SUPREME COURT OF INDIA

Before:- G.B. Pattanaik and Brijesh Kumar, JJ.

Civil Appeal Nos.2697-98/2002, Arising out of SLP(C) Nos.8162- 8163/2001. D/d. 12.04.2002.

K. Ramasamy - Appellant

Versus

State of T.N. & Ors. - Respondents

Arbitration Act, 1940, Sections 14, 17 and 39 - Additional claim for the extra distance from which earth was taken by the contractor for the work - Under the agreement in question, distance indicated was between 1 to 4 k.m - But that place was not suitable, and contractor had to extract from distant sources - Clause in agreement that if sources previously approved are found to be unacceptable, contractor shall furnish materials from other approved sources and allowance or deduction will be made as the case may be for increase or decrease in cost due to an increase or decrease in length of haul - Arbitrator awarded Rs. 27,95,215/- towards haulage - High Court set aside the award - Order of High Court erroneous - Appeals allowed.

[Para ]

ORDER

Brijesh Kumar, J. - Leave granted.

2. These are appeals against the judgment of the High Court of Madras interfering with an award of the Arbitrator, in an appeal being filed against the same. We are concerned with the award relating to claim Item No.1, which in turn is the additional claim for the extra distance from which the earth was taken by the contractor for the work in question.

3. Under the agreement in question, the place specified for earth/gravel was taken, the place being chain age 1750-2000, and the distance indicated was between 1 to 4 k.m. But that place was not suitable, and ultimately the competent authority directed different sources from which the contractor was required to take the earth/gravel for the project in question.

4. A claim being made, the Arbitrator awarded Rs. 27,95,215/- towards the extra lead for which the contractor had to take the materials from this distance of 6 to 18 k.m. It is also apparent that the Superindent Engineer himself entertained the claim and allowed a sum of Rs. 5,41,527/-. The High Court, however, in the impugned judgment being of the opinion that the contractor will not be entitled to any additional claim, set aside the award of the Arbitrator. In coming to the aforesaid conclusion, the Court relied upon clause 106.02 of the Contract, the aforesaid clause is quoted herein below in extensor:

5. Clause 106.02 PS to SSRB Source of Materials

(1) All materials shall be obtained from the sources designated in the contract. The excavation of materials from sources designated in the contract shall be under the direction of the engineer at all times in so far as selection of material or exact location of excavation is involved.

(2) If the sources previously approved are found to be unacceptable at any time and fail to produce materials satisfactory to the engineer, the Contractor shall furnish materials satisfactory to the Engineer; the Contractor shall furnish materials from other approved sources. The Contractor will not be reimbursed for any expense in developing the new source, but allowance or deduction will be made as the case may be for the increase or decrease in cost due to an increase or decrease in the length of haul.

6. On a plain reading of the aforesaid clause, we are of the considered opinion that what the petitioner is not entitled to any expense in developing the source. But so far as the increase or decrease in cost due to increase or decrease in the length of haul is concerned, the same is unequivocally permissible, as is apparent from the later part of the aforesaid clause, and the High Court therefore committed serious error in misreading the aforesaid clause of the contract. We, therefore, set aside the impugned judgment of the High Court and direct that the award of the Arbitrator be made a Rule of Court.

7. The appeals are disposed of.

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