Lok Nath Grover & Sons vs Union Of India And Ors.
1994 Latest Caselaw 777 Del

JUDGMENT

Usha Mehra, J.

(1) The petitioner and the respondent No. I entered into an agreement in respect of construction of Government Higher Secondary School at Kalkaji, New Delhi. The said agreement contained an arbitration clause which provided that in case the amount in dispute is more than Rs. 50,000.00 , the Arbitrator would give reasoned award. Disputes arose between the partics. They were referred to the sole arbitration of respondent No. 2. Since the amount in dispute was more than Rs. 50,000.00 , therefore, as per the term of the agreement, the Arbitrator was required to give a reasoned award. The Arbitrator has given reasoned award. The impugned award was made and published on 17th September, 1983. The said award was filed in the Court. Notice of filing of the award was issued to the parties. Objections to the said award have been filed by the petitioner only. The petitioner has partially challenged the award and that is regarding claims Nos. 3, 5, 22 and 23.

(2) The main thrust of Mr. Gupta's arguments against the award to claim No. 3 had been that the Arbitrator ignored the terms of the agreement. He awarded that amount against Part-1 of Claim No. 3 in violation of Clause (e) of the Agreement. The stipulated quantity described in the Agreement contained in Clause (e) at page 2 which is reproduced as under reads that incase of deviation up to 50%, Contractor would be paid the agreed rates. However, for any excess work done or deviation beyond 50%, the contractor/objector gave undertaking and as per that undertaking any deviation beyond 50%, the petitioner was to be paid the rates as quoted by the second lowest. Clause (e) Time allowed for the work from the 15th day after the date of written order to commence 12 (Twelve) months. Should this tender be accepted, in whole or in part, I/we hereby agree (i) to abide by and fulfill all the terms and provisions of the said conditions annexed hereto and all the terms and provisions contained in notice inviting tenders so far as applicable, and/or in default thereof to forfeit and pay to the President of India or his successors in office, the sum of money mentioned in the said conditions. A sum of Rs. 20,000.00 is hereby forwarded in Treasury Challan Deposit at Call Receipt of a Scheduled Bank guaranteed by the Reserve Bank of India as earnest money.lf I/we fail to commence the work specified in the above Memorandum, I/We agree that the said President or his successors in office shall without prejudice to any other right or remedy, be at liberty to forfeit the said earnest money absolutely otherwise the said earnest money shall be retained by him towards security deposit mentioned against Clause (d) of the above mentioned Memorandum; (ii) to execute all the works referred to in the tender documents upon the terms and conditions contained or referred to therein and to carry out such deviations as may be ordered, up to a maximum of fifty per cent, at the rates quoted in the tender documents and those in excess of that limit, at the rates to be determined in accordance with the provisions contained in Clause 12A of the Tender Form.

(3) The Arbitrator completely ignored the term of the agreement and the agreed rates. Instead while awarding the amount against this claim, he misinterpreted the undertaking given by the petitioner. Petitioner at no stage undertook to charge the rates as quoted by the second lowest for all deviations. It was only when the deviation was beyond 50% that he was to charge the rates as quoted by the second lowest. The Arbitrator instead of giving the rates as agreed for deviation up to 50% as stipulated in the agreement in fact awarded the rates as quoted by the second lowest for all deviations and thus misconduct the proceedings. This way the Arbitrator ignored the term of the agreement and alleged undertaking given vide Exhibit 'C-109'. Mr. Gupta in fact restricted his challenge only to Part-1 of Claim No. 3 amounting to Rs. 9,334.37 paise, which he stated was separable from other parts of claim No. 3 and even this claim No. 3 has no bearing on other claims.

(4) As per the terms of the agreement, the Arbitrator was to give a reasoned award. Apparently, the Arbitrator has not given reasons rather misread the document Exhibit 'C-109'. Bare reading of the same shows that petitioner never agreed to claim second lowest rates for all deviations. It was the terms of the agreement that only when the deviation was beyond 50%, he would claim the same rates as quoted by the second lowest. The Award shows that the Arbitrator relied on Exhibit 'C-109' but instead applying the second lowest rates for deviation beyond, 50% as quoted in exhibit 'C-109' he awarded the amount against Part-1 of Claim No. 3 contrary to the terms of the agreement as well as the scope of exhibit 'C-109'. To my mind, it is apparent that the Arbitrator did not apply his mind. He misread the document exhibit 'C-109'. He ignored the terms of the agreement as stipulated in Clause (e) at page 2 of the agreement. Therefore, the award against Part I of Claim No. 3 for Rs. 9,334.37 paise is liable to be remanded back.

