B.L. Gupta Construction (P) Ltd. vs Bharat Co-Operative Group ...
1996 Latest Caselaw 163 Del

JUDGMENT

K. Ramamoorthy, J.

(1) The objector Bharat Co-operative Group Housing Society Ltd. awarded the contract to the claimant (hereinafter referred to as the contractor) for the construction of 308 flats at Rohini. The disputes were referred to Shri L.C. Chawla, Chief Engineer (Retd.) and he passed the award dated 18.12.92. The arbitrator had 45 hearings and three joint spot inspections. By letter dated 5.11.92 both the parties had confirmed in writing that they did not require any more hearing in the matter.

(2) The arbitrator had also recorded evidence and also received documents from the parties. This Court directed the arbitrator to give a reasoned award and pursuant to that he has given the reasoned award. A few dates are relevant and they are as follows :-

28.6.87The tender was submitted by the contractor.

30.7.87Date of commencement of work. Thirty months period for completing the work.

2.1.90Date of complaint.

26.2.90The Society directed the contractor to stop work.

(3) On claim No. 1, the contractor claimed a sum of Rs. 46,92,461.00 towards work done but not paid. The arbitrator having given the nature of the dispute and the amount awarded by him in annexures A and B, the arbitrator observed in paragraph 11 of the award as follows :-

"THIS claim pertains to the work done but not fully paid. The Local Commissioner appointed by the High Court had submitted his report about the measurements of different items of work. The measurements with regard to Earth Filing, Wood Work and Reinforcement could not he done by the Local Commissioner and this job was also entrusted to the Arbitrator by Delhi High Court. The above three items alongwith many other items of the claim have been discussed and cheeked. After going through documentary and oral evidence given by both the parties and considering all the aspects after three site Inspections, the claim is partly sustained." The arbitrator directed the objector to pay Rs. 24,64,424.00. The objectors referred to the suit filed by the contractor and appointment of local commissioner and the final report dated 22.1.91 filed by the local commissioner and the payment of Rs. 66,000.00 to the local commissioner by the objector and submitted that the award is liable to be set aside as it relates to -

(A)Acceptance of the contractors claim No. 13, and partial acceptance of its claims No. 1,2 & 5.

(B)Total rejection of the respondent society's counter claim Nos. 1,2,4, 6, 7,10 & 12.

(C)The partial rejection of the respondent society's counter claims 5 & 8. The submission made by the society is that award is per se perverse and displays a keen and calculated exercise of the arbitrator to favour the contractor, the award is beyond the jurisdiction of the arbitrator. The objector also states that none of the claims 1 to 12 relates to the final bill except claim No. 1.

(4) Regarding the claim on interest, the objector states that The Arbitrator had thus to consider and decide :

(A)Whether the claimant was entitled to interest, in the facts and circumstances of the case, and if so, on what basis.

(B)Whether the claimant was entitled to interest from the day of invocation of the arbitration clause and if so which is that date?

(C)The rate at which interest was so payable. The claimant had not led any evidence documentary or otherwise, on any of the aforestated issue, nor did the Arbitrator consider and decide upon any of these issues. The arbitrator on the other hand proceeded an altogether different basis, for the award, in respect of the petitioner contractor's claim No. 13, namely, as if it was a claim for compensation for withholding payment of the final bill, submitted on 18.4.90 by the petitioner, and holding that the claimant was entitled to compensation on the ground that the respondent had not paid the amount of final bill submitted on 18.4.90 and the respondent had been keeping the amount with them and assessing the alleged reasonable compensation, on the alleged blocked amount @ 18% per annum. The Arbitrator thus made out a new case for the claimant not pleaded or even argued and, therefore, the award in respect of claim No. 13 is clearly in excess and beyond the

SCOPE of his jurisdiction.

The objector states that originally the claim was Rs. 72,42,525.00 and now the contractor has restricted his claim and that itself shows the contractor was not sure of his ground.

(5) Mr. O.P. Khadaria, learned counsel for the contractor, submitted that the claimant made the claim on the basis of the report given by the local commissioner and, therefore, the argument on behalf of the society that there was originally a claim of Rs. 72,42,525.00 and that is reduced, therefore, the claim made by the contractor was not sustainable. I entirely agree with Mr. O.P. Khadaria that the contractor has made the present claim only on the basis of the local commissioner's report.

