Jagan Nath Ashok Kumar vs Delhi Development Authority
1994 Latest Caselaw 497 Del

JUDGMENT

Usha Mehra, J.

(1) M/S. Jagan Nath Ashok Kumar entered into a contract with Delhi Development Authority (in short D. D.A.') for the construction of shoping-cum-resiential block at Turkman Gate. The said agreement also contained arbitraion clause which provided that in case of any dispute arisen between theparties, the same shall be referred to the sole Arbitrator to be appointed by the Engineer Member of the D.D.A.

(2) Dispute arose between the parties in respect of the work executed by the petitioner, which was refuted by the D.D.A., hence the claims were preferred to theEngineer Member of the D.D.A., who in turn appointed Shri Banarsi Dass,respondent No. 2 herein as the sole Arbitrator to adjudicate the claims and counterclaims of the parties.

(3) The Arbitrator after going through the record and after hearing the partie smade and published his award dated 21/10/1991. The said award was ordered to be filed in the Court. Notice of the filing of the award was issued to theparties. Petitioner did not file any objection. However, on behalf of the respondent/D.D.A. objections have been filed which are listed as IA.No. 9278/92.

(4) There were Approx. 11 claims besides additional claim and counter claims referred to the Arbitrator. However, the D.D.A. has assailed the award primarily against claim No. 1, claim No. 11 read with additional claim No. 5 besides assailing additional claim No. 4 and counter claim No. 1.

(5) Vide claim No. 1, petitioner claimed a sum of Rs. 1,60,000.00 towards the final bill. D.D.A. before the Arbitrator submitted that the gross amount payable was Rs. 51.617.00 subject to recoveries mainly on the ground of stipulated material,income tax, final recovery of stipulated material, risk and cost. The petitioner had also claimed a sum of Rs. 28,247.84 paise for the work done but not paid. As aginst which D.D.A. admitted an amount of Rs. 6,367.16 paise, petitioner also pointed out mathematical mistake to the tune of Rs. 1,596.00 in item Nos. 3 for 2 sq.meter. This error was accepted by the Arbitrator as well as D.D.A. As against the claim of Rs.1,60,000.00, the arbitrator awarded a sum of Rs. 46,920.00. This was subject to issue of certificate of income tax for an amount of Rs. 1,033.00. The challenge of the D.D.A.is primarily on the ground that the Arbitrator arbitrarily dis-allowed the final recovery on stipulated material in the sum of Rs. 5,692.98 paise. According to theD.D.A., this recovery was pursuance to Clause 42 of the Agreement. Clause 42 of the Agreement stipulates that the contractor was to see that only the required quantities of materials are got issued. It was further the term of the Agreement that the difference in quantity of cement actually issued to the contractor and the theoratical quantity including the authorised violation, if not returned by thecontractor, shall be recovered at twice the issue rate without prejudice to the provision of the relevant conditions regarding return of materials governing thecontract. So, relying on this clause, Mr. Sharma contended that the Department rightly recovered the penal rate for the excessive use of material. On the otherhand, Mr. Mittal contended that the difference between the actual consumption and theoretical as pointed out under Clause 42 had been gone into by theArbitrator. He found that the actual loss has not been proved, meaning thereby thatthe Arbitrator on the basic of the record provided before him was not satisfied with the calculations arrived at by the Department and, therefore, disallowed the double recovery. The Arbitrator has given reasons for not accepting the double recovery as the D.D.A. failed to prove the loss. The contention of the Counsel for the petitioner merits consideration because once the Arbitrator gives reasons and those reasons do not appear to be absurd in that case, his decision on the point of law as well as on facts cannot be gone into nor can be re-evaluated by this Court..because this Court is not sitting as a Court of appeal. The reference by the Counsel for the D.D.A. to the decision of the Supreme Court in Continental Construction Co. Ltd. v. State of Madhya Pradesh is of no help.There is no quarrel with the proposition of law laid down that the Arbitrator is nota conciliator and cannot ignore the law or mis-apply it in order to do what he thinks is just and reasonable. He is a tribunal selected by the parties to decide their disputes according to law and is bound to follow and apply the law. These observations in no case help the respondent, particularly when the arbitrator after going through the record concluded that D.D.A. failed to prove that it actually suffered any loss on account of differences between actual consumption of material and the theoretical. Hence, relying on Section 74 of the Indian Contract Act he concluded that the respondent since could not prove loss hence not entitled to recover any amount on this account. For a double recovery, the D.D.A. was to lead evidence and satisfy the Arbitrator. But D.D.A. failed to do so. In the case of Continental Construction Co. Ltd. (Supra), the claim of the contractor was based on some vague plea of equity and not as per the stipulated rates. In that case there was specific clafuse in the contract which barred extra claim in the event of priceescalation. It was despite this prohibition contained in the agreement that the Arbitrator awarded the escalation price. It was in this back-ground that the award was set aside. But that is not the case in hand. Mr. Sharma also relied on another decision of the Supreme Court in Vishwanath Sood v. Union of India and Anr.. I am afraid this decision is also of no help to the D.D.A.because in that case the Court was dealing with an "Exception" clause which provided that "except where otherwise provided in the contract" meaning there by that the compensation determined either by the Engineer-in-Charge or on further reference by the Superintending Engineer could not be called in question before the Arbitrator. This is not the issue here. It is not the case of the D.D.A. that doublerecovery as envisaged under Clause 42 falls under the "Excepted matter" and,therefore, could not be referred to Arbitrator. In fact Clause 42 does not envisage that the decision with regard to double recovery would be final. In this view of thematter, the authority relied by Counsel for the D.D.A. is of no help to the D.D.A.For the above reasons, I find that the objections of the D.D.A. regarding Claim No.1 is not sustainable and award on this account cannot be set aside.

