INTERNATIONAL CONSTRUCTION COMPANY ETC. versus STATE OF ANDHRA PRADESH AND ORS.

Citation: [2001] 1 S.C.R. 792 · Decided: 01-02-2001 · Supreme Court of India · Bench: S. RAJENDRA BABU · Disposal: Dismissed

Judgment (excerpt)

A 
B 
INTERNATIONAL CONSTRUCTION COMPANY ETC. 
v. 
STATE OF ANDHRA PRADESH AND ORS. 
FEBRUARY I, 2001 
[S. RAJENDRA BABU AND S.N. VARIAVA, JJ.] 
Arbitration Act, 1940: Sections 30 and 33-Contract for excavation 
work.formation of embankments etc.--C/ause 83 stipulating that claim should 
be made in writing to the Superintending Engineer within I 5 days from !he 
C date of cause of action in order to enable verification-Also stipulated that 
it would be impossible to verijj· the facts of the claims preferred after 15 days 
and such claims liable to be rejected-Appellant made claims in respect of -+ 
losses suffered because of cyclone in November 1977 and floods in 1978, 
without giving details in terms of Clause 83-Award made by the Arbitrator 
D made rule of the Court-High Court reversed a portion of the said award-
On appeal, Held: No dispute, as contemplated under Clause 83 had been 
raised at all-Appellant's letter only mentioned about the severe cyclone and 
heavy rains-It also said that the labourers gathered from the different areas 
were forced to return-It nowhere gave details as to the number of labourers _f. 
from different areas and the arrangements made regarding them and the 
E extent of loss suffered by them. 
F 
In the year 1977, two contracts were awarded to the appellants for the 
purpose of earthwork, excavation and formation of embankments and 
construction of aquaducts in the Nagarjuna Sagar Left Canals in District 
Khammam in Andhra Pradesh. The total value of the contract was about Rs. I 
1.57 Crores. A dispute arose out of the said two contracts which was referred 
to the Arbitrators. The Arbitrators made an award in favour of the appellants. 
The said award was made rule of the Court by the City Civil Court, Hyderabad. 
However, on appeal, the High Court set aside a portion of the award made by 
the arbitrators on account of claims towards losses suffered by the appellants 
G due to severe cyclone in Andhra Pradesh in November, 1977 and on account 
of reimbursement of losses due to abnormal rains and unprecedented floods )..._ 
in 1978. Henc~ these appeals. 
I 
' The appellants contended that the High Court had sought to interpret 
1 
the clauses of the agreement which it was not entitled to do so and could not 
ff 
792 
INTERNATIONAL CONSTRUCTION CO. ETC. v. STATE 
793 
have reappraised the evidence particularly in respect of the taking over.of A 
*the site and that there was no heavy rainfall in June~ 978 as per statistics 
maintained by the Rainfall Station at Wyra which is near the \vork site. It 
was also contended that the High Court erred in holding that new claims had 
been raised by the appellants and that certain claims were time-barred. 
Dismissing the appeals, the Court 
B 
HELD: I. In order to make a claim and raise a dispute there should 
have been compliance with clause 83 of the agreement. The claim should 
have been submitted in writing to the Superintending Engineer within 15 
days from the date of cause of action so that this aspect would be verified. On C 
the interpretation of clause 83, the High Court held that condition therein is 
a condition meant for convenience of both the parties and does not lay down a 
+ rule of limitation, much less a condition for the arbitrator to entertain a 
claim. (795-D-EI 
2. From the materials on record, it is clear that there had been floods D 
and, therefore, the appellants had been put to loss but a claim or dispute in 
terms of clause 83 does not seem to have been addressed at all either in 
claim regarding reimbursement of losses sustained by way of advances to 
labour on account of severe cyclone in November, 1977 or in the claim 
regarding reimbursement of losses sustained due to abnormal rains and E 
unprecedented floods in 1978. All that the appellants stated in their letter 
dated 26-11-1977 is that there had been severe cyclone and heavy rains as a 
result of which communications dislocated and the appellants sent their labour 
recruitment personnel to Bilaspur, Orissa, Mehboobnagar and other labour 
recruitment areas and some of the labour gathered were on their way to site 
when they were held up due to the cyclone and were forced to return back due F 
fo complete breakdown of communications after the cyclone, but there are no 
details as regards how many labourers have been engaged from different 
areas and what arrangements had been made in regard to them and the extent 
of loss suffered by them. That is the dispute that is

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