(6) On the ground that award of interest was not in accordance with law, in paragraph 30 of the objection petition the objector again reiterated that no interest could be awarded and the arbitrator ought to have followed the provisions of Section 3 of the Interest Act, 1978 and there was no debt due from the society to the contractor and the assumption made by the arbitrator was erroneous in law. In paragraphs 10 to 14 the objectors in this behalf stated as follows :- "10. For that, at all events, in any proceedings, for the recovery of any debt or damages pre-suit interest can only be awarded u/s 3 of the Interest Act of 1978 for the whole or part of the following periods; that is to say,

"(A)If the proceedings relate to a debt payable by virtue of a written instrument at a certain time, then from the date when the debt is payable to the date of institution of the proceedings.

(B)If the proceedings do not relate to any such debt, then from the date mentioned in this regard in written notice given by the person entitled or the person making the claim to the person liable that interest will be claimed to the date of institution of the proceedings".

AN alleged Final bill, not admitted or adjudicated upon, cannot constitute a debt due .

Therefore, 1 (a) of Section 3 of the Interest Act was not attracted.

AS regards clause (b) of Section 3(1) thereof no written notice envisaged by the said clause (b) of Section 3(1) was ever served upon the respondent and there was not even an allegation to that effect much less so proof thereof.

Therefore, of pre-suit interest is not only arbitrary but amounts to misconduct and prejudicial action on the part of Arbitrator.

11)For that the award of interest after expiry of 50 days from 18.4.90 and so, without assigning any reason for the same, is arbitrary and against the mandate of section 3 of the Interest Act, 1978.

12)For that the award of pre-suit interest @ 18% per annum is, at all events, erroneous apart from being perverse and the said error is apparent on the face of the award.

ASSUMING that interest was payable for the pre-suit period, as per section 3 of the Interest Act 1978, such interest would be payable only at a rate not exceeding the current rate of interest, as defined in section 2(b) of the Interest Act of 1978.

THERE was no evidence on record as to what was the rate of interest paid by different classes of scheduled banks on different classes of deposits (other than those maintained in savings account or those maintained by Charitable or religious institutions) in accordance with directions given or issued to Banking companies generally by the Reserve Bank of India under the Banking Regulations Act, 1939.

IT is a matter of common knowledge that the banks have never paid interest on deposits cnvisaged,before 8.6.90, at a rate exceeding 9% per annum. The Arbitrator has given no reasons for the award made @ 18% per annum, though he was directed by the Court to make a speaking award.

13)For that no justification has even been staled for awarding pendentelite and/or future interest at the rate of 18% per annum as against 6% provided by section 34 CPC.

THE petitioner contractor was engaged to construct the dwelling units for the society and the said activity of the respondent society could not be said to he connected with the industry, trade or business, of the society, nor was it even alleged to be so,

14)For that the award of the arbitrator on claim No, 13 of the claimant, is per se perverse, arbitrary and against justice and good conscious and the result of misconduct of the arbitrator and displays a keen and calculated exercise to favour the petitioner contractor, at the cost of the respondent society, and the said perverseness is apparent on the face of the award."

(7) I have considered the matter carefully and I do not find any merit in the objections by the Society.

(8) In counter claim No. 1 the Society has claimed Rs. l,43,98,560.00 as damages for having been deprived of the use and occupation of flats. The arbitrator has rejected the claim giving the following reasons :- "THE claim is remote and indirect unless the flats are constructed and taken over by the respondents by making payment or by promising to make payment for the entire value of work done. The respondents have determined the contract on 26.2.1990 without making any claim for the damages due to breach of contract. The respondents have been making payments after the expiry of the contract period 2.1.1990, without any levy of compensation, There is no clause in the contract for charging of rent in case of delay, The actual damages caused and paid by the members of the respondent society in the form of rents, have not been proved with the documentary evidence before the proceedings. The claimants went to the Court for stay orders due to non finalisation of his final bill by the respondents. The claim for damages under entire counter claim No. I is therefore considered to fall under remote and indirect consequence of the disputes crated by both the parties. This claim is therefore not sustained. I award Rs, Nil to the respondents."

