Anant Raj Agencies vs Delhi Development Authority And ...
1987 Latest Caselaw 545 Del

JUDGMENT

Mahesh Chandra, J.

(1) The plaintiffs M/s. Anant Raj Agencies has filed this Suit No. 1605A of 1985 under Sections 14 and 17 of the Arbitration Act and in pursuance thereof notice was issued to the defendant No. 2, the arbitrator, for filing the award in court and in pursuance thereof the award and its proceedings had been filed by him in the court. On 7th November, 1985, notice of filing of the award was accepted by Shri Manmohan Sarin, counsel for the plaintiffs and on 9th December, 1985 learned counsel appearing turn defendant No. I slated that he had filed objections against the award and the said objections are now 1.A. No. 185 of 1986. I now propose to dispose of this Suit No. 1605A of 1985 and the objections 1.A. No. 185 of 1986 by this order.

(2) The objections are opposed on behalf of the plaintiffs and upon the pleadings of the parties, the following issues were framed vide orders dated, 26th September, 1985: "1. Whether the arbitrator has misconducted himself or the proceedings ? 2. Whether the award is not liable to be made a Rule of the court ?"

It was further directed on that date that evidence shall be recorded on affidavits and in consequence the objector-DDA filed affidavit of one Shri B.P. Aggarwal, Executive Engineer and the plaintiffs filed affidavit of one Anil Sarin, a partner of the plaintiff. I have gone through the affidavits and also the arbitration proceedings and the award and have heard the learned counsel for the parties and after giving my considered thought to the matter before me 1. have come to the following findings :

 (3) Issue NO. 1: The facts giving rise to this matter are that the plaintiffs, a first class contractor, in response to the invitation for tenders for the works titled    "CONSTRUCTION of 3224 houses in Sectors Iii, Iv, V, VII&VIII at Rohini Project Sh : Construction of 400 Mig DU's in Sector Viii Pocket III", submitted its quotations which was accepted vide letter No. F. 50(70) a/HD XVII/DDA/82/996 dated 22nd January, 1983 by defendant No. I D.D.A. and formal agreement No. 26/EE/HD-XVII/DDA/82/83 was executed between the parties which inter alia, included an arbitration agreement clause bearing No. 25 providing for reference of all the disputes, questions, claims, rights, matters or things whatsoever to an arbitrator to be appointed by the Engineer Member of the D.D.A. In course of time disputes arose and reference was made to arbitration of defendant No. 2, who made his award, now being marked Ex. A. I on 28th August, 1985 and hence '.the objections. These facts are not disputed by the parties.  

 (4) A perusal of para 7 of the objections (I.A. No. 185 of 1986) would show that the contention of the objector D.D.A. is. that "the learned arbitrator has thoroughly misconducted himself and the proceedings, acted beyond his jurisdiction and committed an error apparent on the face of the award etc..." This has been elucidated in sub paras .(a) to (g) of para 7 of the objections.  

 (5) The main contention of the objector D.D.A. is incorporated in para 7(g) of the objections. This relates to alleged failure of the arbitrator to conform to the requirements of Clause 25 of the agreement, which provides asunder:    "CLAUSE25: Except where otherwise provided in the contract all questions and disputes relating to the meaning of the specifications, designs, drawings.and instruction hereinbefore mentioned and as to the quality or workmanship or materials used on the work or as to any other questions, claim, right matter or thing, whatsoever, in any way arising out of or relating to the contract, designs, drawings, specifications, estimates, instruction, orders or these conditions or otherwise concerning the works or the execution or failure to execute the same whether arising during the progress of the work or after the completion or abandonment thereof shall be referred to the sole arbitration of the person appointed by the Engineer Member Delhi Development Authority at the time of dispute. It will be no objection to any such appointment that the arbitrator so appointed is a Delhi Develop- ment authority employee that he had to deal with the matters to which the contract relates and that in the course of his duties as Delhi Development Authority employees he bad expressed view on all or any of the matters in dispute of difference. The arbitrator to whom the matter is originally referred being trans- ferred or vacating his office or being unable to act for any reason, such Engineer Member Delhi Development Authority as aforesaid at the time of such transfer, vacation of office or inability to act shall appoint another person to act as arbitrator in accordance with the terms of the contract. Such person shall be entitled to proceed with the reference from the stage at which it was left by his predecessor it is also a term of this contract that no person other than a person appointed by such Engineer Member, Delhi Development Authority as aforesaid should act as arbitrator and, if for any reason that is not possible, the matter is not to be referred to arbitration at all. In all cases where the amount of the claims in dispute,is Rs.50,000.00 (Rupees Fifty thousand) and. above, the arbitrator will give reason for the award."  

