J.N. Constructions vs New Delhi Municipal Committee And ...
1993 Latest Caselaw 583 Del

JUDGMENT

V.B. Bansal, J.

(1) M/S. J.N. Constructions, plaintiff, filed this suit under Section 14 and Section 17 of the Arbitration Act (hereinafter referred to as the 'Act') with the prayers that Shri C. Rama Rao, the sole Arbitrator,defendant No. 2 may be asked the file the original Award Along with the-proceedings in Court and, thereafter, to make Award the Rule of the Court and to pass a decree in terms of the Award Along with interest at the rate of15 per cent per annum from the date of the' Award till realisation.

(2) Briefly stated, the facts leading to the filing of this suit are that the work for the Construction of Residential School for Mentally Retarded Children "Anchal" at Kautilya Marg, New Delhi, SH: Construction of Dining Hall, Servants Quarters s'.ld Lily pool was entrusted to the plaintiff by the New Delhi Municipal Committee, defendant No 1. The work was executed by the plaintiff but certain disputes arose between the parties which were referred to Sir C. Rama Rao, defendant No. 2, by the Administrator,New Delhi Municipal Committee, vide his letter dated 11.12.1989. The Arbitrator was directed to make a reasoned Award in respect of the disputes raised by the claimant.

(3) The Arbitrator entered upon the reference on 28.12.1989 and the claimant filed claims statement in respect of eight claims to which the reply was filed by defendant No. 1. Time for making the Award was extended by the parties from time to time and, ultimately, the Award dated 25.10.1990was made by Shri C. Rama Rao, regarding which intimation was given to theparties.

(4) On 9.11.1990 a notice was issued to the defendant No. 2, Arbitrator, directing him to file the Award Along with the proceedings in Court.After the receipt of the Award and the proceedings notice of filing of the Award was given to the parties. Objections, viz. Ia 2018/91 have been filed defendant No. 1 wherein it has been stated that the notice of filing of the Award was received by defendant No. 1 on 25.1.1991 and, so, objections filed on 19.2.1991 were within time. Reply to the objections was filed by the plaintiff wherein preliminary objections have also been taken to the effect that the Arbitrator had filed the Award in Court vide his letter dated19.11.1990 and that vide letter dated 21.11.1990 the defendant No. 1 had informed the plaintiff about the filing of the Award and the proceedings by the Arbitrator. The objections have also been contested on merits and a prayer is made that the objections be dismissed and the Award be made the Rule of the Court.

(5) Pleadings of the parties gave rise to the following issues which were framed on 20.12.1991:

(I)Whether the objections filed by the respondent are barred by time ?

(II)Whether the award is liable to be set aside in view of the objections raised by the respondent ?

(6) Both the parties were asked to file affidavits by way of evidence.The plaintiff filed affidavit of Shri P.K. Jain, partner of the plaintiff and documents Exhibit P/l and P/2 have been filed Along with the same. No affidavit has, however, been filed by the defendants in spite of opportunities having been given.

(7) I have heard Shri G. N. Aggarwal, learned Counsel for the plaintiff and Shri H. P. Sharma, learned Counsel for the defendant No. 1. I have also gone through the record.Issue No. 1:

(8) Learned Counsel for the plaintiff has submitted that after the filing of the suit in Court in which notice was issued to the Arbitrator for filing the Award and the proceedings before 11.11.1991, the date fixed inCourt, an application was moved by the plaintiff, viz. IA. 10495/90, under Section 151, Civil Procedure Code. in which a prayer was made that notice of filing of the Award may be issued to the defendant No. 1 since the Award had already been filed in Court by defendant No. 2. He has also submitted that before filing this application in Court on 21.11.1990 its copy was served on defendant No. 1. He has further submitted the Counsel for defendantNo. 1 appeared in Court on 27.11.1990 and 3.12.1990. In this way, he has 'submitted that the defendant No. 1 should be deemed to have been served about the filing of the Award in Court on 27.11.1990. He has, thus, submitted that the objections having been filed on 19.2.1991 are hopelessly barred by time and, thus, prayed that this issue may be decided in favor of the plaintiff.

