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TMI Blog2022 (11) TMI 1500X X X X Extracts X X X X X X X X Extracts X X X X ..... y, Respondent No. 1 (hereinafter referred to as 'the Contractor') was selected as the successful bidder. A contract was entered into on 06.11.1993 for a total consideration of Rs. 1,22,81,86,600/-, to be completed within a period of sixty months. 5. As the only issue arising for consideration, in this case, relates to the claim of escalation made by the Contractor, the relevant Clause is extracted hereunder: 3.11(A) The quoted rates of the contractor shall be inclusive of the leads and lifts and in no case separate payment for leads or lifts to any materials including water shall be payable. Similarly no leads or lifts for the materials issued by the department as prescribed in the tender documents shall be payable. The contractor shall bring approved quality of materials. Different quarries are shown in Annexure C. The details shown in the Annexure C are only as a guide to the contractor but the contractor before tendering should satisfy himself regarding the quantity and quality available and all other details of Annexure C and provide for any variation in respect of leads, lifts, place and method of quarrying, type of rocks to be quarried and all such other aspects in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pection report dated 17/09/2002 and 18/09/2002 was referred in which it has been mentioned that, if in Barua Nala sand Quarry the sand is not available then the sand from Mahua river be obtained, which was confirmed by him on 31/10/2002 during telephonic conversation..... ....Therefore it is directed to the Executive Engineer, Madikheda Dam(concrete Dam), Sindh Project and Executive Engineer, Sindh Project(Mud Dam), in place of Barua Nala, the sand of Mahuar River be used for construction of projects Under Clause 3.11A of the condition of contract agreement, the permission is granted. The Executive Engineers are further directed that they will grant permission to the respective contractor Under Clause 3.11A of the condition of contract agreement, so the construction work would not be adversely affected. 9. In compliance with the above-referred letter of the Superintending Engineer, the Executive Engineer granted conditional permission to use the Mahuar quarry under his letter dated 23.12.2002 which stated as under: Permission to collect sand from Mahua river is hereby accorded with following conditions. 1. It is assumed as per Clause 3.11A that provision in the tender rate a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that the claim made by the Contractor is barred by res judicata. What he really means is that the original claim made by the Contractor on 07.03.2002 leading to the initiation and rejection of claims under the first arbitral award dated 06.10.2007 become final, and therefore a similar claim is inadmissible. Shri Saurabh Mishra took us through the letters in the additional compilation evidencing the request for arbitration, the rejection by the Executive Engineer dated 11.03.2002 and thereafter by the Superintending Engineer dated 12.12.2002, the communication for reference to arbitration dated 24.12.2002, and its culmination into the first award dated 06.10.2007. None of these facts are disputed by Ms. Menaka Guruswamy, learned Senior Advocate appearing on behalf of the Respondent No. 1. 14. Shri Saurabh Mishra also argued that the letter of the Superintending Engineer dated 12.12.2002 followed by the letter of the Executive Engineer was implicitly accepted by the Contractor in letter and spirit and without any protest. It is only after a period of four years that the Contractor for the first time raised a plea for escalation, claiming an amount of Rs. 5,51,03,040/- under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he claim for escalation will not be entertained unless there exist circumstances beyond the control of the contract. Further, the claim is admissible only upon the written order of the Superintending Engineer in charge of the work. In our view, both conditions are satisfied. In the first instance, the inspection report dated 31.10.2002 clearly indicates that the original quarry is depleted of the sand and therefore an alternative quarry is necessary for the execution of the contract. Secondly, this is a circumstance which is certainly beyond the control of the Contractor. Further, the permission granted by the Superintending Engineer dated 12.11.2002 is in complete satisfaction of the requirement of the clause. We are of the opinion that the claim for escalation is in full satisfaction of the terms of the contract. 19. The most important submission of the State is that the claim for arbitration is in fact barred by res judicata. We have examined this submission in detail and our findings are as follows. 20. The initial request for a change of quarry was made on 07.03.2002. This request was rejected by the Executive Engineer on 11.03.2002 and the same was confirmed by the Superint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the two conditions provided Under Clause 3.11(A) were satisfied, there was no discretion left with the Executive Engineer to impose any further conditions for claiming escalation. The Executive Engineer, in our opinion, has certainly acted beyond the scope of the contract. The role of the Executive Engineer was only to forward the decision of the Superintending Engineer and enable the Contractor to raise a claim for escalation. 24. In the context of discretion, we may reiterate this principle. The rights and duties of the parties to the contract subsist or perish in terms of the contract itself. Even if a party to the contract is a governmental authority, there is no place for discretion vested in the officers administering the contract. Discretion, a principle within the province of administrative law, has no place in contractual matters unless, of course, the parties have expressly incorporated it as a part of the contract. It is the bounden duty of the court while interpreting the terms of the contracts, to reject the exercise of any such discretion that is entirely outside the realm of the contract. 25. Returning to the facts of the present case, whether the escalation is j ..... X X X X Extracts X X X X X X X X Extracts X X X X
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