(6) The next object in which has been raised by the D.D.A. pertains to the award of interest in favor of the petitioner. According to objector/ D.D.A. no reasons have been assigned for awarding interest w.e.f. 31/05/1984. In this regard, Mr.Sharma Counsel for the D.D.A. contended that since reasons have been assignedhence, award is bad in law. In order to strengthen his argument, he placed reliance on the decision of the Supreme Court and of Delhi High Court 1988 Rlr 421 besides Gujarat Water Supply & Sewarage Board v. Unique Erectors and Ors. . All these judgments in a way were considered by the Supreme Court in the case of Secretary, Irrigation Department, Government of Orissa v. G.C.Roy, . The objection of theD.D.A. that the arbitrator in the absence of the agreement, usage or trade could not have awarded interest, pre-suit as well as pendente lite. Even the rate of interest i.e.12% was not awarded under the Interest Act nor the Arbitrator could award the future interest as it was not within his competence and jurisdiction. These submissions are without merits. The question of interest came up before the Supreme Court at various stages and finally by the judgment in the case ofSecretary, Irrigation Department, Government of Orissa v. G.C.Roy, it has been held that the Arbitrator enjoys the same power as a Civil Court in awarding interest under Section 34 of the Code of Civil Procedure. In the words of Supreme Court,where the agreement between the parties does not prohibit grant of interest and where a party claims interest and that dispute is referred to an Arbitrator, he shall have the same power to award interest as Civil Court. A person deprived of the use of money to which he is legitimately entitled as a right to be compensated for thedeprivation, call it by any name. It may be called interest, compensation ordamages. This basic consideration is as valid for the period the dispute is pending before the Arbitrator as it is for the period prior to the Arbitrator entering upon thereference. This is the principle of Section 34 of the Code of Civil Procedure and there is no reason or principle to hold otherwise in the case of Arbitrator. An Arbitrator is an alternative form for resolution of disputes arising between theparties. If so, he must have the power to decide all the disputes or differences arising between the parties. If the Arbitrator has no power to award interest pendente lite, the party claiming it would have to approach the Court for thatpurpose, even though he may have obtained satisfaction in respect of other claims from the Arbitrator. This would lead to multiplicity of proceedings. For doing complete justice between the parties, such power has always been inferred. The interest is an implied term of the agreement between the parties and, therefore,when the parties refer all their disputes or refer the dispute as to interest as such to the Arbitrator, he shall have the power to award interest. It is a matter within his discretion to be exercised in the light of all the facts and circumstances of thecase. Mr. Sharma further placed reliance on the decision of the Supreme Court in the case of Gujarat Water Supply & Sewerage Board v. Unique Erectors (Gujarat)(P) Ltd., and contented that the Arbitrator had no power to grant pendente lite and pre-suit interest. Therefore, the award of interest w.e.f. 31stMay,l 984 was beyond the preview and power of the Arbitrator. I am afraid in view of the latest Supreme Court judgment referred to above in the case of Secretary,Irrigation Department, Govt. of Orissa v. G.C.Roy (Supra) where it has been made clear that the Arbitrator had the power to grant interest pendente lite as well as prior to the Arbitrator entering upon reference. Therefore, this objection is also without force.

(7) Mr. Mittal explained that the written notice claiming interest is dated 3 1/05/1984 and, therefore, while awarding the pre-suit interest, the Arbitrator took that date i.e. 31/05/1984 when the notice claiming interest was served. The reasonableness is such of an award unless the award is per sc preposterous or absurd is not a matter for the Court to consider. Law permitted the Arbitrator toward interest presutr pendente lite as well as future. The Arbitrator after taking into consideration all the relevant facts and circumstances including the documentary and oral evidence produced before him awarded interest. Re-appraisement of such evidence which was appraised by the Arbitrator is ordinarily not to be interfered by this Court. In the words of Supreme Court "reason varies in its conclusions according to the idiosyncrasy of the individual and the times and the circumstances in which he thinks". Therefore, simply because the Arbitrator took into consideration the date of notice while granting the pre-suit interest will not make his award bad. I find force in these submissions of Counsel for the petitioner.The objection with regard to the grant of interest against Award No. Ii and Additional Claim No. 5 is without force and, therefore, rejected.

