AI Structured Summary
Not yet generated for this judgment
Judgment
Pradeep Mittal, J
The present arbitration revision has been preferred under Section 19 of the Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983, challenging the award dated 24.07.2002 passed by the Madhya Pradesh Madhyastham Adhikaran Tribunal, Bhopal, in Reference Case No. 60 of 1989. By the said award, the Tribunal rejected the petitioner’s claim regarding the base date for price escalation from 01.11.1983 instead of 15.01.1985, as well as the claim relating to additional expenditure incurred in supplying 20 mm steel plates instead of the originally required 12 mm plates.
The facts leading to the filing of the present revision are that in August 1983, the Respondent invited tenders for the design, manufacture, supply and erection of vertical lift gates and other related works for the Tons Barrage. The Petitioner submitted its technical, commercial and price bids. Initially, only the technical and commercial bids were opened on 06.12.1983. Later, the Respondent directed the tenderers to submit revised price bids, which were ultimately opened on 15.01.1985. The Petitioner had submitted a revised price bid stating that the base date for price escalation would be 01.11.1983. The Respondent accepted the Petitioner’s tender on 15.05.1985 and subsequently amended the acceptance letter incorporating the revised price bid. The Petitioner commenced the work and submitted bills on the basis that the base date for price escalation was 01.11.1983, which the Respondent accepted and made payments accordingly until June 1988. Thereafter, by letter dated 12.07.1988, the Respondent raised a dispute stating that the base date for price escalation should be treated as 15.01.1985. The Petitioner completed the work on 30.06.1990 and had already filed a reference petition before the Madhya Pradesh Arbitration Tribunal in 1989.
The respondents before the tribunal denied the petitioner’s claim and contended that the tender was floated in August 1983 and was to be submitted in three parts: commercial bid, technical bid, and price bid. As per the N.I.T., the commercial and technical bids were opened on 6.12.1983, while the price bid was to be opened later after clarification of technical and commercial terms. Common commercial conditions were circulated to all bidders on 7.4.1984, requiring submission of revised price bids without adding any new conditions. The petitioner submitted its price bid on 26.12.1984 with an additional condition regarding the base date for price escalation, which was contrary to the stipulated common conditions and therefore not acceptable. The price bid was finally opened on 15.1.1985, and the letter of intent issued on 15.5.1985 clearly stated that the contract would be governed by the N.I.T. and the common conditions circulated earlier. The petitioner’s letter dated 26.12.1984 was mentioned only in the reference heading and was not made part of the contract terms. Therefore, the petitioner’s condition regarding the base date for price escalation was not binding, and the request for change of base date had already been rejected by the respondents on 19.7.1985.
The grounds taken by petitioner in revision are that the Tribunal erred in determining the base date for price escalation and failed to properly appreciate the documents, correspondence, and conduct of the parties, which clearly establish that the Respondent had accepted 01.11.1983 as the base date as stipulated in the Petitioner’s letter dated 26.12.1984.
It is further submitted that the Tribunal failed to appreciate that the expression “tender opening” in the tender conditions was vague, as the tender was opened in stages and the price bid was opened only on 15.01.1985, nearly fourteen months after the initial opening on 06.12.1983, and therefore the said date could not reasonably be treated as the base date. letters dated 21.11.1983 and 26.12.1984, which were accepted by the Respondent and incorporated into the contract through the Letter of Intent and its amendment dated 17.06.1985.
It is further submitted that the Tribunal failed to consider the conduct of the Respondent, who made payments for several years treating 01.11.1983 as the base date without any objection, thereby clearly accepting the said date. Tribunal erred in holding that the letter dated 26.12.1984 was not part of the contract merely because its contents were not reproduced in the body of the Letter of Intent, ignoring that other referenced documents also formed part of the contractual framework.
It is further submitted that the Tribunal wrongly relied upon the statement written on envelope Ex. D-4 while ignoring the subsequent correspondence dated 26.12.1984 and 17.06.1985, which clearly indicated acceptance of the base date proposed by the Petitioner. the Tribunal drew incorrect conclusions from the Minutes of Meeting dated 13–18.09.1986 (Ex. P-6) even though the Respondent continued to make payments treating 01.11.1983 as the base date even thereafter. Tribunal further failed to appreciate that the Petitioner incurred additional expenditure in supplying 20 mm steel plates instead of 12 mm plates as directed by the Central Water Commission, and since the contract was a lump-sum contract, the Respondent was liable to bear the additional cost arising from the modification of specifications.
