Union of India Vs. Chandalavada Gopalakrishna Murthy & Ors.  INSC 630 (10
CIVIL APPELLATE JURISDICTION CIVIL APPEAL NOs. 926-927 OF
2002 UNION OF INDIA Appellant (s) VERSUS CHANDALAVADA GOPALAKRISHNA MURTHY
& ORS. Respondent(s) ORDER These appeals are directed against the judgment
and order dated 8th May, 2001 passed by the Division Bench of the Andhra
Pradesh High Court.
We have heard the parties at length.
In view of the order that we propose to pass, it is not necessary to recite
the entire facts leading to the filing of the present appeal. Suffice it to say
that a contract was entered into between the appellant and the respondent
regarding the construction of laboratory, Officers' room and class room at
Indian Railway Institute, Secunderabad. Agreement was entered into on
31.01.1981. According to the agreement, the contract was to be completed within
a period of 9 months i.e. upto 27th October, 1981. It is stated that -2- on
request made by the contractor/respondent extension of time was granted under
clause 17(3) of the general conditions of the contract. Ultimately, the
contract was completed on 31st August, 1983. A dispute arose between the
parties and the the respondent made various claims under 7 heads and demanded
for arbitration. The arbitrator granted Award under all 7 heads. The Award was
filed before the City Civil Court. The City Civil Court made the award a rule
of the court in respect of claim No.2 to 6 but set aside the Award regarding
item No. 1 and 7. Aggrieved thereby, the respondent filed an appeal before the
Division Bench of the High Court and by the impugned order the Division Bench
maintained the order of the Civil Court with regard to item No.7. However, the
Division Bench allowed the claim under item No.1. Hence, the present appeals.
The dispute now to be resolved is confined only to item No.1 of the claim.
To answer this question, we may refer to clause 17(3) of the contract. Clause
"Clause 17(3): In the event of any failure or delay by the Railway to
hand over to the contractor possession of the lands necessary for the execution
of the works or to give the necessary notice to commence the works or to
provide the necessary drawings or instructions or any other delay caused by the
-3- Railway due to any cause, whatsoever, the said failure or delay shall in no
way effect or vitiate the Contract or alter the character thereof or entitle
the contractor to damages of compensation thereof but in any such case, the
Railway may grant such extension of extensions of the completion date as may be
Clause 17(3) reads thus clearly shows that if there is delay by the Railways
the terms of the contract can be extended as has been done in the present case.
However, the contractor shall not be entitled to damages or compensation.
A similar question raised before this Court was considered by a three-Judge
(9)SCC 610. This Court held in that case that if the contract is extended under
the terms of the contract, compensation cannot be awarded by the Arbitrator.
The aforesaid judgment has been followed in another decision of this Court in
General Learned counsel for the respondent referred to the judgment rendered by
this The -4- said decision is not applicable in the facts of the present case.
For the reasons aforestated, the case in hand is squarely covered by two
decisions of this Court. In the result, the order of the High Court is not
tenable in law and is accordingly set aside.
The appeals are allowed.
.........................J (H.K. SEMA) .........................J (MARKANDEY
KATJU) New Delhi;
April 10, 2008.