(9) In counter claim No. 2, a sum of Rs. 3,63,84,944.00 is claimed by the Society towards loss and damage due to unproductive investment. The arbitrator has rejected this claim also staling "The claim of interest for investment by the respondent is remote and indirect. Rather the respondents by investing a sum of Rs. 3,63,84,944.00 have benefitted by considerable amount due to subsequent rise in the cost of land, building, material and labour wages. I consider no substance in this claim. The claim is therefore rejected. I award Rs. Nil to the respondents.'

(10) The Society has filed objections in the following terms :-

"23)For that the award of the arbitrator on counter claims No. 1 & 2, of the respondent, is perverse and unsustainable in law and otherwise erroneous and the said error is apparent on the face of the award. The award is the result of gross misconduct and prejudicial action on the part of the arbitrator

24)For that the finding of the learned arbitrator that counter claims No. 1 & 2 arc remote and indirect has no basis nor has any basis been disclosed for the same.

25)For that the finding of the arbitrator that the contract was determined by the respondents on 26.2.90, has no basis, and is mere ipsi dixit of the arbitrator.

ASis established by the evidence on record the petitioner contractor had to complete the contract work by 2.1.90, by which date it had not executed even 50% of the work. The petitioner had not even applied for extension of the contract period though asked by the respondent society to apply for reasonable extension of time with a committed schedule of works within three days, from the receipt of the society's letter dated 19.12.89. The said letter was delivered to the petitioner on the same day. By his reply dated 22.12.89 the petitioner contractor had in unmistakable terms refused to carry on with the remaining works on the same terms and conditions and thereby repudiated the contract which otherwise came to an end by efflux of time on 2.1.90.

THE petitioner nevertheless continued with the work, after 2.1.90, as it transpired later, in collusion with the then Secretary of the respondent society. Neither the Managing Committee of the respondent society nor its General Body had ever asked or authorised the petitioner company to continue with the work after 2.1.90, in view of petitioner's letter dated 22,12.89 and resolution of the General Body of the respondent society dated 5.11.89 (Para 6 of the affidavit by way of examination-in-chief of Shri Rajinder Goyal - hereinafter referred to Shri Goyal's evidence and note of arguments E-31 on record).

IN the said and other circumstances, summarised hereinafter, by letter dated 26.2.90, the society asked the petitioner contractor to slop the work as it had already repudiated the contract, as is apparent exfaces from the said letter dated 26.2.90.

26)For that the finding of the arbitrator that the claimant continued with the work after 2.1.90, on the same terms and conditions, has no basis and is perverse.

THE said stand of the petitioner contractor has been established to have been a dubious scheme of the petitioner company, in collusion with the then Secretary of the respondent society and as is apparent, inter alia, from the letters dated 16.2.90 and 17.2.90 (Announces C-14 & C-15) of the petitioner contractor and the written note of arguments, EC-36, of the petitioner contractor's counsel.

THE scheme was :-

(I)That the petitioner company would profess to carry on with the contract work, on the same terms and conditions, and also profess to complete the same within four months i.e. by 20 4.90; and

(II)In collusion with the Secretary

(A)Make the society pay for all the materials required for the work.

(B)Not carry out the entire unfinished part of the work, at the contract rates, but only part of it; and

(C)Leave the other items of work to be got executed by the respondent society at its own cost.

THIS would have been a drastic variation from the contract agreement particularly in regard to the terms of payment and makes it obvious that the petitioner had never agreed to continue with the work on the same terms and conditions as per the contract agreement, as falsely alleged.

THE unholy alliance between the Managing Director of the petitioner company and the then Secretary of the respondent is apparent from the petitioner's letters C-14 and C-15 and the obviously considered written note of arguments, of the petitioner counsel, EC-36.

ASit apparent from the respondent society's letter dated 26.2.90 itself the respondent did not terminate the contract, which had already been repudiated by the petitioner contractor. By the said letter the then Secretary of the respondent society (who was obviously acting earlier in collusion with the petitioner company) merely asked the petitioner to stop work as it had already repudiated the contract.

27)For that the finding of the arbitrator on counter claims No. 1 & 2 of the respondent society is the result of the arbitrator having chosen to disregard or omit from consideration the evidence on record summarised in the written notes of arguments on behalf of the respondent, and so designedly, in order to benefit the petitioner contractor and thereby committed grave misconduct.

28)For that the arbitrator's finding on the said counter claims No. 1 & 2 are perverse as it holds that by the delay caused by the petitioner the respondent has not lost but gained "due to subsequent rise in the cost of land, building, material and labour wages". Due to the delay caused in completion, the respondent has in fact lost, inter alia, by way of rising cost of building materials and labour wage alone lakhs of rupees."