 Subject as aforesaid the provisions of the Arbitration Act, 1940 or any statutory modification or re-enactment thereof and the rules made there under and for the time being in force shall apply to the arbitration proceeding under this clause. It is a term of the contract that the party invoking arbitration shall specify the dispute or disputes to be referred to arbitration under this clauses together with the amount or amounts claimed in respect of each such dispute. It is also a term of the contract that if the contractor (s) does/do not make any demand for arbitration in respect of any claim (s) in writing within 90 days of receiving the intimation from the Engineer-in-Charge that the Bill is ready for payment, the claim (s) of the contractor (s) will be deemed to have been waived and absolutely barred and the Delhi Development Authority shall be discharged and released of all liabilities under the contract in respect of those claims". The contention of the learned counsel for the D.DA. is that arbitrator has practically given a go by to the requirements of Clause 25 in as much as proper reasons for his findings have not been given by the arbitrator. Para 7(g) of the objection reads that the arbitrator "was under an obligation to give a reasoned award and so he has pretended to give his reasons running into 5-6 pages. These so called reasons cannot be termed as reasons in the eyes of law on the other hand he has made a mockery of this special stipulation which was inserted as a safeguard to check the arbitrariness and free style in the conduct of the arbitration proceedings by the arbitrator. The reasons given by the learned arbitrator are not supported by any quota of evidence permissible under the laws. Moreover the learned arbitrator was under an obligation to indicate the process of assessment and computation in determining the losses and damages on account of idle staff, salaries, wages to labour, artisans etc etc. at Rs. 6.5 lacs. In fact a reading of the award leaves the reader completely groping in the dark as to what is the basis of the awarded amount after all. which in the respectful submission of the objectors, would be none available on the record". As against it, the contention in para 7(g) of the reply of the claimants-plaintiffs is that "the arbitrator has duly indicated his thought process and met with the requirement of indicating "the reasons why" for conclusions arrived at. The reasoned award given by the arbitrator is duly supported by evidence. It is wrong and denied that the learned arbitrator is bound to give a detailed computation or calculation of the amount awarded. It is for him to indicate the various factors considered by him without giving the details of each head or item under a claim and the amounts awarded therefore. The award is a well reasoned one and ic accordance with law......". I have been taken through the award. From the perusal of the award I find that the arbitrator has given reasons for his award. In fact the ''reasons for the award" start at page 2 of the award and continue till page 6 thereof and the award further shows that the arbitrator has discussed the evidence also in that context. It would be unnecessary for me to reproduce the reasons given by the arbitrator for his findings here. A perusal of the said reasons indicates the thought process of the arbitrator clearly and without any ambiguity. The contention of the objector D.D.A. in fact is not that no reasons have been given rather what is urged by the learned counsel for the DD.A.isthat the reasons given by. the arbitrator arc not sufficient and as such the award is liable to be set aside May be that the arbitrator has not given as detailed reasons as the Judges of the ordinary civil courts would but that by itself would not enable this court to say that the arbitrator has failed to give reasons. In view thereof question would arise whether the courts would go into the sufficiency of the reasons or reasonableness of the reasons ; more so, when the award on the face of it indicates the thought process of the arbitrator and the grounds for it : I am afraid 'not'. It is difficult to say by any stretch of imagination that the award in the instant case is a non-speaking one. It cannot be said that present is a case of "No reasons" at all. What is urged is that the reasons given are not sufficient. This court would not be inclined to teller the power of the arbitrator so as to oblige him to give as detailed reasons as the courts would. The court would not substitute its estimate of sufficiency of reasons for that of the arbitrator. The courts would not interfere with the reasons of the arbitrator when the reasons of the arbitrator are not faulty or perverse. In this context Russell on the Law of Arbitration, 20th Edition at page 291 has observed as under :    "THE arbitrators should set out what, in their view of the evidence,, did or did not happen, and should explain succinctly why in the light of what happened they had reached their decision and what that decision was. They are not expected to analyze the law and the authorities".  

