on the part of the
Contractor) and the Contractor shall pay as compensation
on amount equal to one per cent which the Executive
Engineer may levy on the amount of the estimated cost of
the whole work as shown by the tender for every day that
the work remains un-commenced, or unfinished, after the
proper dates. And further to ensure good progress during
the execution of work the Contractor shall be bound, in all
cases in which the time allowed for any work exceeds one
month to complete one-fourth of the whole of the work
before one-fourth of the whole time allowed under the
contract has elapsed, one-half of the work before one-half
F.A.O. No. 1640 of 2008 -3-of such time has elapsed and three-fourth of the work
before three-fourth of such time has elapsed. In the event
of the Contractor failing to comply with this condition, he
shall be liable to pay as compensation an amount equal to
one per cent which the Executive Engineer may levy on
the said estimated cost of the whole work for everyday that
due quantity of work remains incomplete provided always
that the amount of compensation to be paid under the
provisions of this clause shall not exceed ten per cent of
the estimated cost of the work as shown in the tender. The
Superintending Engineer on representation in writing from
the Contractor, may reduce the amount of compensation
and his decision in writing shall be final.
The various situations arising out of the Contractor rendering
himself liable to pay compensation were to be resolved in three different
ways which were described in Clause 3 of the agreement as follows :-
“Clause 3: In any case in which under any clause or
clauses of this contract, the Contractor shall have rendered
himself liable to pay compensation amounting to the whole
of his security deposit (whether paid in one sum or
deducted by installments) the Executive Engineer on
behalf of the Government shall have power to adopt any of
the following courses, as he may deem best suited to the
interests of Government.
F.A.O. No. 1640 of 2008 -4-
(a) To rescind the contract (of which rescission notice
in written to the Contractor under the hand of the
Executive Engineer shall be conclusive evidence)
and in which case the security of the Contractor
shall stand forfeited and be absolutely at the disposal
of Government.
(b) To employ labour paid by the Public Works Deptt.
and to supply materials to carry out the work, or any
part of the work debiting the Contractor with the
cost of the labour and the price of the materials (of
the amount of which cost and price a certificate of
the Executive Engineer shall be final and conclusive
against the Contractor) and crediting him with the
value of the work done, in all respects in the same
manner and at the same rates as if it had been carried
out by the Contractor under the terms of his
contract; the certificate of the Executive Engineer as
to the value of the work done shall be final.
(c) To measure up the work of the Contractor, and to
take such part thereof as shall be unexecuted out or
his hands, and to give it to another Contractor to
complete. in which case any expenses which may be
incurred in excess of the sum which would have
been paid to the original Contractor if the whole
F.A.O. No. 1640 of 2008 -5-work had been executed by him (of amount of which
excess the certificate in writing the Executive
Engineer shall be final and conclusive) shall be
borne and paid by the original Contractor and may
be deducted from any money due to him by
Government under the Contractor or otherwise, or
from his security deposit or the proceeds of sale
thereof or a sufficient part thereof.”
On account of the Contractor not completing the work even
within the extended period, i.e. upto 25.9.1997, the contract was rescinded
vide order dated 25.8.1998 in terms of Clause 3 and ultimately, the work
was re-allotted to another Contractor on risk and cost basis. Accordingly,
on the basis of the available evidence, the Arbitrator concluded that an
amount of Rs. 3,26,185/- as on 28.3.2002 was due which was to be paid by
the Contractor to the Department.
It is submitted on behalf of the Contractor that the work was
started in right earnest and the excavation of s/s tank completed before the
monsoons set in but cement and steel were supplied in sufficient quantity
only in May and June, therefore, the excavated portion could not be secured
and was filled up with the rain-water.
The Department had produced in its evidence the bin cards of
cement and steel which showed that they were available in good quantity
during 5/96 onwards but it was the Contractor who did not come forward to
F.A.O. No. 1640 of 2008 -6-
complete the work after 7/96 and even when extension of time was granted
upto 25.9.1997.
In view of the above, no interference is called for in the
impugned order passed by District Judge, Sonipat whereby objection
petition filed by the Contractor against the award dated 2.4.2002 was
dismissed.
The appeal has no merit and, resultantly, dismissed.
( T.P.S. MANN )
December 11, 2008 JUDGE
satish