(11) A reading of the objection when objector society claimed damages without any proof and in total disregard of the principles involved for the grant of damages. No tangible proof has been adduced by the society to substantiate the claim for damages made by it. The assertion made by the society is there has been a collusion between the contractor and the secretary and for which also there is no basis. Reference is made to the examination-in-chief of Shri Rajinder Goel and the notes of arguments E- 31 for this purpose. I have gone through the documents referred to in the objection petition and I am not able to find any material to support the case of the society on these two claims. I concur with the view taken by the arbitrator and there is no error apparent on the face of the record and the arbitrator is not guilty of any misconduct in rejecting the counter claims 1 and 2 made by the society. Therefore, this part of the award by the arbitrator is confirmed.

(12) In counter claim No. 3, the society had claimed Rs. 12,75,210.00 on the ground that interests have been paid on loan amount and that should be borne by the contractor. The arbitrator has rejected the claim by saying "The members of respondents society are supposed to contribute from their own resources for this project whether the money comes from their pocket or loan from any Financial Institutions or by disposal of other property. This is immaterial for the purpose of this contract. The claimants cannot be held responsible for loss of interest on loans. The respondents were at liberty to keep their money in Fixed Deposits at higher rate of interest in lieu of Saving Fund account at 5% interest. The claim is totally remote and indirect and is considered to be unjustified. The claim is rejected. I award Rs. Nil to the respondents."

(13) I do not find any justifiable objections filed by the Society against rejection of this claim by the arbitrator in the objection petition. Therefore, the award on this part is confirmed.

(14) In counter claim No. 4 a sum of Rs.50,00,000.00 had been towards extra expenditure in completion of unfinished job. The arbitrator has considered the matter and has rejected the claim by giving the following reasons:-

"THE respondents had stopped the work on 26.2.1990 unilaterally without serving any prior notice to the claimants for charging extra expenditure to be incurred by other agency. As regards liquidated damages for delay in completion of work by the claimants, there is no demand notice served on the claimants by the respondents as per contract agreement. The respondents have been making payments for Interim Certificate and secured Advances after 2.1.1990, the due date of completion. The respondents have also been issuing the stores to the claimants during this period. Since no liquidated damages have been recovered from Interim bills and bills of secured advances after 2.1.1990, the respondents are deemed to have waived their right to levy of compensation for delay in completion of the work by determining the contract.

THE appointment of Local Commissioner was initially at the behest of the claimants but subsequently it was insisted by the respondents. The time taken by the local commissioner for finalizalion of measurements & subsequent vacation of the stay order cannot be attributed to the claimants only. The litigation could have been saved if both the parties had agreed for joint measurements at the initial stage and final bill paid to the claimants. Taking all the aspects into consideration the claim is not sustained and as such rejected. I award Rs. Nil to the respondents."

(15) In the objection petition the Society has stated as follows :-

"FOR that the arbitrator's finding on counter claim No. 4 is not only erroneous but perverse.

THE Arbitrator has obviously purposefully ignored the pleadings and argued basis of the counter claim and taken this claim as claim for liquidated damages with the obvious purpose of saving the contractor from the obvious liability caused by its deliberate acts and omissions. The claim was based on the difference in the lender rates occasioned solely by the efflux/loss of time for which the petitioner contractor was solely liable. The basis of the said claim is stated in paragraph 7 to 24 of the counter claim and particularly paragraphs 18 to 21 thereof and counter claim No. 4 therein.

THErespondent produced documentary evidence including Shri Goyal's evidence establishing the said claim. No evidence was led in rebuttal.

THE Arbitrator has obviously side tracked the real issue involved in respect of claim No. 4 and apparently proceeded on an altogether different basis and thereby committed grave misconduct and established that he was determined to act to the prejudice of the objector society with the intention of unduly favouring the petitioner contractor and that the award has been improperly procured."

(16) I do not find any substance in the objection raised by the society. There is no error in law committed by the arbitrator which could be tanned as apparent on the face of record and there is no misconduct committed by the arbitrator. Therefore, this part of the award is confirmed.

