CMA/3810/2002 of D. Papi Reddy Vs The Govt. of A.P. on 31 December 2009

THE HON’BLE SRI JUSTICE V.V.S. RAO

AND

THE HON’BLE SRI JUSTICE B.N. RAO NALLA

C.M.A.No. 3810 of 2002

JUDGMENT: (per Hon’ble Sri Justice B.N.Rao Nalla)

Aggrieved by the common order dated 16.4.2001 to the extent of rejection ofClaim Nos.3A, 4A, 5A and 11A in O.P.No.22 of 1994 on the file of Senior Civil Judge,Nellore, the first respondent therein filed the present C.M.A. However, after filing theC.M.A., respondent No.1, who is appellant herein died and his legal heirs 2 to 7 arebrought on record.

2. For the sake of convenience the parties hereinafter be referred to as ‘appellant’and ‘respondents’ as arrayed in this CMA.

3. The appellant is the contractor who entered into an agreement dated 11.4.1984bearing No.7/SE/8586, with Superintending Engineer, Telugu Ganga Project, inconnection with construction of “Off-take Sluice” for left side canal of KandaleruReservoir at K.M.0.990 of Earth Dam.

4. That the site was handed over to the appellant on 10.5.1985. The duration ofcontract period was 12 months. It was to be completed on or before 9.05.1986. Thevalue of the work was estimated to be at Rs.6,44,686/- plus 8.41% excess over andabove the estimated value to be assessed by the Department. As the work was notcompleted by 9.5.1986, the appellant sought extension of time on 6.6.1986 for a periodof one year and the same was extended up to 15.8.1986. That on 4.11.1985, theappellant informed the Executive Engineer as to stoppage of work due to non supply ofcement. The Deputy Executive Engineer instructed the appellant to stop the work byhis letter dated 11.3.1986, as the appllant did not complete the work even during theextended period up to 15.8.1986 and also during the further extension period up to31.3.1987. The reasons for not completing the work given are that the embeddedparts have not been supplied to the appellant during the extension period up to31.3.1987 and he requested the first respondent to close the contract and settle theaccounts. That the first respondent accordingly approved the closure of contract. Whereupon, the appellant requested the Executive Engineer to finalise the bills dulydeleting the balance items. The first respondent informed the appellant as to hiscompleting the work items from 1 to 13, and remaining items from 14 to 20, which wereheld up due to non supply of embedded parts.

5. The learned Arbitrator was appointed by this court by order dated 26.10.1992 inC.R.P.No.1982 of 1991 as sole Arbitrator to settle the disputes and differencesbetween the appellant and the first respondent.

6. The learned Arbitrator after considering the other claims also considered theClaim No.3A and granted a sum of Rs.48,200/- towards extra overhead charges asagainst the claim of the appellant. However, the learned Senior Civil Judge, Nelloreafter taking into consideration the material produced before him and the factual andlegal aspects of the case, came to a conclusion that the appellant is not entitled toClaim No.3A of Rs.48,200/- holding that the appellant had failed to produce therelevant record such as Income Tax returns before the learned Arbitrator. That thelearned Senior Civil Judge also observed that the appellant failed to produce anydocument before the learned Arbitrator in respect of his claim and the learnedArbitrator granted the said claim without calling for such records as to payment madeby the appellant to his employees from time to time during the extended period and nowork was turned out during such extended period. Further, the Arbitrator had alsofailed to put the burden on the first respondent to prove that the Contractor did not incursuch overhead charges. As such, the learned Senior Civil Judge came to a conclusionthat the learned Arbitrator exceeded his jurisdiction in permitting such claim.Claim Nos.4A and 5A:

7. Under Claim No.4A, the appellant claimed Rs.72,600/- towards idle andestablishment charges considering that the labour and establishment had to be keptidle for total period of 101 days. The learned Arbitrator awarded an amount ofRs.54,500/- towards idle and establishment charges. The appellant also claimedunder Claim No.5A, a sum of Rs.1,18,750/- towards idle machinery. The learnedArbitrator considered and granted the entire claim at Rs.1,18,700/- (rounding of figure)holding that the appellant had to keep the machinery idle for five months. However,the learned Senior Civil Judge after considering the record brought before him andafter assessing the pros and cons of the matter, set aside both the claims. Though, theappellant failed to produce any record in support therefor, like vouchers or I.T. returns,Log extracts etc, the learned Arbitrator awarded the entire claims. Of course, the firstrespondent objected for considering the claims under 4A and 5A on the said grounds.Hence, the learned Senior Civil Judge set aside the said claims since they were notsupported by any material and observed that in such a situation simply accepting the mere statement of the appellant without any supporting material, the Arbitrator shouldnot have granted the said claims and in doing so he went beyond his jurisdiction.Claim No.11A:

8. The appellant claimed an amount of Rs.36,000/- under this claim “loss of profit onwork prevented from execution”. The learned Arbitrator observing that the reasonableexpectation of the profits is implicit under works contract and it’s loss to becompensated by way of damages granted the said claim in toto. However, the learnedSenior Civil Judge, disagreeing with the award so far as the claim No.11A isconcerned, set it aside observing that the said claim relates to a remote and indirectloss said to have been suffered by the appellant and no such claim is admissible inlaw, even if there is breach of contract by the first respondent and further that even theappellant himself intended to have termination of the work, granting of such claim bythe learned Arbitrator was improper and the same amounted to an error on the face ofaward.

9. In the above facts and circumstances of the matter, the learned Senior Civil Judgeafter considering the entire material before him rejected the Claim Nos. 3A,4A,5Aand 11A by giving sufficient reasons therefor. As such we do not find any infirmity orillegality in the impugned order dated 16.4.2001 so as to interfere under Section 39 ofthe Arbitration Act,1940, and as such, the C.M.A. is devoid of merit.10. In the result, the C.M.A. is dismissed. No costs.

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V.V.S. RAO,J

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B.N. RAO NALLA, J

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