(8) The other objection which has been raised by the D.D.A. pertains to Additional Claim No. 4 i.e. awarding of Rs. 6,000.00 on account of over weight in steel issued by weight to the petitioner. Mr. Sharma contended that the Arbitrator while awarding Rs. 6,000.00 has applied the rule of thumb. No basis has been given.In the absence of any proper record having been maintained by the ExecutiveEngineer, how could the Arbitrator award 50% of the claimed amount. On the other hand, Mr. Mittal contended that the Arbitrator took into consideration the submissions made before him and the documents relied and thereafter came to the conclusion that the contention of the claimant was justified. The petitioner had been issuing the steel on weight basis whereas the payment was made by theD.D.A. on length basis. Thereby converting the weight by multiplying with the oretical co-efficient and thus on account of this conversion short payment was made for which the evidence was laid before the Arbitrator. The conditions of the contract also provide that the measurements for re-enforcement shall be done on the actual weight basis but the D.D.A. did not do so and, therefore, committed thebreach. Since, the Department did not maintain the record, therefore, the Arbitra tor relying on the record produced by the claimant found that the claim was partly justified and awarded Rs. 6,000.00. The bare reading of the award against Additional Claim No. 4 shows that the Arbitrator took into consideration the record produced before him and then awarded the amount. It is not the case of the objector/ D.D.A. that the D.D.A. produced the documents to prove that there was no short payment and the Arbitrator ignored the same. So, in the absence of anyrecord produced by the D.D.A., Arbitrator relying on the record produced by theclaimant awarded the amount, I see no error apparent on the face of the award norany reason to interfere with the same. The objection is found to be without meritsand hence rejected.

(9) Mr. Sharma then challenged the award against Counter Claim Nos. I and3 whereby the D.D.A. had claimed an amount of Rs. 1,04,000.00 on account ofdifference of escalation on the item yet to be executed by the claimant as well as asum of Rs. 1,04,500.00 on account of delay involved in the work in the shape ofpenalty at the rate of 10%. Against both these counter claims, the Arbitrator foundthat the claims were not justified. He has given reasons for arriving at thisconclusion. Take for example, award against counter claim No. 1 for not allowingthis claim, the Arbitrator took into consideration the fact that D.D.A. failed to givedesigns and drawings at the proper time to enable the claimants to complete thework within the stipulated period. Similarly, D.D.A. failed to make regularmonthly payments to the claimant and that the D.D.A. failed to supply the stipulated material at proper time and even after expiry of the period, no time was fixed for completion of balance work and thus essence of the time was not kept by the D.D.A. Taking these factors which attributed to the breach of the contract on the part of the D.D.A., the Arbitrator dis-allowed the amount on account of thework got done by the D.D.A. at the risk and cost of the contractor. The Arbitrator has given due consideration to the matter and the material placed before him before rejecting this claim. It is not open to this Court to re-assess that evidence. I find no error apparent on the face of the award, particularly, when the Arbitrator had on the basis of evidence placed before him has arrived at a proper conclusion.

(10) Now coming to the Counter Claim No. 3, the levy charged by the D.D.A.was considered to be not justified as the same was imposed after six years of there scinding of the contract. In fact the matter was pending before the Arbitrator when penalty clause was invoked. This is against the law. Relying on various judgments cited before him, he rejected this claim. Besides the various judgments,he also considered the material placed before him and came to the conclusion thatthe breach was on the part of the D.D.A. He found that the D.D.A. failed to give the working and structural drawings and the electrical contractor "did not lay condued pipes etc. He also found on the basis of the record produced before him that the execution of work was delayed because of fault of the D.D.A. and hence concluded that the claimant was not responsible for the delay and the breach wason the part of the D.D.A. coupled with the fact that the D.D.A. forfeited its right to take action under the terms of the agreement after six years. Therefore, on law as well as on merits he did not find the counter claim of the Department justified. It is not right to say that the Arbitrator did not apply his mind or that the reasoning given by him after considering evidence produced before him is erroneous or thatthe reasoning is preposterous or absurd.

(11) For the reasons stated above, I find no merits in the objections. The objection petition is accordingly dismissed. The award made and published by the sole Arbitrator, respondent No. 2 dated 21/10/1991 is hereby made rule ofthe Court. If the awarded amount is paid within one month from the date of thejudgment, no further interest would be payable, but in case the decretal amount is not paid within one month from the date of the judgment then respondent/D.D.A.will be liable to pay interest at the rate of 12% per annum from the date of decree till realisation.