(17) Under counter claim No. 5, a sum of Rs.88,30,424.00 is claimed towards rectification of defects in the work done by the contractor. The arbitrator has given very cogent reasons for granting the amount mentioned therein as against the claim made by the Society. The same are as follows :- "IN a job where the payment of all the Interim bills passed by the respondent is Rs. 2,05,02,756.00 in addition to income tax deducted for Rs. 6,80,567.00 the cost of rectification to the tune of Rs-88,30,424.00 is fantastically absurd figure. The respondents have been making payment from July 1987 to Feb. 1990 without any cost of recovery for defective work. No record or evidence was produced before me by the respondents where any work was declared defective during the currency of contract. There is a specfic provision in the contract as per clause 21(b) where 1% penalty can be levied per day for non rectification of defective work. No action was taken by the respondents. A specific reference for measurement of Earth work, Reinforcement and Timber work was made to the Arbitrator by the court as the same could not be measured by the Local Commissioner. Necessary adjustment/recovery for these items has been made by me in claim No. 1 of the claimant. Also necessary adjustment recovery of items like marble chips flooring (Bill of quantities item 6.3), marble chips skirting (Bill of quantities item 6.6), painting with primer coat (Bill of quantities item 6.15 (sa)) and marble shelf in kitchen has been done in claim No. 1. For adjustment/recovery against each item of this counter claim, refer Annexure 'D' for assessment. After having examined all aspects including the evidence adduced before me during the haring both by way of oral submission and documents and three spot Inspections I award a sum of Rs. 35,500.00 (Rupees Thirty five thousand and five hundred only) to the respondents to be paid by the claimants."

IN annexure 'D' the arbitrator has dealt with each item with reference to claim No. 5 in the following terms :-

"FINDINGS and Assessment by the Arbitrator

1.Removing and Refilling Earth - Rs.5,00,000.00

ASa result of spot Inspector and hearings, necessary recovery/adjustment has been made in claim No. 1 of the claimants with regard to the quantity & quality of Earth fill. There is no intention of removing the existing earth fill as additional earth was used by new agency over the earth fill completed by the claimants. No evidence was produced by the respondents where the quality of earth fill was rejected during the contract period. The payment was being made by the respondents at the contract rate without any deduction during 32 months. The claim is not justified as far as removal & refilling is concerned. The claim is rejected.

2.Dismentalling Redoing Exposed Brick Masonary - Rs. 2,18,000.00 There is negligible difference in the level of Brick work near the Arches. It is not considered prudent at this late stage to dismantle and redo. It is also not intended as the work of finishes was well in progress by the new contractor. Such defects have not been pointed out at the time when shuttering was removed. The claimants has used the form work and other material required for this job. It is a case of laxity of both the parties at the proper stage of shuttering to achieve the perfect level. Notwithstanding and after visit to 'the site, I assess a recovery of Rs. 10,000.00 for laxity in supervision of form work by carpenters which would have cost extra.

3.Dismentalling & Redoing Half Brick Masonary Rs. 1,54,400.00 The area requiring rectification is to the extent of 6.3 sq. m. as inspected during site Inspection No. 2, wherein the lines of brick work were not truly straight. This defect is not pointed out during the contract period and the finishing work is well in progress. I assess the labour cost of this work for an amount of Rs. 1500.00 which should not be payable. A recovery of Rs. 1500.00 will be effected.

4.Dismentalling and Redoing Rcc Shelves - Rs. 30,510.00 The R.C.C. shelves have been laid at varying heights. The claimants explained that small variation in height was due to non receipt of drawings in lime. This is a case of laxity in supervision of the job. In any case the glazed tiles, marble platform over the shelf, plumbing work and kitchen sink have been completed in most of the quarters by new contractor, It implies that respondents do not intend to dismantle the R.C.C. shelves. No such defect was pointed ont during 32 months period. The claim is not justified and rejected.

5.Dismentalling and Redoing Rcc Fins - Rs. 3,000 00 The respondents slates that they have rectified the Rcc Fins. Since no evidence of any notice to claimants was produced, the claim is not verifiable. The claim is rejected.

6.Dismentalling and Redoing Rcc Work in Beam - Rs. 6,000.00 The respondents states that the rectification work was done by them. In absence of any notice to the claimants, the genuineness of the rectification is not verifiable. No such defect was ever pointed out during the contract period. The claim is not sustained and rejected.

