It is all about

DISPUTES and

ARBITRATION…. By

Rajesh PrasadCPM M RVNL Kolkata

Thought

Some men worship rank, some worship heroes, some worship power, some worship God, and over these ideals they dispute and many worship money.

I have to get the work completed and

commissioned…..

I have to maximise profit and get some

claims from Arbitration

MeARBITRATOR

So it is all about Money,Dispute,Arbitration….

Boundary line cases in Works Contracts can lead to either way…… SIX or OUT……….

What a dispute……

World cup 2007

The biggest unresolved dispute in the world is :

‘which one has come first CHICKEN or EGG?

The dispute of Chicken or Egg is resolved in a restaurant….

what ever you order first we will give you

that first…….

Dispute can be b/w Brothers in a family for property……

Samudra Manthan was also a DISPUTE……

Nature of Disputesi) Delay in completion of work.

ii) Delay in releasing payments.

iii) Delay in giving decisions on matters referred to.

iv) For extra items of work, quantity and rate their of.

v) Variations in scheduled quantities..

vi) Disputes regarding extension under penalty

clause or termination of contract under risk and

cost.

vii) Disputes in connection to measurements.

viii) Claims for hiring plants and equipment.

ix) Various compensations and undue interest.

x) Some times claims are even raised for excepted

matters.

xi) Work getting deleted from Pink Book & payments

are affected due to non-availability of fund.

xii) Disputes in connection to specifications.

xiii) Disputes in connection to drawings.

xiv) Disputes in connection to poor workmanship.

Arbitration: Managing Disputes• Disputes unmanaged lead to arbitration

• Parties to a Contract– Client– Contractor– Consultant (in some cases)

• Objectives are different except one common thread;– “Successful contract completion”

TimelyOrderlyDispute FreeCustomer Satisfaction

Various ways of sorting DISPUTES

ARBITRATION

More than 300 Crores cases pending…It may take 300 years to settle….

Reasons for arbitrations

• 60% Incomplete and defective tender schedule, conditions, poor rate.

• 30% delay in site, drawings, and decision taking.

• 5% contractors inclination towards arbitration.

• 5% unforeseen circumstances.

• There is a limit of changes in Drawing....

• Not sure & clear

Reasons for ArbitrationEvery executive’s Aim : ORDERLY, TIMELY and DISPUTE FREE.

i) The contractor has only motive to earn money and arbitration is now an easy mode to extract the same.

ii) Unexpected changes in underground situations and unforeseen items.

iii) Awarding the contract to L1 irrespective of poor rate.

iv) Changes or revisions in technical decisions.

v) Incorporation of new concepts/ideas.

vi) Unexpected outside developments affecting the work.

vii) Non-maintaining proper and day today progress.

viii) Granting extensions without penalty to ensure completion and that also without a joint program signed by the contractor. A compromise is made to achieve the progress and sometimes this becomes the basis for arbitration.

ix) Time constraint in preparation of drawing, schedule, conditions etc. resulting variations in quantities and or in specifications.

x) Delay in finalization of drawing and construction details.

xi) Erosion of the power of the executive to take bold decision based on the merit of the case due to various checks by Accounts, Vigilance, Audit etc.

xii) Delay in deciding rates for extra items.

xiii) Delay in making the railway materials available.

xiv) Due to termination of contract on account of contractor’s failures and improper follow up action

xv) Incomplete or contradicting schedule and/or specification.

xvi) Claims for execution during over run period for which contractor is not responsible.

xvii) Deductions from bills due to Audit/Vigilance/Account’s examination or faulty measurements.

Executive should therefore, be very careful and particular in planning, framing tender documents, proper record keeping, taking timely decisions etc. In the present scenario increasing no. of disputes can not be avoided.

Arbitration takes place every where to settle disputes……

Claimant should now get the message that Arbitration is no Longer an Easy way to earn..

Prevention against Arbitrationi) Proper planning of tender schedule, drawing and

incorporating clear conditions.

ii) Granting of extensions with a joint program (may be a revised program) signed by the contractor.

iii) Finalization of the contract at the right time with realistic date of completion.

iv) Ensuring signing of all MB’s and bills with prescribed certificates.

v) Ensuring recoding of all level books in ink duly signed by the contractors and keeping in the safe custody of PD.

vi) Keeping record of actual daily progress. This includes engagement of labour, consumption of cement & steel.

vii) All vague and fabricated allegations should be properly and

timely refuted.

viii) Proper procedures should be followed in finalization and

termination of the contract.

ix) Delay on the part of the contractor must be kept in writing.

x) Senior supervisors and junior officers should be advised not

to communicate to the contractor, only PD and CPM should

do that.

xi) Non-execution of work in anticipation of sanction.

xii) A constant watch should be kept on contractor’s tendency to

create records for unjustified claims and prompt and proper

reply should be sent.