It is further submitted that the petitioner claimed Rs. 48,64,573.38 towards price variation before the Tribunal, contending that the base date for price variation should be 01.11.1983, as clearly stated in its letters dated 21.11.1983 and 26.12.1984. The respondents accepted the petitioner’s revised price bid and referred to the petitioner’s letter dated 26.12.1984 as part of the correspondence relating to the contract. On this basis, the petitioner commenced the work and submitted escalation bills considering 01.11.1983 as the base date, which were accepted and paid by the respondents up to June 1988 without any objection. The dispute regarding the base date was raised for the first time on 12.07.1988, when the respondents contended that the base date should be 15.01.1985 and consequently withheld payment of the petitioner’s price variation bills. Therefore, the petitioner claimed Rs. 42,53,883 towards price variation, along with 15% excise duty amounting to Rs. 4,51,524.92 and 4% sales tax amounting to Rs. 1,59,165, totaling Rs. 48,64,573.38.
Heard the petitioner and perused the record.
Vide Common Conditions Order dated 15.01.1985 (Ex. D4), it was issued with the stipulation that no condition other than those indicated in the Common Conditions shall apply. Annexure-A, namely the Letter of Intent dated 07.04.1984 (Ex. D1), contains a condition that the price variation shall be based on the Wholesale Price Index (Base 1970-71 = 100) for the group and sub-group of iron, steel and ferro alloys prevailing on the date of tender opening. From Ex. D4 and Ex. D1, it is clearly evident that the price variation is to be calculated on the basis of the index prevailing on the date of tender opening.
Vide letter dated 07.04.1984, the respondent called for revised prices before the opening of the tender, and the petitioner accordingly submitted the revised price. Vide letter dated 15.05.1985 (Ex. P3), the petitioner was informed that the Board was pleased to accept the tender submitted on 06.12.1983 along with the revised price adjustment bid submitted on 15.01.1985 for the work in question. The said acceptance was subject to the Common Conditions Order (Annexure-A) circulated vide letter No. 03-01/4119 dated 07.04.1984 (Ex. D1). From the above evidence, it is clear that the base price was taken as on the date of opening of the tender, i.e., 15.01.1985.
Vide letter dated 26.12.1984 (Ex. P2) and Annexure P/2A, it was stated that the base price date would be 01.11.1983. However, after calling for revised prices before the opening of the bid, the said position was recalled, and by letter dated 01.05.1985, the date for price escalation was altered to the date of opening of the bid, i.e., 01.05.1985. After the issuance of the new Common Conditions, and in accordance with those conditions, the petitioner’s bid was accepted. Therefore, Ex. P2 and Ex. P2A had no force at the time of acceptance of the petitioner’s bid.
Vide letter dated 27.10.1988, the respondent clarified, with reference to the petitioner’s letter dated 14.08.1988, that the base price would be taken as on 15.01.1985, and denied the petitioner’s claim that the base price date should be 01.11.1983. Therefore, the cause of action arose to the petitioner to file the claim before the Arbitrator on the date of receipt of the letter dated 27.10.1988.
Vide letter dated 16.05.1989 (Ex. P10) regarding the claim for increased thickness of CRS plates, the said claim was rejected by the Chief Engineer on 15.05.1989. Therefore, the cause of action arose to the petitioner to file a claim before the Arbitrator within 30 days from the date of issuance of the said letter to the petitioner.
The respondent had raised an objection before the Tribunal regarding the limitation of the claim. It was contended that, in view of the letters dated 27.10.1988 and 15.05.1989, the cause of action had arisen to the petitioner, and therefore the petitioner was required to file a claim before the Arbitrator within 30 days, in accordance with Clause 27 of the Agreement. However, the petitioner failed to do so and instead directly filed the claim before the Tribunal on 29.06.1989.The Tribunal held that the petitioner had submitted the claim petition on 29.06.1989, whereas the dispute had arisen on 12.07.1988. Even under the provisions of the Limitation Act, 1963, it cannot be said that the reference petition filed on 29.06.1989, claiming the amount of escalation by treating 01.11.1983 as the base date, was barred by limitation.
