RAMNATH INTERNATIONAL CONSTRUCTION PVT. LTD. versus UNION OF INDIA AND ANR.

Citation: [2006] SUPP. 10 S.C.R. 570 · Decided: 11-12-2006 · Supreme Court of India · Bench: H.K. SEMA · Disposal: Dismissed

Judgment (excerpt)

A 
RAMNATH INTERNATIONAL CONSTRUCTION PVT. LTD. 
B 
v. 
UNION OF INDIA AND ANR. 
DECEMBER I I, 2006 
[H.K. SEMA AND R.V. RA VEENDRAN,JJ.) 
Arbitration-Contract-Delay in execution partly on account of 
employer-Claim of compensation by contractor-Terms of contract bearing 
C claim of compensation on account of delay~Arbitrator granted the 
compensation despite holding that both employer and contractor responsible 
for the delay-Award made rule of Court-Division Bench of High Court 
holding that award in respect of certain items was in derogation of the terms 
of the contract-On appeal, held: The claim for compensation in respect of 
certain items of contract on account of delay was barred by the terms of the 
D Contract-Award ignoring the term of contract was made in excess of 
jurisdiction-The terms of the contract amounts to specific consent in 
satisfaction by the contractor to accept extent ion of time alone in satisfaction 
of his claims for delay and not claim any compensation. 
Appellant was awarded two contracts viz. Aircraft and Airtech Hangar 
Ep (Hangar contract) and for construction of roads (Road Contract). The contract 
work could not be completed within stipulated time, partly due to the default 
on the part of the respondent-employer. Several extentions were given by the 
employer. Subsequently the contracts were terminated. Appellant-contractor 
claimed compensation on the ground that on account of delay and extention 
F on the part of the employer, it incurred extra cost and losses. Matter was 
referred to Arbitrator. Arbitrator held that both contractor as well as employer 
were responsible for the delay. However, it held that employer was liable to 
pay the damages as work was delayed on his part and employer failed to 
establish that the contractor had consented to accept the extention of time 
alone, in satisfaction of his claims for the delay. Single Judge of High Court 
G made the award rule of the Court. Division Bench of High Court held that 
Arbitrator had exceeded its jurisdiction in making an award towards claim 
No. 24 of Hangar Contract and towards claim Nos. 13 to 16 of Road Contract 
as the same were in derogation of clause 11 (C) of the contract, which 
prohibited the contractor from making any claim for compensation or 
H 
570 
RAMNA TH INTERNATIONAL CONSTRUCTION PVT.LTD. v. U.0.1. 
571 
otherwise, as a result of extension of time granted under the contract. Hence A 
the present appeals. 
Dismissing the appeals, the Court 
HELD: 1. Clause 11 (C) of the contract provides that if there is any 
delay, attributable either to the contractor or the employer or to both, and the B 
contractor seeks and obtains extension of time for execution on that account, 
he will not be entitled to claim compensation ofany nature, on the ground of 
such delay, in addition to the extension of time obtained by him. Therefore, 
the claims for compensation as a consequence of delays, that is claim 24 of 
Hangar Contract and claims 13 to 16 of Road Contract are barred by clause C 
1 l(C). (576-G-H; 577-A) 
Associated Engineering Co. v. Government of Andhra Pradesh, (1991) 
4 SCC 93 and Ch. Ramalinga Reddy v. Superintending Engineer, (19991 9 
sec 610, relied on. 
2. Arbitrator, inspite of having held that both Department as well as D 
contractors were responsible for the delay and having noticed the arguments 
based on clause l l(C) of the General Conditions of contract, the Arbitrator 
proceeded to award damages on the ground of delay on the reasoning that the 
contractor is entitled to compensation, unless the employer establishes that 
the contractor has consented to accept the extension of time alone in E 
satisfaction of his claim for delay. Clause 11 (C) of the General Conditions of 
Contract is a clear bar to any claim for compensation for delays, in respect of 
which extensions have been sought and ob(air.ed. Clause ll(C) amounts to a 
specific consent by the contractor to accept extension of time alo_ne in 
satisfaction of his claims for delay and not claim any compensation. In view of 
the clear bar against award of damages on account of delay, the arbitrator F 
clearly exceeded his jurisdiction, in awarding damages, ignoring clause 1 l(C). 
(578-D-G) 
Associated Engineering Co. v. Government of Andhra Pradesh. (1991) 
4 SCC 93 and Rajasthan State Mines and Minerals Ltd. v. Eastern 
Engineering Enterprises and Anr., (1999) 9 sec 283, relied on. 
G 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3167

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