A.L. Vaidya, J.@mdashThe applicant above-named has preferred a petition u/s 20 of the Arbitration Act (hereinafter referred to as "the Act") for appointment of an arbitrator to settle the disputes, mentioned in the petition. That petition has been registered as Civil Suit No. 198 of 1995.
2. In the aforesaid suit, the present application under Order 39, Rules 1 and 2, CPC has been moved and it has been prayed therein that pending final disposal of the application u/s 20 of the Act, the Respondents may be restrained from taking over the aforesaid partial works, as intimated by the Respondents vide their letters dated 12-7-1995 and 14-7-1995 (Annexures P-1 and P-2). The works being taken over through the aforesaid communications have been detailed as under:
(i) Balance work of spill channel of pipe Adequct inlet chamber;
(ii) Balance work of R.C.C. Box from outlet of pipe Aqueduct to H.R.T. inlet; and
(iii) Balance work of H.R.T. lining from Adit-I D/S.
3. It has been pleaded in the present application that the applicant filed an application u/s 20 of the Act for reference of the dispute of taking over of the three projects mentioned above by the department, whereas other works have continued to be executed by the claimant company It has been averred that the aforesaid act was absolutely illegal and against the terms of the contract and also against the circumstances as mentioned in the application u/s 20 of the Act. According to the Petitioner, the aforesaid taking over of the works by the department was arbitrable in view of the provisions of Clause 25 of the contract entered between the parties. It has also been alleged that initially the contract given to the applicant was worth Rs. 4.84 crores whereas the claimant company was required to execute the works to the tune of Rs. 8.2 crores for which the initial basis of the rate was upto the extent of Rs. 5.62 crores and rest of the amount was on account of escalation of existing claims of the applicant. It was also pleaded that the applicant had been given extension upto the month of June 1995 and that too that the Respondents had given the extension to the part of the work and for part of the work the extension had been given upto May 1995 and, therefore, notice, which was the subject matter of the dispute dated 30-3-1995 was illegal, premature in view of the terms of agreement settled in the meeting on 9-3-1995 wherein the extension was agreed to be given to the applicant-company. The applicant also averred that the action of the Chief Engineer was also illegal because of the fact that in case the clause for taking over the partial work was concerned, the same should have been decided not by the Chief Engineer but by the Engineer-in-Chief, (actually it should have been Engineer Incharge as per arguments advanced) which, under the circumstances and as defined in the contract was only the Superintending Engineer or the Executive Engineer. The applicant also maintained that they had executed the work to the extent of Rs. 8.2 crores and now the balance work which had been taken over from the applicant was microscopic to the extent of Rs. 15 to 20 lacs approximately. It has been very specifically averred that the contract has not been rescinded completely but only the part of the work had been ordered to be taken over, which could very easily be undertaken during the rainy season whereas the difficult portion of the works was not taken wherein approach is steep or on steep incline and of mud thus slippery. The applicant, as such, has challenged the action of taking over the partial works by way of this reference to the arbitrator.
4. It has further been pleaded that in case the Respondents were allowed to take over the works and execute the works themselves, the applicant shall suffer irreparable injury both in terms of money and reputation. It has been pleaded by the applicants that they were prepared to complete the work within a shortest time, however, the Respondents were adament to take over the works with respect to the tools, plaints and machinery etc. deployed by the applicant and the applicant would also suffer injury on that account also. According to the applicant, the machinery deployed by the applicant was worth Rs. 1.00 crore and by forcibly taking over the projects, the assets of the applicant company worth Rs. 1.50 crores were sought to be taken over which action itself was mala fide and arbitrary.
