CHANDIGARH CONSTRUCTION CO. PVT. LTD versus STATE OF PUNJAB & ANR.

Citation: [2020] 2 S.C.R. 825 · Decided: 14-02-2020 · Supreme Court of India · Bench: R. BANUMATHI · Disposal: Case Partly allowed

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Judgment (excerpt)

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825
       CHANDIGARH CONSTRUCTION CO. PVT. LTD.
v.
STATE OF PUNJAB & ANR.
(Civil Appeal Nos.867-870 of 2013)
FEBRUARY 14, 2020
[R. BANUMATHI AND A.S. BOPANNA, JJ.]
Arbitration Act, 1940: Award by arbitrator – Claimant-
contractor and opposite party entered into an agreement for
construction of Sutlej Yamuna Link Canal and in that regard to
carry out earth work, drainage behind lining and cement concrete
lining – Estimated cost of project was Rs.31 lakhs and contract
amount for the work was fixed at Rs.59.86 lakhs – Claimant raised
demand for additional payment on the ground that during execution,
the scope of work was considerably increased on account of various
decisions by department regarding rebuilding of river banks and
changes in the strata encountered during excavation due to incorrect
geological data observations by department prior to inviting tender
– Demand of additional payment led to arbitral dispute – Arbitrator
accepted claim and passed award with 18% interest – Award
presented before Sub-judge for making ‘rule of court’ – Opposite
party filed objection that no reason was indicated for giving the
award – Sub-judge accepted the objection to the extent of rejection
of Claim no.1 and reduction of interest to 12% p.a. and in other
respects the Award was made ‘Rule of Court’ – First appellate court
rejected the claim in toto taking note of Clause 39 of the Contract
Agreement which provided that the contractor was required to deliver
in the office of the Executive Engineer every month during
continuance of the work, the return showing details of extra work
done with value of such work and if the details are not indicated, it
shall be deemed that the contractor has waived all claims not
included in such returns and will have no right to enforce any such
claim not so included – In that light since the claim was ultimately
found as not included in the monthly statement, the First Appellate
Court held that the requirement of the conditions of the contract
was not adhered to and set aside the Award of the Arbitrator – High
Court also took note of Clause 39 of the contract and declined the
 [2020] 2 S.C.R. 825
825
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826
SUPREME COURT REPORTS
[2020] 2 S.C.R.
claim except claim no.1 – In the instant appeal, it was contended by
appellant-claimant that Note 6 to the schedule of work which formed
a part of the contract provided that extra or other items of work
shall be paid at the rate worked out on the basis of relevant Punjab
Common Schedule of Rates Basis Plus Sanctioned Premium at the
time of tendering – The difference between the estimated cost of
Rs.31 lakhs and contract amount of Rs.59.86 lakhs was the
sanctioned premium which corresponded to the overall premium of
93.12% on the work for computing the rates of extra items/quantity
or work done – Insofar as the remaining claims, 93.12% would
become applicable – It was contended that when the contract
agreement is explicit insofar as the value and the difference being
the sanctioned premium and the percentage being evident at 93.12%,
the decision of the Arbitrator not indicating any further reasons in
the Award would not be fatal – Opposite party (State of Punjab),
referred to Clause 63 of the contract which provides for reference
of the disputes to arbitration – The said clause specified the
requirement that all Awards shall be in writing and in case of awards
amounting to Rs.1 lakh and above, such Award shall state the reason
for the amount awarded – Held: The quantum of the contract amount
as against the estimated cost by itself could not have formed the
basis to conclude the claim as made by the claimant towards
sanctioned premium – Claim No.8 related to the work carried out
on Daldal land wherein the soil was marshy and extra construction
material was required to complete the work – Arbitrator awarded
Rs.19.15 lakhs after indicating the amount for the said work on the
same basis and deducting the agreed rate – Clause 39, no doubt,
prescribes a method by which the claim is to be put forth in the
statement every month – The said requirement will have to be
construed as being put in the agreement so as to ensure that the
additional work has actually been done, the claim is put forth along
with details so that baseless claim is not made at a distant point in
time when it will not be possible to determine – Though the Clause
also indicates that if such claim is not made,  it would amount to
waiver, in a circumstance where the claim 

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