7.Dismentalling and Redoing Cement Plaster - Rs. 10,65,315.00 During the site inspection, some cracks were shown at odd places in addition to craziness in plaster work. In Plaster work of about Rs. 9.00 lacks done by the claimants, the extent of rectification as mentioned above is fantastic and highly exaggerated. Slight touching up is required at places as witnessed at site. I assess Rs. 15,000.00 is reasonable for touching up work. The claim is partly sustained and I award Rs. 15,000.00/

8.Dismentalling & Redoing 40 mm Marble Chips Flooring Rs. 73,500.00 The measurements for this work have been done by the Local Commissioner. Necessary adjustment/recovery has been affected under claim No. I for partly completed work. The dismentalling and redoing of any defective marble flooring has not been brought out during contract, period nor the same was measured by the Local Commissioner. The claim is not justified and rejected.

9.DISMENTALLINGand Redoing Wood work - Rs.42,00,000.00. The work was inspected at site. The respondents plea for dismentalling and redoing the wooden frame work is not feasible nor intended as the shutters have already been fixed at most of the places by new contractor on th wooden frames fixed by the claimants. The sizes of the wooden frames were measured at random at 14 places and the sizes were generally found to be under sized. Necessary adjustment/recovery has been affected under claim No. 1. The claim for Dismentalling and Redoing is rejected.

10.DISMENTALLING and Redoing Hold Fasts-Rs. 13,14,800.00 Some lest checks were carried out during site Inspection and it was found that the flat Iron and casement concrete blocks were under sized. Also one screw was provided for each Rawl plug. The requirement of dismentalling is not feasible as the shutters have already been fixed by new contractor. However, necessary recovery has been affected from claim No. 1 for use of under sized material and Pcc block. No defects were pointed out during the currency of contract. The claim for dismentalling and Redoing the work is rejected.

11.Dismentalling and Redoing Chicken Mesh - R.i. 69,0030.00 There was no provision of chicken mesh originally in the contract. Some work was done without chicken mesh. The rates for this item were finalised after 22 months from the dale of commencement. No evidence has been produced where the work of plastering has been rejected during contract period for non-provision of chicken mesh. This was an additional item and has been paid under claim No. I as per the measurements of Local Cominissionser. The claim for dismentalling and redoing is rejected.

12.DISMENTALLING and Redoing Half Brick Railing - Rs. 26,772.00 The respondents during the course of hearing has stated that the work is not up to the mark as the bricks used arc not selected bricks for the face work. The claimants explained that in site of the selection, some bricks did not have straight edges. Since the bricks were supplied by the respondents, the claimants cannot be held responsible for bad quality of bricks. No evidence was produced where this work was rejected during the currency of contract. The claim of the respondents is rejected.

13.REDOINGPainting with ready mix Paint (Primer) - Rs. 40,0001- No evidence is produced during hearings where the quality of paint used by the claimants has been rejected during the currency of contract. This item has also been paid for part of the work in the Interim Certificates which implies that the quality and make of the paint was approved. The payment of actual work done as per the measurement by Local Commissioner has been paid under Claim No, 1. The claimants contention for redoing the primer coat at the cost of the claimant is not justified and rejected.

14.DISMENTALLING & Redoing Mud Phaska & Tile - Rs. 9,000.00 This item was inspected during first inspection in April 1992. The respondents thereafter stated in affidavit dated 13.7.1992 that the above claim was mentioned erroneously for one block but actually applies to all the 40 blocks thus revising his claim to Rs. 3,60,000.00. At the lime of third site inspection it was brought out by the respondents that the rectification was required for 23 Nos. of A-Type block. As a result of test check carrier out for 4 blocks, it was found that there were small depressions at odd places. The respondents has been shifting his claim from time to time. After the Site inspection I assess an average of 2-0 to 2-50 Sqm. per block is more than adequate for he 17 blocks. I am more than satisfied with the original counter claim. I award Rs. 9,000.00 to the respondents payable by the claimants.

15.Dismentalling and Redoing C.I. Pipes - Rs 11,00,097.00 The contract specifies Hci soil pipe of Rif make or Bc make. The claimants has used A1 and Abc make Isi marked. The respondents want to dismental & redo the entire work as the make used by the contractor is different than specified even though it is Isi marked. No evidence has been produced wherein these pipes were rejected during the currency of job. The respondent has deducted 10% from the amount for purposes of testing in his counter statement of facts. Refer Annexure 'G' of the pleadings. This implies that the quality of pipe was accepted. Since the work was stopped on 26.2.1990 and 32 months have passed, the testing should have been completed. No claim for any defect in testing of C.I. pipe was projected during the course of hearings or during the three Site Inspections. The claim is not sustained and rejected."

