HIDAYATULLAH NATIONAL LAW

UNIVERSITY

Alternative dispute resolution

project

TOPIC union of India v. Moti enterprises

(case review)

PROJECT SUBMITTED TO Mr. Sandeep k. Suman

PROJECT SUBMITTED BY AMIT KUMAR KAYAL

6 th
SEMESTER
ROLL NO 18
SECTION - A
DATE OF SUBMISSION 18.02.2015

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 TABLE OF CONTENTS

ACKNOWLEDGEMENTS........................................................................................3

INTRODUCTION......................................................................................................4

FACTS OF THE CASE.............................................................................................5

ISSUES RAISED......................................................................................................7

JUDGEMENT..........................................................................................................8

ANALYSIS...............................................................................................................9

SUGGESTIONS.....................................................................................................11

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 ACKNOWLEDGEMENTS

I have made this project work, and on the way of completing it, I have learned a lot of
things for which I am thankful to Mr. Sandeep K. Suman, Assistant lecturer, HNLU,
Raipur, and my guide, who gave me the opportunity to do this project work and guided me
all the way. I would also like to thank my friends, and colleagues, for their opinions,
suggestions and critical analysis, which has helped me to improve this project. I also thank
the HNLU library and the people working there. Their silent work is the reason behind the
completion of this project.

I thank God, He has been very generous on me, to have kept me in good health and make
the conditions favourable for me to complete this work in time.

Lastly, I thank my parents. Without their continuous support and belief in me, I would
never have been able to make this project.

-Amit
Kumar kayal
Semester-VI, B.A. LL.B. (Hons.)
Roll no-18

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 INTRODUCTION

A Case Review (also known as a Case Report) is an intensive analysis of an individual unit
(e.g., a person, group, or event) stressing developmental factors in relation to context. Case
Reviews may be descriptive or explanatory. The latter type is used to explore causation in
order to find underlying principles. They may be prospective (in which criteria are
established and cases fitting the criteria are included as they become available)
or retrospective (in which criteria are established for selecting cases from historical records
for inclusion in the study).

Thomas offers the following definition of case study: "Case studies are analyses of persons,
events, decisions, periods, projects, policies, institutions, or other systems that are studied
holistically by one or more methods. The case that is the subject of the inquiry will be an
instance of a class of phenomena that provides an analytical frame an object within which the
study is conducted and which the case illuminates and explicates

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 FACTS OF THE CASE

In August 1996, tenders were invited for construction of a building consisting of a

ground and six upper floors together with related works for providing accommodation
to 42 officers at Colaba. The work was required to be completed on or before 11th
May 1998.

Contract was awarded to M/s Moti Enterprises for construction of the building with
related works on 19th September 1996. Accordingly an agreement was entered
between the parties.

The contractor could not complete the job as per the stipulation in the contract
agreement. As a result the contractor by a letter dated. 30 th April, 1998 sought
extension of time to complete the work. The extension was granted till 22nd November
1998 by a letter dated 5th August 1998.

The extension of time was granted in terms of contractual condition 11(A) (vii)
subject to the condition that the other conditions of the contract shall hold good in all
respect. There was no financial effect of the extension granted from time to time.

The contractor (1st Respondent) submitted its final bill on 21 st December, 1998, with a
reservation that the claims towards extra work and changes in the contract taxes will
also be claimed.

The contractor raised its claim before the Chief Engineer on 18 th February and on 22nd
March 2000.

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 The claims of the 1st respondent were denied by the Chief Engineer in a letter dated
10th June, 2000.
On 4th July,2000, an arbitration petition was filed in the court under section 11 of the
Act for appointment of an Arbitrator and Chief Engineer appointed an Arbitrator on
9th August 2000 for redressal of dispute.

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 Issues raised

The award of the sole arbitrator has been challenged both on preliminary ground that
he disputes which were not arbitrable as well as on merits. By Section 34(2)(a)(iv) of
the Arbitration and Conciliation Act 1996, the specific ground of challenge that has
been contemplated is that the arbitral award deals with a dispute not contemplated by
or not falling within the terms of the submission to the terms of arbitration, or it
contains decisions on matters beyond the scope of submission to arbitration.

The second issue is related to clause 65 of the General Condition of the Contract
which speaks final bills shall be submitted by the contractor in duplicate within three
months of physical completion of the works to the satisfaction of the Engineer-in
Charge. No further claims shall be made by the Contractor after submission of the
Final Bill.

The 3rd issue was for payment due on account of additional work which was carried
out by the contractor, which has not been paid.

