1979 PLP 807 (CLC)

In juxtaposition the provisions of clause 63 of the contract may also be reproduced and the same read as follows :- "

63. Variation of price (materials) consequent on act of the Legislature.-If as the result of an act of the Legislature, being other than Central and/or Provincial Sales Tax, the Contractor shall necessarily and properly pay in respect of any material incorporated .in the works a price which is in excess of the basic price of that material, or if the basic price of the material is reduced, the contract sum shall according ly be varied, provided always that any increase so payable is not in the opinion of the Accepting Officer (whose decision shall be final and conclusive) attributable to delay in the execution of the Contract within the control of the Contractor. The Contractor shall for the purpose of this condition, keep such books of account and other documents as are necessary to show the amount of any increase claimed or any reduction available and shall allow inspection of the same by any duly authorised representative of Government, and further shall, at the request of the Accepting Officer, furnish, verified in such a manner as the Accepting Officer may require any documents so kept and such other informating as the Accepting Officer may require. The Contractor shall within a reasonable time of his becoming aware of any alteration in the prices of any such material, give notice thereof in writing to the Accepting Officer stating that the same is given pursuant to this condition together with all information relating thereto which he may be in a position to supply."

5. On a fair reading of clause 68 it would appear from the sub-clause that has been underlined above that all disputes between the Government and the contractor are referable to arbitration except such disputes in regard to which the C. M. E. S. or S. E. or any other person expressly referred to in the contract has the final and conclusive power to decide. Under clause 63 variation in the price of material would result in payment of higher amount to the contractor in such cases when upward variation in the price has resulted as a consequence of an Act of the Legislature (other than increase in sales-tax) provided that in the opinion of the Officer the increase in price is not attribut able to delay in execution of the contract, within the control of the contractor. For the purposes of deriving the benefit of this clause the contractor has to maintain proper books and relevant information for satisfaction of the depart ment. The Contractor is further required to give a notice of the increase in prices to the Department in order to be able to obtain the increase in prices. On analysis it would appear that the contractor would be entitled to higher prices in respect of the material used if he could show that the rise in prices had occurred on account 'of act of the Legislature and has not been occasioned by a delay in purchase of the material necessary for the accomplishment of the contract. In such regard the contractor has to maintain proper books of account and other documents and also give a notice stating the rise in prices. The compass of inquiry, therefore, is reduced to the determination of this question alone.

6. The four items namely 2(a) to 2(d) which are the disputed items in this case are as follows :-- (1) That the site of works was not handed over to the contractor at the stipulated time so that he had to wait for two years and period for completing contract was extended from one year to three years thereby increasing the cost by reason of labour establishment charges, (ii) the wages of labour had arisen during the two years the contract was extended, (iii) the cost of material had arisen so that an additional sum of Rs. 26,000 had to be spent, and (iv) that some cost on account of high wages and increase in prices of material had not been regularised. The objection of the Department in regard to the first three items may best be reproduced in actual words used in the joint statement prepared by the Depart ment. The objection is as follows :- "It was nowhere mentioned in the C. A. that all the buildings will be handed over simultaneously. The work involved did not require twelve months completion time for each building. Hence the contention of contractor is not correct. Contractor's progress remained all along very slow, for which he was being chased constantly (copies of letters attached). The contractor had himself agreed to adhere to a time Schedule (copy attached) which was not adhered to. Although the time of Contract was extended for double the contract period but none '[Here in italics] of the building was completed satisfactorily and handed over to the Department." In regard to the (iv) item the objection was that clause 33 in the contract was not applicable but in fact clause 63 was applicable so that the full powers of allowing the price increase vested in the Department. It is further stated that the contractor should have reported the increase in the rates as soon as he became aware of the same.

7. The claim on account of the first three items is sought to be refuted on the ground that the contract did not provide for handing over the buildings for repair at one and the same time. It is the further grievance of the Depart ment that the work of the contractor was slow and he had himself sought extension of time for completion of the work. It would clearly appear from the grounds on which the claim in respect of first three items is sought to be resisted that clause 63 of the contract was not even invoked by the Department. The entire controversy is in regard to the delay in completing the work and the objections clearly state that time was extended. Indeed it would appear that the buildings that required structural renewal were not made available to the contractor at the proper time and that is the reason for the contractual work dragging on for three years when it was to be completed within a year. Mr. Sayeed A. Shaikh was unable to point out from the objections in relation to the first three items of the disputed portion of the claim as to how clause 63 of the contract would be applicable in the case. Coming to the fourth and last item among the disputed items of the claim all that is stated in the objections is that the contractor did not report the increase in the rates as is required by sub-para. (2) in clause 63 of the contract agreement. No other objection has been urged. It is no doubt true that if the contractor had failed to report the increase he would not be entitled to benefit in the increase of rates in accordance with clause 63 of the contract. But whether the contractor did or did not report is a question of fact and the arbitrator has decided this question adversely to the Government. There is nothing before us to show that the contractor had not notified the increase in accordance with the clause 63 of the contract and we are inclined to believe that the contractor must have notified the increase because he had even submitted a bill at higher prices. The joint statement of the case prepared by the Depart ment shows that in regard to the Teakwood and chemical paints the rates prevailing before the 1965 War and after the 1965 were stated in the claim and difference pointed out, yet the only objection is on the ground that increase was not notified. Such resistance to the claim therefore had to be decided on the fact whether the contractor reported the increase in prices. On facts the arbitrator has found in favour of the contractor and there is nothing before us to show that the contractor had not reported the increase. There is nothing to show that the Department has considered the question of increase or arrived at any decision and the difference in price pointed out.

8. On a careful consideration of all these aspects of the case we are clearly of the view that clause 63 of the contract did not bar the reference of the disputed items for arbitration. The disputes in relation to such items of the claim have arisen on account of delay in execution of the work and to such extent there is a categorical admission on the part of the Department that time for completion of contractual work was extended more than once. On account of such delay the establishment charges cost of labour and price increase have taken place. No case of misconduct whether of the arbitrator or the proceedings is made out.

9. This appeal is dismissed with costs. M. Y. M Appeal dismissed,