(5) While dialing with claim No. 5, the Arbitrator accepted that the petitioner supplied 8,96,000 bricks. The contract provided rate for the purchase of these bricks. The petitioner in his claim mentioned the procurement rates which were not denied by the respondents. The contract rate was Rs. 79.54 paise per thousand. Petitioner procured the bricks at higher rates i.e. at the rate of Rs. 103.00 per thousand. Therefore, the difference at the rate of Rs. 23.46 paise per thousand was claimed by the petitioner.The Arbitrator awarded the difference at the rate of Rs.14.95 paise per thousand. No reason has been assigned as to from where he derived the rates of Rs. 14.95 paise. How he arrived at this rate cannot be inferred from the reading of the award. The Arbitrator while declining to award the claimed amount relied on the fact that the petitioner could not procure bricks beyond 8,96,000. Mr. Gupta rightly contended that the petitioner's claim was not only dependent on the procurement of the bricks. He in fact has also asked for the difference in contract rates and the procurement rates, which the Arbitrator has neither allowed nor discussed while awarding the amount. It appears non-application of mind. He confined his reasoning only to the quantity of bricks procured and not to the difference of rates. Admitted contract rate was Rs.'79.54 paise per thousand. The petitioner procured at the rate ofRs. 103.00 per thousand. The Arbitrator inspite of admitting the procurement rate @ Rs. 23.46 paise per thousand, ignored the same and awarded the difference @ Rs. 14.95 paise. I find force in the submission of the petitioner. The Arbitrator has no where discussed or even remotely indicated how he took the difference of rates at Rs. 14.95 per thousand, particularly when he accepted that the petitioner, procured 8,96,000 bricks at the rate of Rs. 103.00 per thousand. The procurement rate was not disputed nor the contract rate.; Therefore, it can be said that Arbitrator did not apply his mind. He has even remotely not given any reasons for awarding @ 14.95 paise. Hence, the award against this claim which is independent of other claims is liable to be remanded back as it is rendered without any reasons.

(6) Challenge to claim No. 14 is based on the assertion that the drawing and design supplied to the petitioner show the height of 12 ft. Petitioner made the claim for doing the shuttering work beyond 12 ft. The agreement provided that the petitioner would not make any claim for doing shuttering for all heights. According to the petitioner since the respondent provided specific drawings which indicated as to how shuttering was to be done, the petitioner was thus forced to do extra work because of the drawing and designs supplied by the respondent. To my mind, this argument has no force. The agreement provided that no claim would be entertained for doing shuttering of all heights.What was the effect of the specific drawing and design supplied by the respondent cannot be gone into by this Court, because it pertains to the merits of the case. This Court is not sitting as a Court of appeal nor can re-appreciate the facts already appreciated by the Arbitrator. The agreement prescribed doing of shuttering of all heights. Therefore, objections against claim No. 14 has no merits.

(7) As regard objections against claims No. 22 and 23, Mr. Gupta drew my attention to the terms of the agreement. The Arbitrator has also relied on these terms. According to the agreement, the petitioner was to do the work with the lime motor. However during the currency of the contract, petitioner requested the respondent to substitute this item from lime/sand motor to that of cement motor. The work with cement motor was costly, therefore, the Department asked the petitioner to give an undertaking that for this substituted item he would not claim any extra amount. The said undertaking was given by the petitioner. The petitioner submitted his claim basing on the agreed rates as per the terms of the contract as if he had done the work with lime motor. On submission of this bill, the Executive Engineer recommended the same for sanction. But the Superintending Engineer arbitrarily reduced the agreed rates without assigning any reason. For example as per the contract for lime motor, petitioner was entitled to Rs. 92.05 paise, but has in fact been paid at the rate of Rs. 87.00 . Similarly, for other work though as per scheduled rates he was entitled to Rs. 96.83 paise but paid at the rate of Rs. 89.00 . He was also entitled @ Rs. 97.83 paise as per the agreement but paid at the rate of Rs.91.00 .For yet another set of work as per agreement he was entitled to 98.83 paise but paid @ Rs. 91.00 . The petitioner thus challenged this arbitrary reduction of rates and claimed the difference. The Arbitrator declined this claim without giving any reasons. He has not given his mind why the scheduled rates of this work done with lime motor could not be awarded to the petitioner, particularly when contract rates were recommended by the Executive Engineer under whose Supervision the work was executed. For not awarding even the agreed rates the Arbitrator committed error.By not indicating his mind shows he applied the rule of thumb. Reading of the award shows non-application of mind. Moreover, no reason worth the name has been given for declining this claim. From declining these claims one cannot find what weighed in the mind of the Arbirator. He has in fact arbitrarily in one word rejected these claims by saying not maintainable. This in no reasoning in the eye of law. It cannot be called a reasoned award. The award against these two claims has no bearing on other claims. These are independent of other claims. For the reasons stated above the award against claims No. 22 and 23 is accordingly remanded back to the Arbitrator to give reasons for rejection of these two claims. The award against claims Nos. 3,5,22 and 23 being separable, from the rest of the award, since the Arbitrator has mis-conducted by not giving the reasons and for non-application of mind, the award against these claims is set aside. There claims are remanded back to the Arbitrator for adjudication and for giving reasons. Mr. Gupta contended that award be modified against each of these claims. I am afraid this Court has no power to modify .the award as this Court is not sitting as a Court of appeal. For the reasons stated above the claims No. 3, 5, 22 and 23 are accordingly remanded back to the Arbitrator to give reasons.