5. On the basis of the aforesaid allegations, the temporary injunction, as already detailed above, has been asked for.
6. The Respondents contested the present application and took various preliminary objections in the reply submitted by them it has been pleaded that the applicant, who has asked for interim injunction, has not come with clean hands and has deliberately mis-stated the facts and has obtained ex parte stay order from the Court by suppressing the real facts on insufficient grounds. It has been averred that the applicant has no prima facie case nor the balance of convenience is in favour of the Petitioner. According to Respondents, work was awarded in favour of the Petitioner on 6-2-1989 and agreement was executed on 13-2-1989 and the work was to start on 7-3-1989 and it was to be completed in 36 months to be reckoned from 30th day on which the order to commence the work was issued to the contractor. Thus, the work was to be completed by the 6th of March 1992, but however, the applicant has not been able to complete the work it was also averred that the project has been delayed considerably resulting in the increase in the cost of project and loss of revenue to the Defendants and also to the State Exchequer. It was also pleaded that in all the five working programmes submitted by the Petitioner, the works were committed to be completed by the date of completion stipulated in the agreement, but however, when only six months were left for completion date, the Petitioner submitted a revised working programme during July 1991 effective from August 1991 onwards wherein it was envisaged that all the works except HRT lining will be completed by December 1992 and the HRT lining work will be completed by January 1993. According to Respondents, thereafter, the Petitioner submitted a number of working programme always shifting the completion date componentwise abstract from various working programmes vis-a-vis the achievements and shoftfalls has been placed as Annexure R-12. According to Respondents, inspite of the fact that the Respondents rendered out of the way agreement by way of deferment of the recoveries on account of machinery advance with effect from 15-7-1992 and release of further advance of Rs. six lacs for procurement of 2 No. L.C.V''s during January 1993, the applicant could not reciprocate the good-will gesture and improve the pace of progress of works, ft was pleaded that as a consequence, the work could not be completed even upto September 1994 i.e. even after a lapse of a period of 30 months over and above the completion period of 36 months. It has also been alleged that throughout the period mentioned above, and thereafter Respondents'' representatives at various levels have been bringing out the shortfalls to the knowledge of the Petitioners and have been suggesting ways and means to improve the pace of progress, as detailed in Annexure R-13. According to Respondents, even the equipment and machinery were spared for use on hire basis to the Petitioner to expedite the pace of progress and other materials were transferred on cost to the Petitioner recoverable from their monthly running bills. Thus, in view of the inordinate delay in achieving the completion by the Petitioner, the monitoring of the progress was increased and the matter to expedite the pace of progress was taken up even by the Board''s Management and the Chairman, HPSEB during various visits to the project and the meetings held with the representatives of the Petitioner. According to Respondents, the dates committed for completion of the works by the Petitioner to the Respondents board at various occasions could not be adhered to and in this regard, the minutes of the meetings deted 13-9-1994, 23-1-1995 and 9-3-1995 were Annexures R-9, R-10 and R-11 respectively. It was averred that the progress achieved vis-a-vis the programme submitted by the Petitioner was reviewed at the month end by the Engineer-in-charge i. e. Superintending Engineer, Projects Construction Circle, HPSEB, Dharamsala (Respondent No. 3), and in view of the slow pace of progress a notice under Clause 3 of the agreement was served on the Petitioner on 30-3-1995, (copy Annexure R-4) and on failure of the Petitioner to comply with the requirements of the above notice, the Engineer-in-charge (Respondent No. 3) made recommendations in this regard to the Chief Engineer, who in accordance with the powers vested in him under Clause 3, passed an order vide his letter dated 12-7-1995 (Annexure R-6) for taking over of the three works referred earlier. The notice envisaged the Petitioner to hand over the works to the Respondents after the joint measurement on 20-7-1995 and the Petitioner stopped the work on the entire Head Race Tunnel i.e. from Adit-I D/S as well as from Adit-II D/S and II u/s w.e.f 13-7-1995. It was also pleaded that in view of the discussions held at site with the Deputy General Manager of the Petitioner, the Engineer-in-charge (Respondent No. 3) gave clarification in regard to take over of the work mentioned at aforesaid item No. (iii), vide his letter dated 14-7-1995 (Annexure R-7), but inspite of the clarification provided to the Petitioner''s representative, the work in the entire HRT as well as the other components mentioned for take over was kept suspended by the Petitioner.
7. Another preliminary objection raised by the Respondents has been to the effect that the application u/s 20 of the Act as filed by the Petitioner company, was not maintainable in view of the arbitration agreement, as per Clause 25 of the agreement dated 6-2-1989. According to Respondents, the action to take over the balance works as mentioned in the letter of the Chief Engineer dated 12-7-1995 has been taken over under Clause 3 of the agreement and the clause provided details vested in Chief Engineer.