It is in this very context that a Division Bench of this court has observed in Delhi Development Authority New Delhi v. Mis. Alkaram, New Delhi, that 'if the arbitrator gives the reasons, it does not mean that the losing party can quarrel with his reasoning......' It was further observed' therein that 'when the arbitrator gives reasons for his award, this does not open the door of the court to see what the contention of each party was and what was the evidence given by the parties on it, and then examine the evidence to see whether the disputed findings of fact are sufficiently supported by the evidence. The theory propounded before us that the court can see the reasonableness of the reasons" if accepted 'would cut at the root of the whole purpose of arbitration, the basic idea of which is that the arbitrator's decision, shall be final'. The underlying idea behind the requirement of giving reasons by the arbitrator is that the award is a speaking one and the arbitrator avoid arbitrariness and the idea behind is not of obliging the arbitrator to write a detailed judgment like the judges in the ordinary courts do. It was similarly held in Delhi Development Authority's case (Supra) that 'it will be right to point out here that though the arbitrator by the terms of arbitration clause is required to give reasons for the award, he is not to write a detailed judgment as the judges do in courts. The requirement of reasons- meets the elementary demand of the parties to be told 'the reason why' for a particular conclusion arrived at by the arbitrator. For the arbitrator it is an act of self discipline. But to say that the court will be entitled to examine the 'reasonableness of the reasons' is to allow the concept of reasons to run wild. The theory is a disguised attempt to turn questions of fact into questions of law with a view to having them retried by the court, with the result that all the objects sought to be attained by means of arbitration decision by the tribunal chosen by the parties, and finality and quickness and. cheapness-would be defeated by protracted proceedings in the courts......... What reasons are sufficient in any particular case must, of course depend upon facts of the case, I approach the matter in this way ; that reasons are not deficient merely because they fail to deal with every point raised before the arbitrator at the hearing. No universal generalisation can be made. Everything depends on the subject matter", in view of my discussion above, it cannot be said that the award of the arbitrator is liable to be set aside on this ground.