The 4th issue was on account of increase in the liability of the contractor for the
payment of works contract tax resulting from a change in legislation and balance
escalation.

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 Judgement

The provisions of section 34(2)(a)(iv) are not attracted at all to the facts of the present
case. The dispute which has been determined by the arbitrator cannot be regarded as
one not contemplated by or not falling within the terms of the submission to
arbitration. Accordingly the award cannot be assailed on the grounds that it contains
decisions on matters beyond the scope of arbitration.

The court also observed that it will be impermissible for this court having regard to
provisions of section 34(2)(v)(b)to accept any of the contentions in view of the facts
that the petitioner has been unable to sustain the contentions that the arbitral award
is in conflict with the public policy of India

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 Analysis

In the present case,, there is no dispute about the fact that an extension of time was granted to
the first respondent as the job was not completed within the schedule time. The contractor
could not contest the extension for a longer period as the extension granted under clause A &
B of condition 11 are final and binding.

In the present case, the submission of the petitioners that disputes were not arbitrable on the
ground that a decision of the CWE or authorized person are final and binding under the
contract. The exclusion contained under clause 70 of GCC is not attracted to the facts of this
case.
Clause A of section 11 contemplates an extension of time on account of force mejeur and
other analogous reasons i.e. abnormally bad weather, strike or lockout, civil commotion, loss
or damage by fire etc.

Clause11B- contemplates an extension where the work is delayed due to non-availability of

Govt. stores or non-availability of breakdown of govt. tools and plant as listed.
11C- contemplates no claim in respect of compensation which has arisen out of an extension
granted under Clauses A & B.

In the present case the arbitrator has noted that the ground on which the contractor made the
request for extension included several grounds which included delay in the part of the Union
of India in fulfilling the part of the contract, making a change in the contractual stipulations
or finalizing the specifications. Number of evidences have been come to notice that there
were several delays on the part of the Union of India as a result of which the extension was in

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fact granted. More over the delay could not attribute to clause A & B of conditions but was
independent of all. It was observed by the arbitrator that out of total delay of six months, a
delay of five months was on account of consideration which did not falls within the purview
of conditions level a or level b and to which therefore condition 11/c could not be attractive.
Therefore, the period of five months delay, the union of India would have to bear the
consequences. Therefore, the Court observed that the view taken by the arbitrator cannot be
considered as perverse and doesnt call for any interference.

The second submission urged before the Court is based on clause 65 of the General Condition
of the Contract, which stipulates that final bill shall be submitted by the contractor in
duplicate within three months of the physical completion of the work.

The arbitrator has duly considered the clause of 65 and noted that contractor has submitted
his final bill on 21st December 1998. This bill cannot be construed as final bill as because the
deviation orders by the Union of India, dated between 11 January 1999 and 30 th October
2000. The measurable items of the contract have to be priced on prescribed formats and this
is the responsibility of the department. Similarly, the final bill requires the price abstracts and
recovery schedules are also to be prepared by the department and submitted to the contractor.
The contractor in absence of this cannot prepare the final bill and as such submission of final
bill on 21st December 1998, the provision of condition 65 was not attractive.
The Arbitrator has interpreted that all the prerequisites for submission of proper final bill
must be fulfilled by the department before condition 65 is attracted.

The third claim was for payment due for additional work carried out by the contractor, which
has not been paid. Since the contractor has constructed the road with much superior
specification then was originally contemplated but also suffered an increase, in the quantity
by merely four times, the claim of the contractor is justified. As such the Court refused to
disturb the findings of the arbitrator, as such findings of the learned Arbitrator cannot be
disturbed.

The claim no. 4 is related to increase in the liability of the contractor for the payment of
works contract tax due to change in legislation. The arbitrator observed that though the
contract was silent in this regard, the enhancement of liability due to an amendment in the

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legislation had to be reimbursed by Union of India. The Court also observed that the awards
of the arbitrator are not contrary to public policy.

For claim no. 5 & 6, related to payment of balance escalation due to material, fuel additional
overhead and supervision charges for the prolonged period of contract. Since no separate
submission has been urged by the petitioner, the issue was not further considered.

SUGGESTIONS

The findings of the Arbitrator is so explicit and clear that the petitioner should not
have gone for appeal in higher court and thereby were required to pay the interest
@9% w.e.f 1st April 2000 until the date of award and if payments are not made by July
2002, the award to contractor shall carry simple interest @ 10% p.a from 16 th July till
date of payment.

After examining the award of the Arbitrator, the department should have gone for out
of court settlement which would have been more economical and beneficial to the
Department.

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