Uppal Engineering Construction ... vs Central Warehousing Corporation
1995 Latest Caselaw 482 Del

JUDGMENT

Devinder Gupta, J.

(1) Mahabir Prasad, Chief Engineer (Retd.), U.P.P.W.D. made and published his award on 27.1.1987, who was appointed as an Arbitrator under Clause 25 of the agreement dated 8.1.1979 by the Managing Director. Central Warehousing Corporation Limited, New Delhi through its letter dated 30.12.1981 with respect to the disputes relating to contract between the parties dated 8.1.1979 for the work of construction 10500 M.T. capacity godown with ancillaries at Central Warehouse, It awa.

(2) To the award, on being filed in Court, objections were filed by the claimant alone, which are resisted by the respondent. On 13th July, 1988 an issue was framed whether the award is liable to be modified/set aside on the objections of the petitioner.

(3) The objections are many but at the time of hearing arguments, learned Counsel for the claimant confined his submissions only to the objection as regards counter Claim No. 10 of the respondent. It was stated at the bar that claimant's objection as regards Arbitrator's decision on Claim No. 5 are not pressed. In view of the stand taken by the learned Counsel for the claimant the only point to be considered is as regards the objection the award on for counter Claim No. 10 of the respondent.

(4) Counter Claim No. 10 of the respondent was with respect to the compensation for delay amounting to Rs. l,62,169.00 . This amount was claimed by the respondent towards the compensation for delay and the amount of claim was 10% of the estimated cost which is the maximum amount which can be levied as per Clause 2 of the conditions of contract. It is not in dispute that as per clause 2 of the Conditions, Manager Engineer through his letter dated 8.9.1982 had taken a decision in terms of Clause 2 to levy the amount of compensation on the claimant. This objection of the claimant in view of the decision of the Supreme Court in Vishwanath Sud v. Union of India deserves to be upheld.

(5) The Supreme Court considered similar Clause 2 in an arbitration agreement as also similar Clause 25, namely, arbitration clause. It was held that opening para of Clause 25 clearly excludes matters like those mentioned in Clause 2 in respect of which any dispute is left to be decider by a higher official of the department. It was further held that reading Clauses 2 and 25 together, the conclusion is irresistible that the amount of compensation chargeable under Clause 2 is a matter which has to be adjudicated in accordance with that clause and which cannot be referred to arbitration under Clause 25. Both these Clauses 2 and 25 in the instant case are similar to the one which were the subject matter of adjudication in Vishwanath Sud's case (supra)

(6) In view of the decision in Vishwanath Sud's case, the counter Claim No. 10 of the respondent could not have been referred to arbitration and the Arbitrator also could not have made any adjudication thereupon and accordingly award to that extent of the Arbitrator on the respondent's counter Claim No. 10 is liable to be quashed and set aside.

(7) The claimant has already given up his objection as regards challenge to the award on his Claim No. 5.

(8) In view of the above, the objections are partly allowed to the extent that the award of the Arbitrator on counter Claim No. 10 cannot be sustained. This part of the award is severable. Resultantly the claimant would also be entitled, in addition to the awarded amount, a sum of Rs. 40,542.25 which amount was withheld by the respondent on the ground that this was the amount of compensation levied by the Manager Engineer under Clause 2 of the agreement. This of course will be subject to the rights of the respondent to realize this amount by taking recourse to such other procedure envisaged under law, which will be available to the respondent. In view of the above, the award of the Arbitrator is modified and decree for the awarded amount along with Rs. 40,542.25 is passed in favor of the claimant against the respondent. Claimant shall also be entitled to interest on the awarded amount till the date of payment at the rate of 12% p.a. Award shall form part of decree.