School of Engineering & Technology

Forensic Structural Engineering

Construction Disputes on :
DEFECTS LIABILITY PERIOD
Course : Prevention and Resolution of Construction Disputes
(RDMCE13)
Prepared by : Andharia Priyam (101EGMTCE2021001)

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What is Defects Liability Period?
o A defects liability period must be understood simply as being the
period within which a contractor is obliged to remedy any defect
that appears during that time period.
o This period is usually of six or twelve months.

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CASE 1 :
Municipal Corporation of Greater Mumbai v/s Hindustan
Construction Company
o Petitioner – MCGM
o Respondent – HCC
o MCGM invited tenders in April 1995 for construction and
completion of civil work of aerated lagoons at Ghatkopar and
Bhandup.

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CASE 1 :
o HCC was awarded the contract on 5th January, 1996 and
agreement was signed between both the parties on 30th April,
1996.
o The respondent (HCC) was able to complete the work
satisfactorily within completion time and in accordance to the
conditions of contract.
o After the completion certificate was furnished, Defects Liability
Period started on 4th March, 2001 and ended on 3rd March,
2002.

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CASE 1 :
o On 14th March 2002, a general inspection was carried out by the
respondent (HCC) and was asked to rectify the same.
o On 16th April, 2002, the chief engineer of MCGM addressed a
letter to the respondent stating all the defects are rectified
satisfactorily and accordingly the defects liability certificates were
forwarded to the respondent (HCC) on the same day.
o Later in June/July 2003 after completion of Defects Liability
Period and almost 2 years after the work was taken over by
MCGM, defects were noticed in the work.

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CASE 1 :
o On 15th September, 2004, a meeting was arranged by both the
parties.
o What transpired at the meeting, is the matter of dispute.
o The petitioner(MCGM) relied on the minutes of the meeting,
which were disputed by the respondent (HCC).
o According to the petitioner, during the meeting the respondent
agreed on rectifying all the defects at their cost.

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CASE 1 :
o Thus, when the petitioner submitted the photocopy of the
minutes, it was found that the respondent did not sign them,
which means that the true copy of the minutes of the meeting
was unavailable.
o Later, during arbitration it was found that the petitioner(MCGM)
retained an amount of Rs.66.5 Lakhs which was payable to the
respondent(HCC), on the ground that the work completed was
defective.

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CASE 1 :
o It was also noted by the tribunal that no evidence was found
regarding the commencement of rectifying the defective work by
some other agency at the cost of respondent (HCC).
o Thus, due to unavailability of true copies of the minutes of the
meeting, the tribunal allowed the claim of RS.66.5 Lakhs by the
respondent from petitioner alongwith interest of 10%
compounded monthly on the payment which was delayed.

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CASE 2 :
Kamarajar Port Limited, Chennai v/s G.A. Projects Private Limited,
Chennai
This case is regarding setting aside of the award given by the
Arbitrator according to Section 34 of Arbitration and Conciliation
Act 1996.
o The learned Arbitrator gave an award based on the oral evidences
which were requested to set aside by the Kamaraja Port Limited.

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CASE 2 :
o Section 34 states that,
◦ An arbitral award may be set aside by the Court only if—
(a) the party making the application furnishes proof that—
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law
to which the parties have subjected it or, failing any
indication thereon, under the law for the time being in
force; or

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CASE 2 :
(iii) the party making the application was not given proper
notice the appointment of an arbitrator or of the arbitral
proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated
by or not falling within the terms of the submission to
arbitration, or it contains decisions on matters beyond the scope
of the submission to arbitration.

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CASE 2 :
(b) the Court finds that—
(i) the subject-matter of the dispute is not capable of
settlement by arbitration under the law for the time being in force,
or
(ii) the arbitral award is in conflict with the public policy of India.

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CASE 2 :
o Thus, disputes arose in this case were due to:
o The defects liability period is a 12 month period from the
certified date of completion.
o In this case, the work was completed in April 2016 except for a
minor portion and the road appears to have been put to use
thereafter.