8. On merit, the averments made in the petition have been denied and it has been pleaded that the application u/s 20 of the Act was not maintainable and the dispute relating to the taking over of the partial work as intimated to the Petitioner by letter dated 12-7-1995 and 14-7-1995, was not a subject-matter covered by the arbitration clause and according to the Respondents, the decision of the Chief Engineer was final and conclusive and was not covered by the dispute which could be resolved through arbitration under Clause 25 of the agreement The action taken by the Respondents has been alleged to be legal and valid and in terms of the agreement agreed to between the parties. It has, thus, been prayed that the application merits dismissal and the ex parte stay order obtained by the Plaintiff by suppressing the real facts deserves to be vacated, more particularly when it was not in public interest that the completion of the project should be stayed and the cost of construction is increasing day by day and especially when Petitioner was responsible for the delay in the completion of the project.
9. The learned Counsel for the parties have been heard at length and I have also scrutinised the relevant record placed before this Court.
10. The present Petitioner was awarded the construction of civil works of Gaj Hydle Project, District Kangra, H.P. through Agreement No. 1/89 dated 6-2-1989, which was executed on 13th of February 1989 between the parties. There is no dispute on the factual side between the parties that the work could not be completed within the stipulated time, which had been extended from time to time.
11. Learned Counsel for the Petitioner, has very strongly contended that the works taken over by the Respondents vide Clause 3(d) of the agreement only meant that the agreement has been partially cancelled, which could not be so done under the law and also under the relevant terms of the agreement. According to learned Counsel, a dispute has arisen between the parties regarding the taking over of the three works, referred to earlier, by the Respondents and for that purpose, application u/s 20 of the Act has been moved for referring the dispute for the arbitration.
12. Learned Counsel line of argument has been, that as prima facie, the Respondents could not pass such an order of taking over, accordingly, the operation of that taking over, during the pendency of the arbitration proceedings under the law, required to be suspended It has further been submitted that under Clause 3(d) of the agreement, the contractor could, not claim compensation for any loss sustained by him, by reason of his having purchased or procured any materials or entered into any engagements or made any advances on account of or with a view to execution of the work or the performance of contract and in case action is taken under any of the provisions aforesaid, the contractor shall nor be entitled to recover or be paid any sum for any work thereto or actually performed under this contract unless and until the Engineer-in-charge has certified in writing the performance of such work and the value payable in respect thereof and he shall only be entitled to be paid the value so certified. In the aforesaid background, it has been argued that the value of he compensation so certified by the Engineer-in-charge, could not be made the subject-matter of reference, as the same would be final. Therefore, it is being contended that after taking over the part of the work as per Clause 3(d) of the agreement, in case that order is allowed to be continued, it may result in irreparable injuries to the applicant in the aforesaid background of claim for compensation.
13. It is not so simple a matter, as has been contended on behalf of the Petitioner. On merit, it has been contended that all the essentials required for passing of an interim injunction are present in this case, which aspect, according to the learned Counsel, deserves favourable consideration of the application.
14. On the other hand, the submissions put forth by Shri K.D. Sood, learned Counsel for the Respondents, can be summarised as under:
(i) On the basis of Clause 25 of the agreement, the action taken by the Respondents under Clause 3(d) of the agreement cannot be legally made the subject-matter of the reference, and
(ii) on merit even, the Petitioner''s case does not come within the ambit of Order 39, Rules 1 and 2, Code of Civil Procedure, especially when on the basis of the pleadings and documents filed by the parties, no prima facie case is made out in favour of the Petitioner, but on the other hand, it is made out in favour of the Respondents and that irreparable injury, if the injunction asked for is granted, would be caused to the Respondents and balance of convenience in the present case, also requires the prayer to be not favourably considered. Above all, it has been contended that in case injunction asked for is granted, it will adversely affect the public interest which requires the completion of the Project, without any undue delay.
15. In order to appreciate the contentions put forth on behalf of the parties, at the very initial stage, Clause 3 and Clause 25 of the agreement, are required to be referred, which run as under:
Clause 3 determination of contract
Chief Engineer may without prejudice to Board''s right in respect of any delay or inferior workmanship or otherwise or to any claim for damage in respect of any breach of the contract and without prejudice to any rights or remedies under this contract or otherwise and irrespective of the fact whether the date for completion has or has not elapsed, by notice in writing, absolutely determine the contract in any of the following cases:
(i) If the contractor, having been given by the Engineer-in- charge a notice in writing the rectify, reconstruct or replace any defective work or that the work/or part of work is being performed in an in-efficient manner or otherwise improper or unworkman like manner, fails to comply with the requirements of such notice for a period of seven days thereafter or if the contractor shall delay or suspend the execution of the work or part of the work so that either in the judgment of the Chief Engineer (which shall be final and binding) the contractor will be unable to secure completion or the contractor has already failed to complete the work by that date.