(6) The next contention of the learned counsel for the objector D.D.A. is that the arbitrator has misconducted himself in so far as he has not allowed proper opportunity to the D.D.A. to present its case. A perusal of the arbitration file would show that order of reference by the Engineer Member was passed on 23rd January, 1984 and the arbitrator actually entered upon the reference on 20th February, 1984. Vide letter dated 27th March, 1984 the arbitrator called upon the parties to file their statements of facts immediately and in consequence statement of claim was filed by the contractor on 12th June, 1984 which statement was duly supported by copies of relevant documents. In so far as counter-statement was not filed by the D.D.A. on 30th June, 1984, the respondent-D.D.A. was granted 15 more days to file its counter-statement and vide letter dated 9th July, 1984 received by the arbitrator on 17th July, 1984 one month's extension was sought by the D.D.A. for filing of the counter-statement which was granted and the counter-statement was in consequence filed on 10th August, 1984 by the D.D.A. which also was supported by certain documents. On 28th August, 1984 the arbitrator fixed the next date before him as 7th September, 1984 which could not take place because of ldul's Zuha and on 10th September, 1984 the arbitrator fixed 21st September, 1984 as the next date before him. On 21st September, 1984 hearing could not take place and as such vide letter dated 26th September, 1984 parties were directed to appear before him on 8th October, 1984 and it was ultimately on 19th October, 1984 that issues were framed by the arbitrator and the case was adjourned to 17th November, 19.84 and thereafter proceedings were held on various dates including on 29th December, 1984, 19th January, 1985, 2nd February, 1985, 2nd March, 1985, 14th May, 1985, 3rd June, 1985 and 12th June, 1985 and finally the award was made on 28th August, 1985. All this shows that the arbitrator has given full opportunity to the parties to present their respective cases and as such the award is not liable to be set aside on this ground either and mere fact that D.D.A. has alleged in its objection that arbitrator was inclined to make the award in favor of the contractor and did not afford proper opportunity to D.D.A. would not by itself invalidate the award, more so in the face of all the hearings held by this arbitrator in this behalf.

(7) It has next been contended by the learned counsel for the D.D.A. that the award is based on no evidence and the arbitrator has not applied his mind to the terms and conditions of the agreement and in this behalf he has drawn my attention to the fact that the contractor-claimant had not submitted proper evidence before the arbitrator for evaluating the damages and the claim of the contractor in dispute and the arbitrator was wrong in relying upon the certificate of the Chartered Accountant and photo copies of the muster rolls filed by the contractor before the arbitrator, more so, when the D.D.A. was not permitted to inspect the same and rebut it, and that the arbitrator had not been faithfully recording the proceedings. I have already held above that the arbitrator has given reasons for the award and in the face thereof it would be difficult to accept the contention of the learned counsel for the D.D.A. that the arbitrator has not applied his mind to the terms and conditions of the agreement or that he has not applied his mind to the points involved in the case. Learned counsel for the D.D.A. has not been able to show me anything from the arbitrator's file indicating that the representative of the D.D.A. has ever challenged the correctness of the records of the proceedings by the arbitrator even though copies thereof were regularly provided to the parties. In this view of the matter it would be difficult to accept this contention of the learned counsel for the D.D.A. From the perusal of the proceedings I find that the certificate is at page 179 of the arbitrator's file and it is dated 29th June, 1985 and it reads as under : "WE have examined the books and Records of Anant Raj Agencies, and to the best of our information and according to the explanations given to us it is certified that Anant Raj Agencies had incurred an expenditure of Rs. 13,00,718,36 comprising Rs 3,12,327.53 for wages to labour and masons, Rs. 2,61,686.43 for salaries to staff and Rs 7,26,704.40 for hiring charges of shuttering materials, mixers and other equipments excluding other overhead payments and charges during the period at the site stated above".