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CASE 2 :
o However, the completion certificate was not issued in view of the
defective workmanship.
o Nevertheless, even if the defect liability period is reckoned from
May 2016, it would extend up to 30.04.2017.
o Therefore, it was necessary to examine whether the defects were
noticed by the owner within the said period and whether the said
defects were brought to the notice of the contractor.

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CASE 2 :
o The case of the contractor was that the work was satisfactorily
completed by April 2016 except with regard to the unavailable
work front, for which the contractor was not responsible.
o As regards quality, the submission was that 528 successful cube
tests were carried out during the course of execution of work and
that only 3 cube tests were not successful.

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CASE 2 :
o It was also the case of the contractor that the contract specifies
the mechanism for dealing with unsuccessful cube tests by
providing that, in such eventuality, core tests would be
conducted. In this case, such core tests were also successfully
conducted as evidenced by the core test results.
o According to the General Conditions of Contract:
If the “Cube Tests” are unsuccessful, the owner had to conduct the
“Core Test” and if the test results were negative the contractor was
liable to pay the cost to the owner to conduct the core test.

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CASE 2 :
o Based on these oral evidences, the Arbitrator concluded that the
“Core Test” result satisfied all the technical parameters like
thickness, strength requirement etc. and the results were
intimated by PMC letter dated 25.4.2016. The owner was
therefore liable to pay sum of Rs 1,00,000/- for the cost of the
core test.
o Thus, Arbitrator concluded that the tests were carried out by the
contractor and he is liable to pay the cost incurred in the core test
to the contractor.

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CASE 2 :
o Thus, presently the case was issued to prove that the arbitrator
passed the award ignoring the documents available regarding
the Tests carried out.
o The records indicate that the contractor not only refused to
receive letter from owner but also failed to rectify the defects
pointed out by the owner.
o The contractor was also called upon to participate in the conduct
of core tests during April 2016. However, the contractor refused
to co-operate in the said endeavour.

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CASE 2 :
o Therefore, the owner carried out such core tests independently
through the National Test House, Tharamani, Chennai.
o The test results were published during September and October
2016 respectively which were carried during the defect liability
period.
o These tests showed defective workmanship by the contractor and
therefore, the learned Arbitrator ought to have discussed the
same. Instead, the learned Arbitrator has merely instead relied
on oral evidence of the contractor while passing the award.
o Thus, the award by arbitrator was set aside.
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CASE 3 :
Brief of the dispute :
o A contract for construction work of Formation of Earth Dam, Un-
controlled Spillway for Kodumudiyar Reservoir Project was
accepted by the P.W.D. Engineers on 24th January, 2000.
o The period of contract was 19 months and it was extended
several times upto 31st March, 2003.
o The defects liability period of 365 days started from 31st March
2003 and ended on 30th April 2004.

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CASE 3 :
o The dispute arose when the contractor was asked to rectify the
defects after expiry of the defects liability period.
o According to the owner, a notice was issued by the engineer
regarding defects on 23rd March 2004, which extended the
Defects Liability Period as per the General Conditions of the
Contract.

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CASE 3 :
Evidences from the General Conditions of the contract :
CL 35 : Defects Liability Period
35.1 The Engineer shall give notice to the Contractor of any Defects
before the end of the Defects Liability Period, which begins at
Completion of the work. The Defects Liability shall be extended for as
long as Defects remain to be corrected.
35.2 Every time notice of a Defect is given, the Contractor shall
correct the notified Defect within the length of time specified by
Engineer’s notice.

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CASE 3 :
o Conclusions :
◦ The arbitrator from the evidences collected from the CL.35 of the
general conditions of contract, concluded that the contractor has
to rectify the defects on his own cost and shall be liable to pay an
interest to the owner for the loss he suffered due to non-
rectification of defects.

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References
1. M/S.G.A.Projects Private. Limited vs M/S.Kamarajar Port
Limit – Madras High Court
2. Municipal Corporation of Greater Mumbai v/s Hindustan
Construction Company
3. The State of Tamil Nadu v/s Chief Engineer of P.W.D, Tamil Nadu
4. 200 Contractual Problems and their Solutions by Roger
Knowles

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