The respondent had raised an objection that the petitioner’s claim was premature, on the ground that the petitioner was first required to exhaust the remedy provided under Clause 27 of the Agreement. In our view, the said claim could not have been entertained by the Tribunal at that stage, as it was premature. According to the judgment of Sanjay Dubey vs. State of M.P. & Another reported in 2012 (4) MPLJ 212, where a works contract contains a clause like Clause 29, the jurisdiction of the Tribunal can be invoked only after first approaching the authority as provided under the terms of the works contract.
Upon consideration of the pleadings, documents, and submissions of both parties, it was held that the base date for calculation of price escalation is 15.01.1985, the date on which the revised price bid was opened. The tender was accepted subject to the common conditions circulated by the respondents vide letter dated 07.04.1984, which clearly provided that the base date for escalation would be the date of opening of the tender. The petitioner had also submitted the revised price bid in conformity with these common conditions and stated that no other conditions were stipulated. Although the petitioner mentioned 01.11.1983 as the base date in certain communications and escalation bills, the respondents never accepted this condition. The subsequent inclusion of the petitioner’s letter dated 26.12.1984 in the reference portion of the letter of intent did not amount to incorporation of its contents into the contract terms. Therefore, the contractual condition regarding the base date remained unchanged. The payments earlier made by the respondents on escalation bills mentioning the base date as 01.11.1983 were provisional and made due to oversight, which was later clarified by the respondents vide letter dated 12.07.1988, specifying that the correct base date was 15.01.1985.
Accordingly, the respondents have correctly calculated and paid the escalation amount along with 15% excise duty and 4% sales tax based on the base date 15.01.1985. The petitioner was therefore not entitled to recover Rs.42,53,883.35 towards escalation, Rs.4,51,524.92 towards excise duty, and Rs.1,59,165.11 towards sales tax, totalling Rs.48,64,573.38. Hence, Claim No. 1 of the petitioner was rejected in toto.
The principal dispute concerns the determination of the base date for calculation of price variation. The record indicates that the revised price bid was finally opened on 15.01.1985 and the letter of intent issued by the respondents specifically provided that the tender was accepted subject to the common commercial conditions circulated on 07.04.1984, which stipulated that the base date for escalation would be the date of opening of the tender. The Tribunal has rightly held that the petitioner submitted the revised price bid in accordance with these common conditions and had also declared that no other conditions were stipulated. The mere mention of 01.11.1983 in certain communications or escalation bills does not amount to incorporation of that date as the contractual base date, particularly when the respondents never expressly accepted such condition. The Tribunal has further rightly observed that the reference to the petitioner’s letter dated 26.12.1984 in the letter of intent does not constitute incorporation of its contents into the contract. Therefore, the conclusion of the Tribunal that the base date for price escalation is 15.01.1985 cannot be said to be erroneous or contrary to the contractual terms. Consequently, the rejection of the petitioner’s claim of Rs.48,64,573.38 towards price variation, excise duty and sales tax does not suffer from any illegality or perversity.
The argument of the petitioner is not acceptable that the respondent had made payments for several years treating 01.11.1983 as the base date without any objection, thereby allegedly accepting the said date. When the error came to the knowledge of the respondent, he denied further payments on the basis of the base rate of 01.11.1983. Although the respondent did not recover the excess amount already paid to the petitioner, it does not mean that the respondent had accepted 01.11.1983 as the base date.
Regarding claim No.2, the petitioner sought Rs.3,33,600 as reimbursement for the additional cost incurred due to the use of 20 mm finished thickness corrosion-resistant steel (CRS) plates instead of the originally required 12 mm thickness for the wheel tracks. The petitioner submitted before the Tribunal that such high thickness was unnecessary and that 10 mm finished thickness would have been sufficient based on its prior experience in similar projects. However, the respondents, acting on the advice of the Central Water Commission, directed the petitioner through a letter dated 5.2.1986 to use 20 mm finished thickness CRS plates. The petitioner informed the respondents through its letter dated 15.2.1986 that this change would involve an additional cost of Rs.3,33,600 plus applicable taxes and duties, and no objection was raised at that time. Relying on this, the petitioner carried out the fabrication and installation work between June 1986 and 1987. The respondents later even indicated their agreement to pay this amount through a letter dated 16.12.1987. However, despite repeated requests, the respondents subsequently denied the claim on 16.5.1989, and therefore the petitioner sought reimbursement of Rs.3,33,600 along with applicable taxes and duties.