In the face of this detailed certificate, which has been filed on the directions of the arbitrator, it cannot be accepted that the arbitrator has gone wrong on relying upon this certificate. The matter may be considered yet from another angle. A perusal of the award shows that the certificate has not been accepted by the arbitrator in toto and rather the arbitrator has applied bids judicious mind in coming to his conclusions as to the amounts awarded to the contractor, under various heads. In the face of this situation it cannot be said that the arbitrator has misconducted himself or the proceedings. Learned counsel for the plaintiff-claimant has taken me through photo copies of various muster rolls and register of employment. These photo copies cover practically the entire period which was relevant and in view thereof also it would be difficult to find fault with the findings of the arbitrator. The contention of the learned counsel for the D.D.A. that there was a delay in filing these documents by the claimant is misplaced in so far as the D.D.A. had not objected to the course adopted by the arbitrator in calling upon the claimant to file a certificate of the Chartered Accountant and copies of various employment registers and the muster rolls. Incidentally it may be mentioned that copy of letter dated 19th July, 1985 whereby copies of various muster rolls and attendance register were submitted to the arbitrator was also simultaneously endorsed to the Executive Engineer, Rohini Project, Division v. DD.A. New Delhi. This shows that the D.D.A. is raising objection to the award on this ground only because the award has incidentally gone against the D.D.A. which it cannot be permitted now at this stage. Not only the perusal of the proceedings before the arbitrator but even the award goes to show that it is not a case of want of evidence or no evidence at all and therefore it cannot be said that the award is based on no evidence. The award itself shows that it is based on definite evidence led before the arbitrator. There can be no dispute on the principle that damages cannot be allowed unless actually proved but in the instant case the certificate of the chartered accountant coupled with copies of attendance register and muster rolls filed on record of the arbitrator and the admissions of the DD.A. goes to show that the principle is not violated in the instant case for the simple reason that the claimant has proved the damages actually. It is also submitted that in accordance with Clause 10D of the agreement, necessary returns were not submitted but this cannot be objected to at this stage by the D.D.A. after the necessary documents and returns were filed in the form of copies of the muster rolls and the attendance register before the arbitrator by the claimant. Photo copies of the register shows that it is from January, 1983 onwards to December, 1983 which is the relevant period. Similarly the muster rolls are from 16th March, 1983. to 15th October, 1983. It was submitted by the learned counsel for the plaintiff claimant that the plaintiff had to get statutory audit under Section 44 of the Income-tax Act by the Chartered Accountant and in the face of this situation it was open to the arbitrator to place reliance on the certificate of the Chartered Accountant and I find weight in it. There is yet another aspect of the matter. The letter dated 3rd July, 1985 from the arbitrator shows that this incorporates proceedings of the hearing dated 12th June, 1985 and the said proceedings go to indicate that the hearing of the entire case was complete on 12th June, 1985 and the arbitrator had reserved his award and as such also it cannot be said that the letters dated 15th July, 1985 and 26th July, 1985 by the D.D.A.to the arbitrator could adversely affect the award of the arbitrator, more so in view of the fact that copy of the letter dated 19th July, 1985 had been endorsed by the plaintiff claimant to the defendant also. My attention has been drawn by the learned counsel for the plaintiff, claimant to the fact that the claim has been made by the plaintiff for 50 per cent of the salaries of idle workmen and that too has been cut down by the arbitrator. In this view of the matter also it would be difficult to find fault with the arbitrator or his award. My attention has been drawn to para 2 of letter dated 3rd July, 1985 from the arbitrator wherein the respondent D.D.A. had categorically stated before the arbitrator that it had nothing more to offer and had only undertaken to submit further comments, if any, on the statement of audit certificate to be submitted by the claimant. The arbitrator has considered the entire submissions made by the D.D.A. in this behalf as a perusal of his award would show. The most important thing which cannot be lost sight in the instant case is that the arbitrator was the Chief Engineer of the D.DA. which by itself is an inbuilt safeguard for the proper conduct of the arbitration and without any bias in favor of the claimant, lr may be mentioned here that it has been accepted principle and practice of the courts in India that the courts would not be inclined to go into reasonableness or the reasons of the arbitrator. The arbitrator is the final arbiter of facts and law and his award is not lightly to be set aside and the courts would even strain to uphold the award rather than set it aside on flimsy grounds.

(8) There is no other submission which has been made before me. In view of the discussions and findings above, I do not find that the arbitrator has misconducted himself or the proceedings and as such Issue No. I is decided in favor of the plaintiff claimant and against the D.D.A.

(9) Issue NO. 2: I have gone through the award Ex. A which does not suffer from any infirmity. There is nothing which stands in the way of its being made a rule of the court and this issue is decided in favor of the plaintiff-claimant and against the defendant.

(10) In view of my discussion and findings above the objections (I.A. No. 185 of 1986) have no merit and are liable to be dismissed and are dismissed. The award Ex. A-1 is made a rule of the court. Let the decree be drawn in terms of the award.