(ii) If the contractor being a company shall pass a resolution or the Court shall make an order that the company shall be wound up or if a receiver or a manager on behalf of a creditor shall be appointed or if the circumstances shall arise which entitle the Court or creditor to appoint a receiver or a manager or which entitle the Court to make a winding up order.
(iii) If the contractor commits breach of any of the terms and conditions of this contract.
(iv) If the contractor commits any acts mentioned in Clause 21 hereof.
When the contractor has made himself liable for action under any of the cases aforesaid, the Chief Engineer on behalf of the Board shall have powers:
(a) To determine or rescind the contract as aforesaid (of which termination or rescission notice in writing to the contractor under the hand of the Chief Engineer shall be conclusive evidence) Upon such determination or rescission, the security deposit of the contractor shall be liable to be forfeited and shall be absolutely at the disposal of HPSEB.
(b) To execute the work department ally and debit the cost (cost as certified by the Engineer-in-charge shall be final and conclusive against the contractor) of such execution to the contractor and credit him with the value of the work done in all respects in the same manner and the same rates as if it had been carried out by the contractor under the terms of his contract. The certificate of the Engineer-in-charge as to the value of the work done shall be final and conclusive against the contractor, provided always that action under sub-clause shall only be taken after giving notice in writing to the contractor, provided also that if the expenses incurred by the department are more than the amount payable to the contractor at contracted rates, the difference should be paid by the contractor.
(c) After giving notice to the contractor to measure up the work executed by him and to take such part thereof as shall be unexecuted out of 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 original contractor, if the whole work had been executed by him (of the amount of which excess the certificate in writing of the Engineer-in-charge shall be final and exclusive) shall be borne and paid by the original contractor and may be deducted from any money due to him by the Board under this contract or any other account whatsoever or from his security deposit or the proceeds of sales thereof or a sufficient part thereof as the case may be.
(d) To take any part of the work out of contractor''s hand which in the opinion of Engineer-in-charge is not being carried out by the contractor with required diligence and efficiency and to execute it departmentally or through other agency at the risk and cost of the contractor. In the event of any one or more of the above courses being adopted by the Engineer in-charge the contractor shall have no claim to compensation for any loss sustained by him by reason of his having purchased or procured any materials or entered into any engagements or made any advances on account or with a view to the execution of the work or the performance of contract. And in case, action is taken under any of the provisions aforesaid, the contractor shall not be entitled to recover or be paid any sum for any work there to or actually performed under this contract unless and until the Engineer-in-charge has certified in writing the performance of such work and the value payable in respect thereof and he shall only be entitled to be paid the value so certified.
Clause 25 settlement of disputes by arbitration
Except where otherwise provided in the contract, questions and disputes relating to the meaning and interpretation of the terms of contract, specifications, designs, drawings and instructions herein before mentioned and as to the quality of workmanship or material used in the work or as to any other question, claim, right, matter or thing whatsoever in any way arising out of or relating to the contract, designs, drawings, specification, estimate, instructions, orders or these conditions or otherwise concerning the works, or the execution or failure to execute the same whether arising during the progress of the work or after the completion or abandonment thereof or relating to termination or recission, or delay in the execution and all consequences thereof of the contract shall be referred to a sole arbitrator which will be appointed by the HPSEB.
16. At this stage, letters dated 12-7-1995 and 14-7-1995 can safely be referred. Letter dated 12-7-1995 runs as under:
"Fax Message"
Himachal Pradesh State Electricity Board.
No. CEP-Gaj-Tender/94-95-6406-10 (Camp at Dharamshala) dated 12-7-1995.
To
M/s. S.A. Builders Ltd.,
S.C. Order 49-50,
Sector-26, Madhya Marg,
Chandigarh-160026.
Fax No. 0172-44046.
Sub: Agreement No. 1/89 dated 6-2-1989 for construction of Gaj Hydel Project.
