M.S.J. (Engineers) & Company ... vs Union Of India And Ors.
1995 Latest Caselaw 875 Del

JUDGMENT

S.K. Mahajan, J.

(1) The petitioner was awarded the work of providing Rcc Cast-in-Site friction piles and under reamed piles for the electric loco shed at Vijayawada vide letter of Railways dated 21st January, 1977. During the course of execution of the work, certain disputes had arisen between the parties which were referred for adjudication to the Arbitrators. The Arbitrators after hearing the parties, made and published their award on 26th June, 1989. Notice of filing of award was given to the parties. The respondents have filed objections under Sections 30 and 33 of the Arbitration Act, challenging the award of the Arbitrators, in so far as the same related to claim Nos. 1, 3, 8 and 9. It is also stated in the application that the Arbitrators had not considered the counter-claims of the respondents and as such the award is liable to be set aside. On the pleadings of the parties, the following issues were framed :- 1. Whether the award is liable to be set aside for the reasons given in the objection petition? 2. Relief. The contention of learned Counsel for the Objector is that the Arbitrators have misconducted themselves and the proceedings and the award is based upon no application of mind. The contention is that while claim No.1 of the petitioner was for refund/release of the amount of bank guarantee, the Arbitrators have awarded a sum of Rs. 91,004.00 to the claimant. The award against claim No. 3 is also stated to be illegal, as according to the respondent, the agreement specifically provided for extension of time and not for any compensation/damages under Clause 17(2) and (3) of the general conditions of contract. According to the Objector, the Arbitrators could not have awarded any amount under Claim No. 8, in view of the provisions of Clause 19 of the special conditions of agreement. The award of interest is also stated to be illegal.

(2) As far as Claim No. 1 is concerned, it is no doubt true that the claim was only for refund/ release of the bank guarantee and the Arbitrator should have directed the Government to release the Bank guarantee. However, I find that on 28th July, 1993 a statement was made in Court by learned Counsel for the petitioner that if the respondent was ready to return the bank guarantee furnished in favor of the respondent by the petitioner, then the petitioner was ready to reduce his claim by Rs. 91,004.00 . The respondent stated in Court that he was ready to return the aforesaid Bank guarantee within eight weeks from the said date. In view of the submissions made on 28th July, 1993, in my opinion, nothing survives as far as claim No.1 is concerned and I do not want to dwell upon in details as to what is the effect of the award made in respect of Claim No. 1

(3) Objections to the award made against Claim Nos. 3 and 8 are that the Arbitrators could not have awarded the amount. The submission of learned Counsel for the Objector is that under Clauses 17(2) & (3), if in the opinion of the engineers, the progress of the work has at any time been delayed for the reasons stated in the said clause, the time for completion of the work may be extended for such reasonable time as the engineer on behalf of the Railways may decide. It is further stated that in the event of any failure or delay by the Railways to hand over to the contractor possession of the land or give necessary notice to commence the work or to provide necessary drawings or instructions or delay caused by the Railways will not entitle the contractor to any compensation for the delay in the completion of work and the Arbitrators have, therefore, misconducted themselves and the proceedings by awarding the sum of Rs. 65,000.00 towards overhead charges.

(4) In my opinion, there is no force in the arguments of learned Counsel for the Objector, firstly, for the reason that such an objection had not been taken before the Arbitrators and there was, therefore, no occasion for them to deal with the said objection, and secondly, the power to extend the time cannot be a substitute to the right of the contractor to claim damages for the breach of the contract. In a Division Bench Judgment of this Court reported as Metro Electric Company v. Delhi Development Authority, Air 1980 Delhi 266, it has been held in similar circumstances that such a clause would not stand in the contractor's way in claiming damages. The Division Bench, while dealing with the similar matter has held as under:- "The present case is a case of the total failure of the Dda in completing the civil construction, which was pre-condition for any electric installations to be made by the contractor. This is not a case of minor hindrance or impediments which alone are taken care of by Clause 5. Even otherwise several representations made by the contractor regarding the delay in handing over of the site, had not produced any result. Secondly, even assuming that Clause 5 is applicable in the present case that would not stand in the contractor's way in claiming damages, as Clause 5 does not bar any such claim, either expressly or by implication. Hudson's Building and Engineering Contracts (Page 492, 9th Edition) states the principle as follows :- Where the clause of delay is due to breach of contract by the employer, and there is also an applicable power to extend the time, the exercise of that power will not, in the absence of the clearest possible language, deprive the contractor of his right to damages for the breach."

(5) It is beyond comprehension that inspite of there being considerable delay on the part of respondent in the performance of its obligations under the contract, the contractor will not be entitled to any compensation for such delay. Such an argument does not appeal to logic and is in any case inequitable.

(6) Under Claim No. 8, the Arbitrators have awarded a sum of Rs. 5,000.00 towards hire charges for machineries, etc. Learned Counsel for the Objector submits that under Clause 19 of the special conditions of contract, the contractor was not entitled to any amount by way of hire charges. In my opinion, as the Arbitrators have not referred to any of the terms of the contract under which the contractor is stated to be entitled of the aforesaid amount, the Court is not entitled to look into the contract to see whether there is any error of law or fact in arriving at the decision at which the Arbitrators have arrived at. The award is a no speaking award and I do not see any infirmity in the same.

(7) The objector has also challenged the award of simple interest at the rate of 10% p.a. from 1st September, 1988. I do not find any reason as to why the Arbitrators were not entitled to award interest. The power of Arbitrators to interest has not been challenged and, in my opinion, therefore, there is no reason to set aside the award of the Arbitrators under Claim No. 9.

(8) The last contention of the Objector is that the Arbitrators have failed to consider the counter-claims of the respondents and no findings have been given on the counter-claims preferred by the respondents. In this case, the disputes were referred to the Arbitrators by the Court by order dated April 8, 1982. By the said order what had been referred to the Arbitrators was the disputes which had been raised by the contractors alone. No disputes were sought to be raised by the Objector before the Arbitrators nor any application was made in the Court in S.No. 1406-A/1979 for reference of such disputes to the Arbitrators. The operative part of the order dated April 8, 1982 in S.No. 1406-A/79 reads as under - "I accept the petition and direct the respondents to refer the disputes mentioned at S. Nos. 1,2,3,5,6,8,9 and 10 for arbitration. The respondents shall appoint the Arbitrator and refer the disputes within six weeks from today. The prayer for the reference of Claim Nos. 4 and 7 to arbitration is declined."

(9) In view of this clear order it is only those disputes which had been referred by the Court to the Arbitrators that they were required to give a decision and no other disputes including the counter claims of the Union of India was referred. Arbitrators have derived their jurisdiction from the order of reference passed by the Court and as the counter claim of the Objectors were not referred to them, there was no necessity for them to give their decision on the claims which had allegedly being raised by the Union of India before them. The objection taken by the Objectors, therefore, that the Arbitrators have not given any decision on the counter claims of the Objector, is without any basis.

(10) In view of the findings, there are no merits in the objections filed by the Objector and the same are, accordingly, dismissed. The award except in so far it relates to Claim No. I is made a rule of Court and a decree in terms of the award is passed. The petitioner shall be entitled interest at the rate of 10 per cent per annum from the date of decree till the date of payment.

(11) In the circumstances of the case, I leave the parties to bear their own costs.