* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ C.S. (OS) No. 4610A/1992
9th November, 2009
M/s Kanishka Builders ..Petitioner
Through: Mr. Harish Malhotra, Sr. Advocate
with Mr. Vipul Gupta, Advocate.
VERSUS
Delhi Development Authority & Anr. ...Respondent
Through: Mr. Abhishek Puri, Mr. Sunil
Malhotra and Mr. Dheeraj Gupta,
Advocates.
CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA
1. Whether the Reporters of local papers may be allowed to see
the judgment?
2. To be referred to the Reporter or not?
3. Whether the judgment should be reported in the Digest?
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JUDGMENT (ORAL)
I.A. No.4135/1994 in CS(OS) No.4610A/1992
1. These are objections filed by the applicant/DDA against the Award dated 1.12.1992 of the Sole Arbitrator. The counsel for the C.S(OS)No.4610A/1992 Page 1 DDA, on instructions, has confined his challenge to Claim Nos. 1,4,7 and 8 as made by the non-objector before the Arbitrator.
2. So far as Claim No.1 is concerned, the counsel for the DDA has strongly argued that a reference to the discussion under claim no.1 shows that it is totally bereft of reasoning and the Arbitrator has only given his conclusions as distinguished from reasons. According to the counsel, conclusions cannot be construed as reasons and there must be intelligible reasons to support conclusions arrived at. A reference to the discussion with respect to claim no.1 shows that the contention of the counsel for the objector is absolutely justified, I find that the Arbitrator has simply given his conclusions by holding that there is work beyond the deviation limit but it is however not stated as to which items are beyond the deviation limit, what is the deviation limit, what is the document in support of the deviation limit and so on. Similarly, with respect to allowing the contractor, categorization of work under 9.10 instead of 9.8 (a) and (b), the Arbitrator has given no reasoning except saying that the work should be categorized under item 9.10. With respect to rebates also, I find that there is absolutely C.S(OS)No.4610A/1992 Page 2 no discussion in this regard in the Award. Even in respect of the allowing of the claim 10CC, neither is there quantification as to what is the amount under 10CC nor as to why such claim is being allowed and as per what reasons. This aspect of the clause 10CC claim becomes relevant because one of the contentions of the counsel for the Objector while arguing claim no.4 has been that there has been double payment to the non-objector under claim no.4 which also pertained to higher rates on account of prolongation of the period of the contract. No doubt, the contract has been prolonged because of the respondents, because the contract was extended without levy of liquidated damages, however, what should be the amount with respect to 10CC is not clear from the Award.
Accordingly, this part of the award pertaining to claim no.1 needs to be remitted back to the Arbitrator to give reasons as required in law for allowing or disallowing of such claims. Since the claims have been allowed in this case, it would mean that the Arbitrator, if he sustains these claims, is bound to give intelligible reasons and which are reasons in law for allowing of the different items of this claim.
C.S(OS)No.4610A/1992 Page 3 Accordingly, with respect to all the heads under Claim no.1, the matter is remitted back to the Arbitrator for giving reasons and for quantifying the claim under Clause 10CC .
3. The second objection raised by the objector is with respect to Claim No. 4. In this claim, the non-objector has been awarded payment of additional cost in execution beyond the stipulated date of completion. It is a fact appearing from the record and which cannot be challenged in objection under Sections 30 and 33 of the Arbitration Act, 1940 that the objector has in fact been found guilty of delays and prolongation of the contract beyond the contractual period. This becomes more than abundantly clear because the respondent itself extended the contractual period without levy of liquidated damages. If the contractor was guilty of delay, then surely extension would only be granted subject to levy of liquidated damages. The Arbitrator is thus justified in awarding this claim. Accordingly, the challenge to this claim fails. However, I may note that since there is already an entitlement as claimed by the non objector for 10CC in claim no.1, if and when the Arbitrator awards an amount under the head of clause C.S(OS)No.4610A/1992 Page 4 10CC then such amount will be reduced from this claim awarded under claim No.4.
4. That takes me to the objection with respect to claim no.7. The contention of the objector is that no reasons have been given by the Arbitrator for awarding this claim which pertains to interest on delayed payments. I do not agree. If we look at discussion under the claim no. 7 we find that the Arbitrator has categorized the bills under two categories. One category pertains to those bills wherever Arbitrator has found as a matter of fact that there are no delays in payments of R/A bills 17th, 28th and the final bill and therefore, the non- objector has not been awarded any interest for delayed payment of such bills. However, with respect to other running bills, the Arbitrator has in fact, referred to the detailed calculations as filed by the non-objector and on the basis of such evidence has come to a finding of fact that there is in fact delay in payment of the bills for which the contractor is entitled to interest on the delayed payments. This finding of fact cannot be challenged by the Objector under Sections 30 and 33 of the Act because there is absolutely no perversity C.S(OS)No.4610A/1992 Page 5 noticed since the finding is based on reference to necessary material for arriving at such a conclusion.
5. That takes me to the last claim being claim no. 8 of the award with respect to interest. Basically what the counsel for the objector has argued is that the rate of interest granted is highly excessive and such high rate is not justified, though an argument is also feebly raised with respect to grant of interest.
6. So far as the grant of the interest is concerned, it cannot be faulted with because if the money is found to be due to a person, interest is nothing but basically compensation for the loss which is caused to a person for not receiving the money at a correct point of time. Interests are, therefore, effectively, in sum and substance, loss of profits towards monies which a person would have received in time as the person would have earned interest thereupon. Therefore, so far as allowing of interest is concerned the same cannot be faulted with. The high rate of interest granted, however is an issue to which I agree. It has been recently held by the Supreme Court in the chain of judgments reported as Rajendra Construction Co. Vs. Maharashtra C.S(OS)No.4610A/1992 Page 6 Housing & Area Development Authority & ors.2005 (6) 678, McDermott International Inc. Vs. Burn Standard Co. Ltd.& ors 2006 (11) SCC 181, Rajasthan State Road Transport Corpn. Vs. Indag Rubber Ltd. (2006) 7 SCC 700 and Krishna Bhagya Jala Nigam Ltd. Vs. G.Harischandra, 2007 (2) SCC 720 that courts must take notice of the changed economic scenario where on account of liberalization of the interest regime, the rates of interest have drastically fallen. I note that this arbitration proceedings are of the year 1992. Accordingly, in view of the aforesaid judgments, I reduce the rate of interest under the award wherever so specified to 9% simple.
7. With the aforesaid observations, the Award is made Rule of the Court with respect to claims against which no objections have been pressed. With respect to all the sub-heads under claim no.1, the matter is remitted back to the Arbitrator to give a reasoned award. The Arbitrator, in law, is bound to give reasons which are intelligible reasons in law. I also hold that for the present, the claim under claim no. 4 cannot be executed because what is the amount by which claim no. 4 would have to be reduced with respect to the amount under C.S(OS)No.4610A/1992 Page 7 Clause 10CC is not clear. Therefore, it is only after a fresh award under claim no.1 is passed by the Arbitrator would the award with respect to claim no.4 be executable.
8. With the above observations, objections are partly allowed and partly dismissed and the Award is made Rule of the Court subject to modifications as stated above.
9. In the facts and circumstances of the case, I leave the parties to bear their own costs.
10. The arbitration record in this court be sent by the special messenger to the Arbitrator with respect to the matters which are remitted back to him for reconsideration.
VALMIKI J.MEHTA, J
November 09, 2009
dkg/ib
C.S(OS)No.4610A/1992 Page 8