D/Sirs,
Whereas the undersigned is satisfied that due to your carrying out the work in an inefficient manner resulting in slow progress of the work entrusted to you under agreement referred to above; the work has not been completed within extended date of completion.
And whereas you were served a notice by Superintending Engineer, Projects Construction Circle, HPSEB, Dharamshala (Engineer-in-charge) vide his letter No. SEP-W-127/94-95-3089-92 dated 30-3-1995 to improve your pace of progress and whereas the reply given by you vide your letter No. SAB/GAJ/95/16 dated 5-4-1995 has been found to be unsatisfactory and also you have failed to improve your working.
And whereas due to slow progress and carrying out the work in an inefficient manner, I am satisfied that you are not in a position to secure completion of the work by the extended date of completion.
Now, therefore, in exercise of the powers conferred/vested in me under Clause 3 and Sub-clause 3(d) and other enabling provisions of the contract agreement and after taking into account the acts of omission and commission and carrying out the work in an inefficient manner and other relevant documentary evidence placed on record, I.S.P. Chaudhary, Chief Engineer (Projects), H.P State Electricity Board, Vidyut Bhawan, Shimla 4 hereby order taking up the following balance works under Clause 3(d) of the contract agreement:
(i) Balance work of spill channel of pipe Aqueduct inlet chamber.
(ii) Balance work of R.C.C. Box from outlet of pipe Aqueduct to HRT inlet.
(iii) Balance work of HRT lining from Adit-I D/S.
The above taken over balance works which have not been executed so far shall be carried out entirely at your risk and cost departmentally/through other agency(ies) to complete the same in which case any expenses which may be incurred in excess of the sum which would have been paid to you, if the whole work had been executed by you in terms of the agreement (the amount of excess certified in writing by the Engineer-in-charge shall be final and exclusive) shall be borne and paid by you on demand or may be deducted from any money due to you by the Board under this contract or any other contract whatsoever or from security deposit or the proceeds of sales thereof or a sufficient part thereof as the case may be, without prejudice to the rights of the Board to realise the said excess amount by suit or otherwise.
Now, further in exercise of the powers conferred/vested in me under Clause 4, the list of Tools and Plants and material appended in Annexure I is also taken over for use on hire by the Board, the hire rates for each has been shown against each item.
Please also take note that the work executed by you will be measured by 20th July, 1995 for which you are advised in your own interest to join and attend the joint measurements failing which the work will be measured unilaterally in your absence and the measurements to taken shall be final and binding on you.
Before parting, I record that this is without prejudice to H.P. State Electricity Board''s rights to take action under any Clause (s) or Sub-clause (s) of the agreement and to realise HPSEB dues and losses and damages whatsoever under the provision of the contract.
Yours faithfully, Sd /-
(Er. S.P. Chaudhary),
Chief Engineer (Projects),
HPSEB, Vidyut Bhavan,
Shimla 4
For and on behalf of HPSEB.
Copy of above is forwarded to the following:
(1) M/s. S.A. Builders S.C. Order 49-50, Sector 26, Madhya Marg, Chandigarh 160026 By Speed Post.
(2) The Chief Engineer (P and M) H.P. State Electricity Board Vidyut Bhavan Shimla 4.
(3) The Superintending Engineer, Projects Construction Circle, HPSEB, Dharamshala.
(4) Executive Engineer, Gaj Const. Division HPSEB, Gharoh for information and necessary action please.
Sd /-
(Er. S.P. Chaudhary),
Chief Engineer (Projects),
HPSEB, Vidyut Bhavan,
Shimla 4.
This letter is accompanied by Annexure I wherein the list of Equipment, Machinery and material to be taken over from M/s. S.A. Builders for use on hire basis by the HPSEB has been given.
The letter dated 14-7-1995 is also reproduced hereunder:
No. SEP-W-127/95-649194 . Dated: 14-7-1995.
To
The Dy. General Manager,
M/s. S.A. Builders Ltd.,
Camp at Matti.
Sub: Agreement No. 1/89 dated 6-2-1989 for construction of Gaj Hydel Project.
Sir,
This is with reference to the discussion held at site with the undersigned today i.e. the 14th July, 1995 regarding taking over of the part work by the HPSEB from M/s. S.A. Builders Ltd. as ordered by the Chief Engineer Projects vide his letter No. CEP-Gaj-Tender/94-95/Camp/D/sala 6406-10 dated 12-7-1995 addressed to your Head Office with copies to other.
