G.D. Rathi Steels Pvt. Ltd. vs Delhi Development Authority
1992 Latest Caselaw 441 Del

JUDGMENT

S.C. Jain, J.

(1) Disputes and differences, having been arisen between the parties with respect to agreement No.38/EE/HD/III/82-83, were referred to the arbitration of Shri G.R. Hingorani by the Engineer Member, Dda vide letter dated 25.11.85 as per the Arbitration clause.

(2) The Arbitrator entered upon the reference and invited claims from the parties. After considering the respective claims and the documentary evidence the Arbitrator made and published his award on 4.1.1988. The petitioner claimant submitted its claim for goods supplied as claim No. 1. The Arbitrator awarded Rs 617450.00 towards this claim.

(3) The second claim submitted by the petitioner was for Rs 5.00.000.00 towards damages suffered on account of breach of contract by the Department. The Arbitrator did not Find that claim to be justified and rejected the same.

(4) The claim No.3 was to the extent of Rs. 20,000.00 towards refund of security deposit which was disallowed by the Arbitrator as he had already allowed the security deposit of Rs I lakh lying with the Department under under clause No. 1. Claim No.4 was for pendente lite interest which was allowed by the arbitrator at the rate of 18% simple interest from 22.9.84 up to the date of payment or decree whichever is earlier.

(5) The D.D.A. also submitted counter claim of Rs. 22,18,807.00 for procuring the balance goods at the risk and cost of the petitioner. The Arbitrator did not find that claim to be justified and rejected the same.

(6) The second counter claim was for Rs. 9,59,578.00 on account of recovery of liquidated damages levied by Superintending Engineer under Clause 2. This claim was also found not justified and was rejected.

(7) Counter claim No.3 for Rs 6.04.758.00 which was on account of extra amount payable to M/S Ambika Steel Rolling Mills for non supply of the goods in time by the petitioner. This claim was also found to be not justified and was rejected.

(8) On the application of the petitioner, the Arbitrator filed the Award and the arbitration proceedings in the court. Notices for filing objections within the statutory period were sent to the parties.

(9) The Dda filed objections (I.A. 1201/88) under Sections 30 and 33 of the Arbitration Act. pleading inter alia that the Arbitrator did not give a reasoned award, though he was bound to give the same under the terms of the reference. He is guilty of misconduct and the award is liable to be set aside. The findings of the Arbitrator were challenged on various grounds. Counter affidavit was filed by the petitioner company justifying the findings of the Arbitrator and the award.

(10) During the course of arguments the main submission made by the learned counsel for the objector Dda was that the Arbitrator did not give any reason while allowing the claims of the petitioner and rejecting the counter claims of the DDA. The learned counsel for the Dda drew my attention to Clause 2 of the General Rules and Directions for completion of the contract which reads as under : "CLAUSE2:- The time allowed for carrying be strictly observed by the contractor and shall be deemed to be of the essence of the contract and the contractor shall deliver the materials on or before the dates mentioned in the tender. Should the contractor fail to deliver the materials on or before the stipulated dates, he shall pay as agreed liquidated damages and not by way of penalty, an amount equal to one percent or such smaller amount as the Supdtg. Engineer Dda (whose decision in writing shall be final) may decide on the amount of the estimated cost of the whole work as known in the tender for every day that the contractor shall exceed the time of the delivery and the delivery of the materials may be in arrears, Provided always that the entire amount of liquidated damages shall not exceed 10% of the estimated cost of the work as shown in the tender."

(11) According to the learned counsel by invoking the provision of Clause 2 as referred to kabove, the Supdtg. Engineer Circle 9/DDA held that the petitioner was liable to pay Rs 9,59,578.00 by way of liquidated damages as stipulated in Clause 2 of the Agreement. This amount of liquidated damage was levied on the petitioner for the period 5.4.84 at the rate of 10% as determined by him on the estimated cost which he worked out to Rs. 9,59,578.00 .

(12) According to the learned counsel, the Arbitrator ignored this aspect of the matter altogether and in view of this order passed by the Supdt Engineer as per clause 2 of the agreement, the Dda is entitled to claim this amount from the petitioner company. The award on this account is p=09 illegal as per se. The next point submitted by him is that amount of Rs 20,000.00 allowed by the arbitrator for getting the material tested is wrong inasmuch as it was at the risk of the petitioner that the materials were to be tested. The learned counsel for the Dda relied upon the decision of the Supreme Court in Vishwanath Sood vs Union of India , wherein it has been held that the where the time is the essence of the contract and there is a clause of compensation for delay, the decision of the Supdtg. Engineer on the amount of compensation should be Final under the clause.