18.The objector has stated in the objection petition in the following terms how [he- award on this claim is not sustainable :-

"FOR that the Arbitrator gravely erred and acted altogether arbitrarily in awarding to the respondent society

(A)Rs. 10,000.00 only against its claim of Rs. 2,18,000.00 in respect of defective exposed brick masonary.

(B)Rs. l,500.00 only against its claim ofRs. l,54,400.00 in respect of defective half brick masonary work.

(C)Rs. 15,000.00 only as against its claim of Rs 10,65,325.00 in respect of defective cement plaster work.

(D)Rs.9000.00 only as against its revised claim of Rs. 3,60,000.00 in respect of defective mud phaska.

(E)In awarding Rs. Nil against its claim in the sum of Rs. 73,500.00 for defective marble chips flooring.

(F)Rs. Nil against its claim of Rs. 59,030.00 in respect of chicken mesh work.

(G)Rs. Nil against claim of Rs. 20,772.00 in respect of defective half brick railing.

(H)Rs. Nil against claim of Rs. 40,000.00 in respect of painting with ready mix paint (Primer).

(I)Rs. Nil against claim of Rs. 11,00,097.00 in respect of Ci pipes of different specifications.

THE said award, apart from being against the evidence on record including minutes of three site inspections by the arbitrator, is biased on the sole ground that no objections was made in respect of the defective work during the execution thereof.

THE Arbitrator has, in this reard, ignored the fact:- (i) That the work had not been at any stage approved and/or accepted by the respondent or its Architects.

(II)That the payments made in respect of the said works were only interim on account payments against Running Account bills.

(III)That the final bill, of the petitioner contractor, had not been processed; and

That, the respondent had not lest it right to reject and/or devalue the defective work executed.

FOR that the observation of the arbitrator, in respect of the respondent's counter claim No. 5, that the cost of rectification claimed is a fantastically absurd figure is arbitrary and without any basis and in fact absurd and only displays that the arbitrator was not dealing with the issues involved in an impartial manner but with bias against the respondent society and undue concern for the petitioner.

THE said claim was not for rectification but for dismantling/removing and redoing afresh the defective work and was assessed by the Architect, who was supervising the work and verified by a Chartered Engineer.

IF the nature of the defects and the cost involved in removing the defective work and getting the same re-executed and the rising cost of labour and materials is taken into consideration the actual cost may he much more than claimed, though the arbitrator has obviously purposely done his best to close his eyes with reference to this aspect of the matter.

TO be illustrative but not exhaustive if we take the world of providing hold fasts and Pcc Blocks for the same, and the Arbilrator's findings, as a result of spot inspection referred to in ground 15 herein before, it becomes obvious that the work done by the petitioner company, in this regards was worst than useless and to be fair and honest to the members, for whom the flats are meant, the said work would hae to be dismantaled and redone, in respect of all the 308 flats, the cost whereof would be much more than claimed, apart from the time that would be consumed in the process, during which priod the allottees would he deprived of the use and occupation of the flats.

FOR that the partial rejection of counter claim No. 5 of the respondent's society is erroneous and the said error is apparent on the fuel of the award.

FOR that allowing a sum of Rs. 35.500.00 only to the rspondent, against its counter claim of Rs. 88,30,424.00 is the result of a purposeful exercise of the arbitrator to somehow benefit the petitioner contractor and displays grave misconduct apart from perverseness and the said misconduct is apparent from the face of the award.

FOR that the penalty imposed by the Delhi Development Authority, the lessor of the plot, for delayed completion of the building project, for the period of the claim, is directly attributable to the default of the petitioner contractor, in breach of the contract between the parties, and not a remote and indirect claim or not directly connected with the construction and completion, of the flats, by the petitioner contractor, as allegsed, in the award, The award is thus patently arbitrary and perverse and the result of the arbitrator having marshelled conditioned his mind to somehow benef. the petitioner contractor at the cost of the respondent society."

(19) A perusal of the objections would show that the society ignoring realities of situation and the nature of the claim made by it and the proof required to substantiate the claim and has made the challenge just for the sake of it. So I do not find any substance in the objections.