In this regard it is clarified that against item No. (iii) the balance work of H.R.T. lining for Adit-I D/S has been decided to be taken over, the balance H.R.T. lining works u/s and D/s of Adit-II continue to remain with you, which means that HPSEB has taken over the balance work of H.R.T. lining from Adit I D/s heading only from RD 0 to RD + 750 and rest of H.R.T. lining from RD 750 onwards remains with - you. For more clarity the work taken over- against item No. iii vide Chief Engineer (Projects) letter referred above may be read as balance H.R.T. lining works from Adit-I D/S heading from 0 RD to + 750 mtrs. RD.
In view of above clarification you had agreed to start the work stopped by you in HRT u/s of Audit-II. But during inspection of works it was seen that no labour was engaged on the job. Please take necessary action to execute the works from Adit-II u/s and D/S headings efficiently.
Yours faithfully,
Sd/-
Superintending Engineer,
Project Const. Circle,
HPSEB, Dharamshala.
(1) Copy to the Chief Engineer (Projects) HPSEB, Vidyut Bhawan Shimla 4 for information. This letter has been issued as per telephonic discussion held with him on 14-7-1995 at 3.30 p.m,
(2) Copy to M/s. S.A. Builders Ltd, S.C. Order 49-50 Sector 26 Madhya Marg Chandigarh 160026 for information and necessary action please.
(3) Copy to Executive Engineer, Gaj Const. Div. HPSEB, Gharoh for information and necessary action please.
Sd/-
Superintending Engineer,
Project Const. Circle,
HPSEB, Dharamshala.
In the aforesaid background, the legal submissions put forth on behalf of the parties, at first instance, have to be appreciated.
17. As referred earlier, it has been contended on behalf of the Petitioner by Sh. Chhabil Dass, Advocate, that taking over of some of the balance works under Clause 3(d) of the agreement referred in the letter dated 12-7-1995. as reproduced above, only meant that the contract has been, in part, rescinded and as a consequence thereof, the aforesaid balance works have been taken up. The proposition laid down by the learned Counsel that agreement cannot be rescinded or cancelled in part but as a whole, is not being strictly disputed. The sole point involved remains, whether the action taken by the Respondents under sub Clause 3(d) of the agreement amounted to cancellation of the contract in part ?
The answer, in the background of the present case, would be in the negative.
18. Admittedly, there is nothing in the letter dated 12-7-1995 that the agreement has been cancelled in part. It may, however, be pointed out that in Clause 3(d) of the agreement, it has been very specifically provided that "in the event of anyone or more of the above courses being adopted by the Engineer-in-charge, the contractor shall have no claim to compensation...." This provision only signifies that the above courses included, as provided under Clauses 3(a), (b), (c) and (d) independently. Under Clause (a), the contract could be rescinded but under Clause (d) any part of the work out of the contractor''s hand could be taken which, in the opinion of Engineer-in-charge, was not being carried out by the contractor and such an action could be taken without rescinding or cancelling the contract, as it has been so provided in the agreement itself. Needless to say, parties are to be governed by the terms and conditions of the agreement and not by any other aspect at all.
19. In the letter dated 12-7-1995, it has been very specifically mentioned the reasons why a part of work was taken from the hands of the contractor. In this view of the matter, it cannot be said, on any stretch of imagination, that the aforesaid act on the part of the Respondents was not within the purview of the specific conditions laid down in the agreement. This argument of learned Counsel for the Petitioner, as such, does not carry any legal weight.
