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2011 (4) TMI 1467 - SC - Indian LawsArbitration Proceedings - Delay in execution of the work - termination of contract - liability to pay liquidated damages - the Respondents awarded the work of "extension of terminal building" at Guwahati airport to the Appellant. As per the contract, the date of commencement of work and the period of completion of the work was 21 months, to be completed in different stages. As the Appellant (`contractor') did not complete the first phase of the work within the stipulated time, the Respondents terminated the contract. The termination was challenged by the Appellant in a writ petition filed before the Guwahati HC. the HC set aside the termination and directed the Respondents to grant time to the Appellant till the end of January for completion of the first phase reserving liberty to the Appellant to apply for further extension of time. As the work was not completed, the Respondents granted an extension, without levying any liquidated damages. The contractor proceeded with the work even thereafter. However, as the progress was slow, the Respondents terminated the contract again on the ground of non-completion even after 35 months. The Appellant filed a writ petition, challenging the cancellation. The High Court referred the parties to arbitration. In pursuance of it, on a request by the Appellant, the Respondents appointed the arbitrator. the Appellant filed its statement of claims. the Respondents their reply and also filed their four counter claims before the arbitrator. the Arbitrator awarded a sum with interest and costs in favor of the Appellant and rejected the counter claims of the Respondents. this petition is filed by Respondents. HELD THAT:- The arbitrator has examined the said issue and has recorded a categorical finding that the Respondents were responsible for the delay in execution of the work and the contractor was not responsible. The arbitrator also found that the Respondents were in breach and the termination of contract was illegal. Therefore, the Respondents were not entitled to levy liquidated damages nor entitled to claim from the contractor the extra cost (including any escalation in regard to such extra cost) in getting the work completed through an alternative agency. In view of the finding of the arbitrator that the Appellant was not responsible for the delay and that the Respondents were responsible for the delay, the question of Respondents levying liquidated damages or claiming the excess cost in getting the work completed as damages, does not arise. Once it is held that the contractor was not responsible for the delay and the delay occurred only on account of the omissions and commissions on the part of the Respondents, it follows that provisions which make the decision of the Superintending Engineer or the Engineer-in-Charge final and conclusive, will be irrelevant. Therefore, the Arbitrator would have jurisdiction to try and decide all the claims of the contractor as also the claims of the Respondents. Consequently, the award of the Arbitrator on items 1, 3 and 11 has to be upheld and the conclusion of the High Court that award in respect of those claims had to be set aside as they related to excepted matters, cannot be sustained. No part of the decision of the High Court is sustainable. The appeal is therefore allowed, the impugned order of the High Court is set aside and the order of the District Court is restored.
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