The respondents denied the petitioner’s claim of Rs.3,33,600 and contended before tribunal that the contract was awarded on a lump sum basis, and the thickness of the CRS plates was not specified in the contract. Under the terms of the agreement, it was the petitioner’s responsibility to design, fabricate, and supply the gate and wheel tracks according to the required specifications. The petitioner proposed 10 mm thick CRS plates for the first time while submitting its design calculations after the award of the contract. Upon scrutiny, the respondents found that 10 mm thickness did not meet the design requirements and therefore advised the petitioner to either provide 20
mm finished thickness CRS plates or clad the plates on M.S. plates of at least 5 mm thickness. The petitioner voluntarily chose the option of 20 mm thickness, as the alternative would have required time-consuming imports. The respondents further stated that under Clause 24 of the agreement, no additional payment was admissible for changes in design. The recommendations of the Central Water Commission were binding, and the petitioner had already agreed during discussions to provide 20 mm thickness plates. Therefore, the petitioner was not entitled to any reimbursement for the alleged additional cost.
The learned tribunal considering the submissions of both the parties and the documents available on record concluded that the records showed that during discussions with the Director (Gates-I), the petitioner’s representative agreed to provide 20 mm finished thickness CRS plates. Having accepted this requirement and chosen the said option, the petitioner cannot subsequently claim additional cost. Moreover, under the terms of the lump sum contract and the relevant clause of the agreement, no extra payment was admissible for alterations in design, and the contractor remains responsible for the adequacy and correctness of the design. Therefore, the claim of the petitioner for reimbursement of Rs.3,33,600/- towards additional cost for providing 20 mm thick CRS plates was not sustainable and claim No. 2 was rejected. In our opinion there is no jurisdictional error committed by tribunal to reject the claim.
With regard to Claim relating to reimbursement of Rs.3,33,600 for the alleged additional cost incurred in providing 20 mm thick corrosion-resistant steel plates, the Tribunal has rightly considered the terms of the agreement and the evidence on record. The contract between the parties was admittedly a lump sum contract, under which the responsibility for design, fabrication and adequacy of specifications rested upon the contractor. The record further reveals that during discussions with the concerned technical authorities, the petitioner agreed to provide 20 mm finished thickness CRS plates and opted for that specification instead of the alternative option suggested. In view of the relevant contractual clause stipulating that no extra payment would be admissible for alterations in design, the Tribunal correctly concluded that the petitioner, having accepted the requirement and executed the work, accordingly, cannot subsequently claim reimbursement of the alleged additional expenditure. The finding of the Tribunal that the contractor remained responsible for the adequacy and correctness of the design is consistent with the contractual framework and cannot be interfered with.
Having heard the learned counsel for the petitioner and upon perusal of the pleadings, documents and the award passed by the Tribunal, this Court finds that the Tribunal has examined the material on record in detail and has assigned cogent reasons while adjudicating the claims of the petitioner.
It is well settled that in a revision under Section 19 of the Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983, the scope of interference with an arbitral award is limited. Unless the award is shown to be perverse, arbitrary, or contrary to the terms of the contract or the law, the Court would not substitute its own view for that of the Tribunal. In the present case, the findings recorded by the Tribunal are based on appreciation of evidence and interpretation of the contractual terms, and no patent illegality or jurisdictional error has been demonstrated by the petitioner.
In view of the aforesaid discussion, this Court finds no ground to interfere with the findings of the Tribunal insofar as Claim No. 1 and Claim No. 2 are concerned. The conclusions reached by the Tribunal are reasonable, supported by the record and in accordance with the contractual stipulations between the parties.
Accordingly, the revision being devoid of substance and merit is dismissed and the findings of the Tribunal rejecting the petitioner’s Claim No. 1 and Claim No. 2 are affirmed. The award passed by the Tribunal does not call for interference on these issues. The record, if any, be sent back to the Tribunal within two weeks. Interim relief, if any, shall stand vacated.