xiii) Last but not the least – as soon as the dispute arises and the

contractor’s intention is noticed, all basic records like level

books, cross-sections, MB’s, site records and various

correspondences should be sealed and kept under personal

custody of a responsible officer (Bad example: Furfura

Contract)

Counterclaims and defending the proceedings

i) Continuation of speed restrictions (affected directly or indirectly) due to prolonging of execution. The total loss can be calculated.

ii) Extra traffic/power block required due to fewer engagements of skilled/semi-skilled/un-skilled labors. The amount of loss can be calculated.

iii) For safety related works, cost of speed restriction and cost of any accident occurred due to non-completion or delay in completion can be claimed by railway.

iv) Cost of railway supervisors/officers for their idling or under utilization can be claimed.

v) Various compensations and interests as claimed by the contractors can also be raised as part of counterclaims.

vi) Demurrage and wharfage dues, if any.

vii) In case the contractor does not return the railway material over a long period, the cost as per the rules along with interest should also be claimed.

The counterclaims should also be got vetted by local finance and law before submission to the arbitrator.

Site not clear- Site not clear- Encroachments, Encroachments, Infringements,Infringements,DOT, Tree, DOT, Tree, ServicesServices

Important letter/ instruction :1Letter date:12.05.2011

The claim of Ms AFCONS Infrastructure Ltd. quashed by Arbitrators

i) Mr. M. Ravindraii) Mr. P . Sridhananiii) Mr S.M. Singla

Citing a lot of judgments

Classical Case

Important letter/instructions:2

Risk Management with regard to contractors claims date 23.04.13

POINTS REQUIRED TO BE MONITORED TO MINIMISE CLAIMS OF THE CONTRACTOR

1.Award of contracts to be done only after (i) availability of at least 50% land and availability of first stage forestry clearance in case of forest land is involved (ii) Preparation of detailed estimate as per procedure order No.C/Policy/Estimate dated 27.6.2012.

2.Tender for important bridges should be invited only after considering Geotechnical Investigation Report and finalization of GAD's

3.Schedule of quantities should be prepared as per procedure order No.C/Policy/Estimate dated 27.6.2012.

4.The time frame for completion of work in the tender documents should be realistic duly stipulating mile stones for section wise completion.

5.The time frame for completion of work in the tender documents should be realistic duly stipulating mile stones for section wise completion.

6.Request for extension of time should be processed expeditiously within 7 working days of receipt of application.

POINTS REQUIRED TO BE MONITORED TO MINIMISE CLAIMS OF THE CONTRACTOR

7.Process for sanction in variation in quantities and rates for deviated/substituted/ extra items expeditiously i.e. within 15 working days of receipt of information about the same.

8.Maintain all necessary records such as site order book, labour register, equipment register and cement consumption register properly.

9.All references received from the contractor must be invariably replied expeditiously covering all points raised with reference to the conditions of contract.

10.Periodic Review meetings should be held with the contractor and minutes should be invariably issued.

11.Payment to Contractors should be made as quickly as possible, but in any case not later than the time limits specified in the contract.

12.Timely action should be taken to make available critical items such as rails, sleepers and any other items to be made available by the Employer, keeping in mind the milestones given in the contract document.

Important letter/instructions: 3

Appointment of Arbitrator date: 01.08.2013

Judgment (2013/4 Supreme Court cases 35)

of the Supreme

Court sent by Anit Seth, Advocate dated

25.07.13 wherein the

Supreme Court has held that appointment /

nomination of

Arbitrator by Corporation after the Contractor

has filed the

application for appointment of Arbitrator is not

valid and the

Appointing Authority under agreement right

is forfeited to

appoint / nominate the Arbitrator for your

information and

necessary action please.

Important letter/instructions: 4

Monitoring of appointment of Arbitrators and progress of Arbitration cases Date:14.08.13

Important letter instructions 5:-

Order of Hon’ble High Court , Delhi dated 14.08.2012 in OMB No.742/2013 filed by M/s D. S. Construction Ltd., against Rail Vikas Nigam Limited

Consequently, the registry is directed to forthwith handover the following fixed deposit receipts drawn in the name of the Registrar General of this court

Fixed deposit -the sum of Rs. 18,04,23,143/-

Fixed deposit -the sum of Rs. 14,31,23,500

On the aforementioned fixed deposit receipts being handed over, RVNL would be free to liquidate the same.

Handle contractors honestly & diplomatically. Otherwise………

Bigger the Contractor, better and diplomatic handling is needed…….

I Have Lost Everything due to greed to earn more through Arbitration

Contractor

Agency went for Arbitration and spent a lot of Money and could get only SD..

Ping-Pong b/w Ping-Pong b/w ContractorContractor & & Executive Executive

Play Play between between

Contractor and ExecutiveContractor and Executive has to be has to be FairFair and and as per as per

the provisions of the the provisions of the Contract AgreementContract Agreement