(9) Learned Counsel for defendant No. 1 has, however, submitted that the information with regard to the filing of the Award in Court was received by the New Delhi Municipal Committee only on 25.1.1991 and the objections having been filed within 30 days of the service of notice, it can not be said that these are filed beyond limitation. He has further submitted that no notice was given to defendant No, I about the filing of the Award on 27.11.1990, 3.121990 or any other date before 25.1.1991. He has, thus,submitted that the plaintiff has not been able to prove this issue and prayed that it may be decided against the plaintiff.

(10) I have given my thoughtful consideration to all these submissions and am clearly of the view that the objections have been filed by the defendant No. 1 within time.

(11) The basic authority on the subject is Nikantha Stdramappa Ningashett I v.Kashinath Somama Ningashetti and Others, where it has been held that the time for moving an application forgetting the Award set aside begins from the date of the service of the notice of filing of the Award. It was also held that there was no ground to construe the expression 'date of service of notice' to mean only a notice in writing served in a formal manner. When the Legislature used the word'notice' it must be presumed to have borne in mind that it means not only a formal intimation but also an informal one and that to construe the expression as meaning only a written notice served formally on the party to beaffected, will leave the door open to that party, even though with full knowledge of the filing of the award he has taken part in the subsequent proceedings to challenge the decree based upon the award at any time upon the ground that for want of a proper notice his right to object to the filing of the award had not even accrued. It was also held that notice given to the party through a pleader in Court was sufficient notice to the party.

(12) Indian Rayon Corporation Ltd. v. Raunaq and Company Pvt.Ltd., is another judgment on the subject. It has been observed that in order to be effective both for the purposes of obtaining the judgment in terms of the Award and for setting aside the same,all that is required to be proved is filing of the award in the proper Court;service of the notice by the Court or its office to the parties concerted and such notice need not necessarily be in writing and it is upon the date of service of such notice that the period of limitation begins to run. In the case aforesaid, the Award was filed in the High Court on 4.2.1977 where in an affidavit was filed by a party to an Award on 4.2.1978 slating therein Award had been wrongly filed in the High Court and it should be taken off the file. Notice under Section 14(2) of the Arbitration Act about the filing of the Award was served on 30.7.1981. The question for consideration was as to when the objections could be filed. It was held that the party had the notice when it filed the affidavit dated 4.2.1978 and that the period of limitation would not start from the date on which another notice was served.

(13) Lachman Dass and Others v. M/s. Veer Finance Company, New Delhi and Others, is another authority of this Court on the subject wherein it has been held that the starting point of limitation under Section 14(2) is the date of service of notice of filing of the Awardand, thus, where parties have knowledge and are present and appear and apply for leave to examine the award and pray for time to file the objections, the service of notice becomes unnecessary. In such cases the date of appearance in the proceedings was deemed to be the date of service of notice though actually no notice bad been served.

(14) Submission of the learned Counsel for the plaintiff has been that copy of IA. 10495/90 was served upon the defendant No. 1 by the plaintiff on 21.11.1990 and it was in pursuance of the same that Counsel for defendant No. 1 appeared in Court on 27.11.1990 and 3.12.1990 and, so, it should be presumed that notice of the filing of the Award was given to the defendant No. 1 by Court at least on 27.11.1990. I do not agree with thissubmission. A perusal of the file shows that the Presiding Officer was on leave on 27.11.1990 and, so the case was adjourned for 3.12.1990 and on that date the case was again adjourned. It may also be noted that on11.1.1991 Counsel for the plaintiff appeared while no one was present for defendant No. 1 and notice of filing of the Award was ordered to be issued to defendant No. 1 for 20.1.1991. The application, viz. IA. 10495/90,moved by the plaintiff was dismissed as infructuous on account of the notice having already been given. In these circumstances, it cannot be said that any notice was given by the Court to the defendant No. 1 about the filing of the Award at any time prior to 25.1.1991. In these circumstances, I hold that the objections filed by the defendant No. 1 are within time and decide this issue against the plaintiff.Issue No. 2:

(15) It is the admitted cane of the parties that the Arbitrator was required to give a reasoned Award and in compliance of this requirement a well-reasoned Award running into 33 pages has been made by him. It is also the admitted case of the parties that Shri C. Rama Rao, the Sole Arbitrator, defendant No. 2, retired as Director General of Works, Central Public Works Department. Before discussing the objections with regard to the claims made by the plaintiff claimant, it would be necessary to refer to the law on the subject.