20. It has been contended by Shri K.D. Sood learned Counsel for the Respondent, that the action taken by the Respondent under Clause 3(d) of the agraement could not be made the subject-matter of reference for arbitration under Clause 25 of the agreement. In this behalf, it has been contended that Clause 25 for referring any dispute to the arbitrator, would be available to a party to the agreement only in case the so called dispute otherwise provided in the contract, could not be referred for arbitration. According to learned Counsel, us in the agreement itself i.e. in Clause 3(d) it has been provided that after taking action under Clause 3(d), the contractor shall have no claim to compensation for any loss sustained by him by reason of his having purchased or procured any materials or entered into any engagements or made any advances on account or with a view to the execution of the work or the performance of contract and in case, action is taken under any of the provisions of Clause 3, the contractor shall not be entitled to recover or be paid any sum for any work thereto or actually performed under this contract unless and until the Engineer-in-charge has certified in writing the performance of such work and the value payable in respect thereof and he shall only be entitled to be paid the value so certified, therefore, the only relief to the contractor, under this clause, would be to get the value so certified by the Engineer-in-charge, which would be final. I think, whether compensation is paid or not or any value is to be paid to the contractor after so certified by the Engineer-in-charge, it is nothing but the follow up action when a part of the work has been taken over from the hands of the contractor under Clause 3(d) referred to earlier, in so far as Clause (d) is concerned, the wording of the said clause is crystal clear, as it does not contain anything through which it could even remotely be inferred that the action taken by the Engineer-in- charge, under this Clause 3(d), would be final. In the absence of any finality being given under the agreement to the action of the Engineer-in-charge, as provided under Clause 3(d), it cannot be said, on any score whatsoever, that this action taken under Clause 3(d) has been kept outside the purview of the dispute to be referred for arbitration under Clause 25 of the agreement.
21. Learned Counsel for the Respondent has tried to take some help from
22. In
23. Similarly, in
The clause containing compensation is a penalty clause introduced under the contract to ensure that the time schedule is strictly adhered to. It is something which the Engineer-in-charge enforces from time to time when he finds that the contractor is being recalcitrant, in order to ensure speedy and proper observance of the terms of the contract. It contains a complete machinery for determination of the compensation. It is not in the nature of an automatic levy to be made by the Engineer-in- charge based on the number of days of delay and the estimated amount of work. The decision of the Superintending Engineer is in the nature of considered decision which he has to arrive at after considering the various mitigating circumstances that may be pleaded by the contractor or his plea that he is not liable to pay compensation at all under this clause. The opening part of the arbitration clause clearly excludes matters like those mentioned in Clause 2 in respect of which any dispute is left to be decided by a higher official of the Department. Therefore, the question of awarding compensation under Clause 2 is outside the purview of the arbitrator and the compensation, determined under Clause 2 either by the Engineer-in-charge or, on further reference, by the Superintending Engineer will not be capable of being called in question before the arbitrator. Reading Clauses 2 and 25, it must be held that the amount of compensation chargeable under Clause 2 is a matter which has to be adjudicated in accordance with that clause and which cannot be referred to arbitration under Clause 25.
This ratio is also not applicable to the facts of the present case, for the reasons mentioned earlier.
24. Now, on merit, it is to be looked into whether the temporary injunction prayed for, can be granted or refused in the context of the material brought on record at this stage.
25. In order to consider the" relief, asked for, in an application of present nature, the three essentials, being prima facie case, irreparable injury and balance of convenience have to be there simultaneously in favour of the party asking for such a relief. In case one of the ingredient, referred to above, is lacking, the relief asked for cannot be favourably considered.
26. In addition to the aforesaid three essentials required to be established, the presence of fourth one, in some cases, has also to be taken note of, which being the public interest involved in a particular case. The following observations made in
It would thus be clear that in a suit for perpetual injunction, the Court would enquire on affidavit evidence and other material placed before the Court to find strong prima facie case and balance of convenience in favour of granting injunction otherwise irreparable- damage or damage would ensue to the Plaintiff. The Court should also find whether the Plaintiff would adequately be compensated by damages if injunction is not granted It is common experience that injunction normally is asked for and granted to prevent the public authorities or the Respondents to proceed with execution of or implementing scheme of public utility or granted contracts for execution thereof. Public interest is, therefore, one of the material and relevant considerations in either exercising or refusing to grant ad interim injunction....
27. It has been submitted on behalf of the Petitioner that prima facie, the dispute of taking over of part of the work assigned to the Petitioner is referable for arbitration under Clause 25 of the agreement, therefore, the prima facie case in favour of the Petitioner, stood established. There is no doubt that, at the face of it, as discussed above; the alleged dispute can safely be referred for the arbitration under Clause 25 of the agreement. The sole point to be gone into, at this stage, is whether there are prima facie circumstances established on record, on the basis of which, such an action, as taken by the Respondents by taking over a part of the work could or could not be exercised under Clause 3(d) of the agreement. According to Petitioner, there were prima facie no circumstances established on record, which empowered the Respondents to take such an action under Clause 3(d) of the agreement.