(13) As far as legal proposition is concerned, there is no dispute about it that when time is made the essence of the contract and there is clause stipulating the levy of compensation, it is the Supdtg. Engineer who is to award compensation under the clause of the agreement but in this case the position is quite different. The petitioner was to supply 4140 M.T. of Ctd bars within a period of 8 months commencing from 17.1.83 but due to delay in getting the required license from Isi the petitioner did not make delivery till 179.83 when the stipulated period of contract was over. However, the Dda did not take action to levy liquidated damages under clause 2 or to annul the contract under clause 3. The Dda continued to ask the contractor for the supply as per the contract. The Contractor i.e. the petitioner commenced supply from 14.5.84 which was p=09 accepted by the Dda without reservation. The petitioner stopped further supplies on 10.7.84 as according to the petitioner by that time Rs 6 lakhs were outstanding and this amount was not paid to him. As per the conditions mentioned in the contract regarding the payment of the goods received the Dda was to make the payment within seven days of the receipt of the material. No damage/compensation had been levied by the Supdtg. Engineer till 26.4.85 as is evident from letter Ex R-15 on the file. The arbitrator has correctly interpreted clause 2 of the General Rules and directions for completion of the contract while rejecting the claim of Dda objector on this account. Extending the time to the contractor to supply the goods from time to time and then imposing compensation by the Supdtg. Engineer on 26.4.85 by invoking the provisions of clause I of the General Rules and directions for completion of the contract, it cannot be said to be in accordance with the terms of the agreement. The Arbitrator has correctly rejected the counter claim of the Dda on this account.

(14) Regarding the amount due to the petitioner it has been admitted by the respondent in their counter statement of facts that payment of Rs 4.92.562.00 on account of supply of material and Rs 4498.00 on account of cartage is pending with them but this amount has been withheld as the petitioner stopped the supply of the balance goods. The Arbitrator correctly held that Dda did not make the payment as per clause of the agreement and and hence further supplies were stopped. It being a matter of fact cannot be challenged before the court.

(15) Regarding refund of Rs 1 lakh, there is no dispute that Rs 1 lakh was lying with Dda as security deposit which is refundable. The plea of the counsel for the objector that Rs 20.000.00 spent by the Dda for getting the material tested should have been paid by the petitioner is against the terms of the contract. As per clause 6 of the Agreement contained in letter dated 17.1.83, the petitioner confirmed that they were Isi license holder for cold twisted steel bars conforming to Isi specification and the steel to be supplied would carry Isi certification mark (ISI tags) and they also undertook to furnish Isi tags for every log of steel supplied by them. In case the Department wanted to get the material tested, they could do so at their own. It is not the case of the Dda that the petitioner did not comply with the undertaking given by them. Testing of the material if at all was to be got done by the Dda at their own costs. The Arbitrator has correctly allowed Rs 20.000.00 which was wrongly deducted by the DDA.The security deposit of Rs I lakh was also correctly held to be payable to the petitioner. The Award of the Arbitrator is legal and suffers from no lacuna.

(16) It has been laid down by the Supreme Court in Hindustan Tea Co. vs K. Sashiban, that the Arbitrator is the final Judge to interpret and adjudicate the terms of the contract. No court can readjudicate the same. The Arbitrator is the last to decide the facts and that the courts are not supposed to interfere on the findings of facts. The findings of the Arbitrator can only be challenged if the same are without any evidence and illegal as per se. There is nothing on the record to show that the Arbitrator has misconducted himself or the proceedings. A perusal of the award shows his mind as to on which basis he has acted and it is sufficient to meet the requirement. When the terms of the agreement requires that the award should be reasoned one, it is obligatory on the part of the Arbitrator to state the reasons but it is not obligatory to give the detailed judgment.

(17) There is no ground to interfere in the findings of the Arbitrator which are legal and justified. I find no merit in the objections of the Dda and the same are hereby dismissed. The award is made a rule of the court. Decree sheet be drawn accordingly. No order as costs.