(16) In the case Delhi Development Authority, New Delhi v. M/s.Alkaram, New Delhi, , it has been held that sufficiency and quality of evidence is a matter for the Arbitrator to decide and when an Arbitrator gives a reasoned Award he is not required to right a detailedjudgment, setting out each logical step of his reasoning. It is sufficient that indicates the trend of his thought process so that error can be eliminated and arbitrariness avoided.

(17) In case Hindustan Tea Company v. M/s. K. Shashikant and Company and Another, it has been held that the Arbitrator is made the final arbiter of the disputes between the parties and the Award is not open to challenge on the ground that the Arbitrator has reached a wrong conclusion or has failed to appreciate facts. If the view taken by an Arbitrator is possible and plausible, it cannot be set aside or substituted by the Court with its own view and merely because if the Court was to decide the matter it would have taken a view different from the view taken by the Arbitrator is not a ground to interfere with the Award. It has been so held in the case U.P. Hotels etc. v. U.P. State Electricity Board, (JT 1988(4) S.C.471). To the same effect is the judgment in the case Hind Builders-v.Union of India , The jurisdiction of the Court hearing objections under the Arbitration Act is not an appellate jurisdiction. It is well settled that an Award can be set aside only for the reasons specified in Section 3. In case Jagdish Chander v. Hindustan Vegetable Oils Corpora-lion (1989(2) A.L.R. 189) the Arbitrator appointed was a senior officer of the Government of India and an expert in the field. He gave an Award after considering the claims, counter claims, oral and documentary evidence and also after hearing arguments. It was held that the jurisdiction of the Court hearing objections under the Arbitration Act was not an appellate jurisdiction and it could not be said that the Arbitrator had misconducted theproceedings.

(18) The Court is not required to examine the correctness of theclaim on merits with reference to the material produced before the Arbitrator as the Court cannot sit in appeal. The scope for setting aside the Award is very much limited to the grounds available under the Arbitration Act.Reference in this regard can be made to the case Puri Construction Pvt. Ltd.v. Union of India, .

(19) The net result from all the aforesaid decisions is that an Award cannot be interfered with unless the objector proves on record that the Arbitrator has misconducted himself or the proceedings or that their was a mistake apparent on the record. Beyond these facts no relief can be given to an objector.

(20) I would now be considering the objections of the defendant regarding the claims of the plaintiff/claimant.Claim No. 1:

(21) The plaintiff/claimant bad claimed a sum of Rs. 55,4701- as due to them in the final bill for the work done by them. The claimants had pleaded that the work was completed on 7.7.1988, which fact was not controverter by the objector. It was also pleaded by the claimants that the final bill should have been settled on 7.1.1989 and as no action was taken by the defendant, the claimant had himself prepared the final bill, giving all the details and, thus, claimed the aforesaid amount.

(22) Detailed reply was considered by the arbitrator who had also heard arguments of both the parties. The Arbitrator had gone through all the items-and came to the conclusion that a sum of Rs. 46,923.00 was due to the claimants. It may also be noticed that in the objections of the defendant it has been pleaded that only a sum of Rs. 44,047/22 was due and the Arbitrator had allowed a sum of Rs. 46,923.00 and, thus, an excessiveamount. Learned Counsel for the objector has not been able to point out any mistake in the totalling which could be taken note of. The Arbitrator having taken all the facts into consideration before giving the aforesaid claim on Rs. 46,923.00, it cannot be said that this claim is not justified or that it calls for any interference.Claim No. 2:

(23) The plaintiff/claimant has claimed a sum of Rs. 4,003.00 towards the refund of the balance of the security deposited with the defendant No.1. In the objections filed by the defendant all that has been stated was that this claim was not in order. Nothing could be argued against this claim and learned Counsel for the defendant submitted that the objection against this claim is not being pressed.Claim No. 3:

(24) The claimant had put forward a claim of Rs. 45,551.00 on account of non-payment/inadequate payment for extra/substituted items executed at the site. Learned Counsel for the defendant-objector has submitted that the New Delhi Municipal Committee had submitted detailed arguments with regard to the non-admissibility of the claims, but the Arbitrator has committed a mistake in giving an Award for a sum of Rs.34.077.00, which was not justified. Learned Counsel for the defendant has further submitted that nothing was due against this claim and the Arbitrator has committed a mistake in not agreeing with the contention of the defendant. I am afraid no case has been made out by the defendant within the parameters so as to hold that the Arbitrator has misconducted himself or theproceedings.

