Sukumar Chand Jain vs Attam Vallabh Cooperative Group ...

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*     IN THE HIGH COURT OF DELHI AT NEW DELHI


%                                     Date of Decision : February 18, 2015


+                              FAO(OS) 600/2009

      SUKUMAR CHAND JAIN                                   ..... Appellant
              Represented by:         Mr.Sandeep Sharma, Advocate with
                                      Mr.Vikas Sharma, Advocate

                                      versus

      ATTAM VALLABH COOPERATIVE
      GROUP HOUSING                              ..... Respondent
              Represented by: Mr.Naveen Kumar Singh, Advocate
                              Mr.Subhiksh Vasudev, Advocate for
                              Intervener/Members


CORAM:
HON'BLE MR. JUSTICE PRADEEP NANDRAJOG
HON'BLE MS. JUSTICE PRATIBHA RANI

PRADEEP NANDRAJOG, J. (Oral)

1. The respondent is a co-operative group housing society. It was allotted a parcel of land by the Delhi Development Authority on which residential flats had to be constructed by the society for allotment to its members. The appellant was awarded a contract for constructing 233 flats and in respect of which the respondent and the appellant had entered into an agreement on December 04, 1987. The intended date of completion of the construction was June 30, 1990. The work continued till August 19, 1992. It was not completed. Respondent withdrew the unfinished works.

2. For the work done the appellant raised a final bill on June 20, 1992. As per clause 16(c) of the Special Conditions of the Contract, final bill had to be paid within 6 months. Thus, the due date for making final payment under the final bill was February 19, 1993.

3. The respondent did not make payment of the final bill.

4. It retained the security deposit.

5. Reason given was that the appellant was responsible for the delay and thus would not be entitled to the payment claimed since it included an element of escalation.

6. The appellant had a claim for payment under the final bill, refund of security deposit and loss of profit for the unexecuted portion of the work. A claim for interest was also raised on the delayed payments.

7. The contract between the parties had an arbitration clause and thus an arbitrator, Sh.G.S.N.Goel was appointed to adjudicate the claims of the appellant. Vide award published on December 20, 1992 the claims were rejected. The award was a non-speaking one.

8. Appellant filed objections under Section 30 read with Section 33 of the Arbitration Act, 1940 to the award dated December 20, 1992. The objections succeeded when vide order dated May 04, 2005 the same were allowed. The matter was remitted to the arbitrator for a reasoned decision. Sh.G.S.N.Goel expired in the meanwhile and consequently the parties approached this Court on the original side for appointment of a new arbitrator. On December 13, 2005 Mr.Prem Kumar a retired Additional District Judge in Delhi was appointed as the arbitrator.

9. The learned arbitrator by a reasoned award held that delay was attributable to the society. The learned arbitrator found that `16,24,416/- was payable for balance work. The learned arbitrator held that security FAO (OS) No.600/2009 Page 2 of 5 amount in sum of `9,97,346/- retained by the society was liable to be refunded. Learned arbitrator held that `13,96,108/- was payable towards loss of profit.

10. Awarding said three claims under the said three heads learned arbitrator granted interest @ 12% per annum on the three sums but restricted the same only to the period of two years. Learned arbitrator granted cost of arbitration to the appellant in sum of `1,10,000/-.

11. The respondent as well as the appellant challenged the findings returned by the learned arbitrator.

12. Vide impugned order dated October 28, 2009 the learned Single Judge partially allowed the objections filed by the appellant as well as by the respondent. Favourable to the respondent was the reduction of the rate at which interest was awarded. It was reduced from 12% per annum to 9% per annum. Favourable to the appellant was the period which was enhanced from 2 years given by the arbitrator to 5 years.

13. The respondent is satisfied with the impugned decision dated October 28, 2009. The appellant is aggrieved.

14. The contention urged by the appellant is simple. The arbitrator committed an error which was apparent on the face of the record to grant interest only for a period of 2 years. The learned Single Judge was also in error by enhancing the period to only 5 years taking clue from the fact that reference was made to the new arbitrator on December 13, 2005.

15. It is urged by the appellant that the learned Single Judge overlooked the fact that the initial reference of the dispute was made to the arbitrator way back in the year 1992. Award was published by the previous arbitrator on December 20, 1992 which was set aside. Reference made to the new arbitrator on December 13, 2005 was not a fresh reference.

16. We find merit in the contention urged by learned counsel for the appellant on account of the reason that interest has to be paid by a party which has wrongly withheld the amount due and payable; and the date wherefrom interest has to be paid is the date from which payments would be due.

17. On the issue of interest we find that as per clause 27 of the Conditions of the Contract, interest was to be paid @ 12% per annum for the work done. Thus, pertaining to claim one in sum of `16,24,416/- the interest payable would be with effect from February 19, 1993. Since the contract provides for interest @ 12% per annum, said claim would entitle the appellant to interest @ 12% per annum.

18. As regards claim No.3 the interest payable thereon would be with effect from April 26, 1992 when the balance works were wrongly taken away. On the said sum interest would not be payable at the contractual rate and would be as per the Interest Act. The rate would be at which banks pay interest on deposits.

19. On claim No.4 for retention of the security deposit interest would be payable from the date when final bill became payable for the reason at that stage all dues had to be paid and thus interest on said claim would be with effect from February 19, 1993. It would be payable @ 9% per annum.

20. Accordingly, we dispose of the appeal modifying the award and the impugned order directing as under:-

(i) Interest @ 12% per annum would be paid on the sum payable under claim No.1 and @ 9% per annum on the sum payable qua claim No.4 with effect from February 19, 1993 till date of payment.

(ii) Interest would be payable on claim No.3 @ 9% per annum with effect from April 26, 1992.

21. No costs.

(PRADEEP NANDRAJOG) JUDGE (PRATIBHA RANI) JUDGE FEBRUARY 18, 2015 mamta FAO (OS) No.600/2009 Page 5 of 5