28. There is no dispute that the work assigned in favour of the Petitioner was to be completed by the 6th of March 1992, but however, the time was extended from time to time, as is evident from the minutes of the meetings held on 13-9-1994, 23-9-1994 and 9-3-1995, as revealed from Annexure R-9, R-10 and R-11 respectively. It has been contended on behalf of the Petitioner that the latest meeting was held on 9-3-95 pertaining to the progress review of the work under the Chairmanship of F.C.-cum-Secretary (Power)-cum-Chairman, HPSEB. In this meeting, it was agreed to extend the date of various works by different dates and the last date for one of the work was the end of May 1995 Admittedly, by that time, the work could not be completed and thereafter the Respondents took action under Clause 3(d) as mentioned earlier.
29. It has been argued by Shri Chhabil Dass, Advocate, that certain difficulties and impediments arose, which were beyond the control of the Petitioner and were mostly due to the intervening circumstances of Government instructions and those circumstances have been detailed under para 13 of the main petition which have been various in number. Those need not be detailed here On the other hand, it has been the case of the Respondents that the working programme submitted by the Petitioner warranted the works to be committed by the date stipulated in the agreement, but thereafter again, the Petitioner submitted a number of working programmes always shifting the completion date. The Respondents have very specifically averred that prima facie, the grounds alleged by the Petitioner, responsible for non-completion of the works within the stipulated period, were not factually correct, as would be revealed from the documents R-36, R-43 and R-44, which pertained to the statement showing availability of cement and steel issued in favour of the Petitioner w.e.f. September 1994 to June 1995 (Annexure R-36) and the statement of daily procurement of petrol diesel from 1st May. 1995 to 30th June, 1995, (R-43). In R-44, which is a Utter dated 12-5-1995 addressed by Superintending Engineer, Projects, to the Chief Engineer, Projects, wherein various quantities of diesel procured on different dates have been mentioned and it has very specifically been referred that works even on other fronts, which did not involve the use of diesel, such as, excavation of RCC etc. has not picked up due to shortage of labour and the representatives of M/s. S.A. Builders at site had been assured all help to make supply of diesel further also.
30. Anyway, the fact remains that the Petitioner, on the one hand, is alleging that due to certain circumstances, the work could not be completed and those circumstances were not under the control of the Petitioner, but, on the other hand, this allegation is being disputed by the Respondents and parties have tried to bring on record some documents to that effect.
31. Primarily it is for the arbitrator to find out whether there existed circumstances for the Respondents to take action under Clause 3(d) of the agreement, but on the basis of the allegations made by the parties and the documents filed by than, prima facie, it stood established that the action taken by the Respondents under Clause 3(d) was a valid one. Needless to say, parties'' rights and liabilities arc to be determined on the basis of the agreement, arrived at between them.
Even for arguments sake, the Respondents were not legally entitled to take action under Clause 3(d) of the agreement, as has been so done by them, its only consequence would be that the Petitioner would be entitled for some damages or compensation which can be assessed in terms of money. In this view of the matter also, the irreparable injury cannot be said to be caused to the Petitioner, in case the injunction asked for is not granted in their favour. Keeping in view the past conduct of the parties, more so that of the Petitioner, the further extension of the time for completion of the works taken over would not have been in the interest of the work itself, which is of public importance and its completion has already been delayed. The irreparable injury, as such, in case injunction is granted as asked for, would be not only to the Respondents, but to the public interest at large. In such circumstances, balance of convenience again tilts in favour of the Respondents.
The present project, admittedly, is being taken in hand for the interest of the public which is very much involved in the present case There is no doubt that in case Petitioner undertakes the work, it would be for the public interest, but in the background of the circumstances existing in this case, the non-completion of the project within the stipulated time which stood extended from time to time, has gene against the public interest. As referred earlier, experiencing the past conduct of the Petitioner for delaying the work for one reason or the other, it would be in the interest of public that the work is completed without any undue delay and that too by the Respondents, as they have proposed to do in the present case.
32. In view of the foregoing reasons, I do not find any merit in the present application and accordingly dismiss the same The interim order, passed on 20-7-1995, stands vacated.
33. It may be very specifically pointed out that any observations made hereinabove, will not, in any way, affect the parties'' case, which is yet to be finally disposed of.
This petition stands accordingly disposed of.