(25) A perusal of the Award shows that as against the claim of Rs.45.551.00 an Award has been made only for sum of Rs. 34,077.00 after discussing individual items and due application of mind. Learned Counsel for the objector was not in a position to elaborate as to how this claim was being objected to by the defendant. I, thus, find no reason to interfere with the conclusion arrived at by the arbitrator regarding this claim.Claim No. 4:

(26) The claimant had claimed a sum of Rs. 7,854.00 towards no reimbursement of statutory increase in minimum wages of labour with effect from 16.3.1988. After hearing arguments and considering the calculations furnished by the defendant No. 1, the arbitrator allowed a claim of Rs.4.433.00. In the objections filed by the defendant No. 1, averments were made that this claim was not in order. However, learned Counsel for the defendant submitted during arguments that this claim is not being opposed.He was, even otherwise, not able to point out anything wrong so as to enable this Court to interfere with this claim.Claim No. 5:

(27) The claimants had put forward a claim for Rs. 1,19,800.00 towards the escalation in cost of material and labour for the work executed beyond the stipulated period of the contract. Both the parties had put forward their documents and after hearing both the parties and taking into consideration all the material the Arbitrator allowed a sum of Rs. 62,41 I/to the claimant. The Arbitrator has given the details as to how this amount was arrived at. In the objections it was pleaded that there was duplication of the amount in this claim and that it was not justified. Learned Counsel for the defendant No. 1 has not been able to put forward any arguments so as to hold that the Arbitrator has misconducted himself or the proceedings calling for interference in the conclusion arrived at by the Arbitrator. Nocase, therefore, has been made out for interfering with this claim allowed by the Arbitrator.Claim No. 6:

(28) A sum of Rs. 48,068.00 was claimed as damages by the claimants,stated to have been suffered by them for the under utilisation of their capacity in the execution of the work. As against this amount of claim, an amount of Rs. 32,045.00 has been allowed by the Arbitrator. It was pleaded in the objections that no proof was available on behalf of the claimant to show that his resources were lying idle and that contractor was required to adjust his resources as per actual site position and necessity. It was, thus,pleaded that no amount was payable against this claim. Learned Counsel for the defendant No. 1 has not been able to submit anything over and above what has been referred to above. I am afraid the submission of the learned Counsel for the defendant No. 1 cannot be accepted for the samereasons, i.e. no misconduct has even been alleged against the Arbitrator,who has given reasons for coming to the conclusion and no case has been made out to interfere with the conclusion arrived at by him.Claim No. 7:

(29) The 'Arbitrator has awarded interest at the rate of 15 per cent per annum on a sum of Rs. 89.436.00 found due to the claimant from7.1.1989 till the first date of hearing, i.e. 26.6.90, which comes to Rs.19,700.00. No interest was allowed during the pendency of the arbitration proceedings and the Arbitrator directed that if the amount of the Award was not paid within two months the claimant would be entitled to simple interest at the rate of 15 per cent per annum on a sum of Rs. 1,83,892.00 till the date of publication of the Award or till the actual payment of decree,whichever was earlier.

(30) Learned Counsel for the defendant No. 1 has submitted that the rate of interest was higher and it ought not to have been at the rate of15 per cent. I do not find any ground to interfere with the discretion exercised by the Arbitrator in awarding simple interest at the rate of 15 percent. No case, therefore, is made out for interference in the discretion exercised by the Arbitrator.

(31) Keeping in view the aforesaid discussion I am clearly of the view that the defendant No. 1 has not been able to prove on record that the Award was liable to be set aside or modified. The objections contained inIA. 2018/91 are, thus, dismissed and Issue No. 2 is decided against the defendant.

(32) Since the objections have been dismissed, the Award dated25.10.1990 is made Rule of the Court. Decree sheet be prepared accordingly.The A ward shall from part of the decree sheet. The claimant shall also been titled to get interest at the rate of 15/o from the date of decree tillrealisation.Appeal dismissed.