(20) It is stated that the penalty imposed by the Delhi Development Authority for the delayed completion of the building project was directly attributable to he delay on the part of the contractor. This was made on the counter claim No. 6. The arbitrator has slated that this is a remote and indirect claim and not connected with the construction of the flats.

(21) On the facts and circumstances of this case, I do not find any merit in this contention also. The objection is rejected and the award on this part of the claim by the arbitrator is confirmed.

(22) On counter claim No. 7, a sum of Rs. 23,76,098.78 is claimed towards labour escalation. The arbitrator has opined and rejected the claim by giving the following reasons :-

"FROM the terms of contract, the rate of wages @ Rs. 15.90 per day has been considered by the contractor for working out the rate of his tender and this has been expressly accepted and noted by the respondent in the negotiation letter forming part of the contract. This fact is also deemed to hae been examined by the respondsents and their consultant before acceptance of the tender.

AS per contract, the extra payment for increase in labour rates shall he made provided such payments arc made to the labour. This is supposed to have been checked during payment of Escalation as no objection was ever raised by the 'respondents during the contract period. The respondents, as a principal employer, is also duty bound to check the payment of rate and amount of wages of all the labourers to ensure that they arc paid not less than the minimum wages. The claimants has been paying not less than the minimum wages to the labour as per notification issued by Delhi Administration from time to time as per evidence of paid vouchers produced during proceedings.

BOTH the parties conscientiously knw the fact that the tenser was priced on the basis of labour rate of Rs. 15.90 per day whereas the rate of wages paid to the labour remained at Rs. 18.80 per day from the very beginning. In addition to above, during the course of conduct between both the parties from beginning to the date of stoppage of contract, they acted to prepare the escalation amount at the basic rate of Rs. 15.90 per day for 32 months regularly upto the last payment of running bill upto 31.1.90. All these bills were thoroughly scrutinised including escalation by the consultants of the respondents. The course of conduct between the parties and conscious application of their minds, docs not warrant it fit to disturb the settled terms of payment of escalation of labour.

HAVING examined all aspects including the evidence adduced before me during the hearing both by way of oral submission and documents, I consider that the claim is not sustained. I award Rs. Nil to the respondents."

(23) In the objection petition, the objector had stated that as per the clause in the contract that extra payment due on account of escalation shall be made only if such payments are made to labourers and satisfactory proof is provided thereof.

(24) The arbitrator has stated that he had perused the documents and he was satisfied with the claim of the contractor. Mr. Khadaria, learned counsel for the contractor submitted that the documents were perused by the arbitrator in the presence of the counsel for the society and, therefore, the arbitrator was fully justified in coming to the conclusion.

(25) I find no reason to differ from the view taken by the arbitrator on this claim. Therefore, this part of the award by the arbitrator is confirmed.

(26) On counter claim No. 8, a sum of Rs. 66,000.00 is claimed. This was with reference to payment made to local commissioner. The arbitrator has stated that "The claimant shall pay Rs. 33,000.00 to the respondents because both the parties have contributed to the dispute by not sorting out the disputed measurements. I award Rs. 33,000.00 to the respondents."

(27) In the objection petition the society has taken the following stand :-

"FOR that the arbitrator's finding on counter claim No. 8 of the respondent and in so far as it has disallowed a sum of Rs. 33,000.00 out of the same is perverse and against the evidence on record. The evidence on record amply establishes that it was the petitioner contractor who refused joint measurements, despite repeated requests by the respondent society, and that the respondent had to request the court for a local commissioner to verify measurements as the petitioner contractor had failed to record joint measurements and not persued its application for appointment of a local commissioner, to verify the measurements of the work executed by the petitioner contractor.

IT is therefore altogether unsustainable and unreasonable to hold that the respondent also contributed to the dispute by not sorting out the disputed measurements."

(28) The arbitrator is fully justified in directing the parties to pay the amount equally and, therefore, it cannot be said to be bad in law. I confirm the award on this claim.

(29) On counter claim No. 9 relating to the payment of Rs. 49,893.32 hill payable to DESU. The arbitrator awarded Rs. 49,893.32 and that has not been objected by the contractor. Therefore, the award is confirmed.

(30) On counter claim No. 10. a sum of Rs. 3,90,000.00 is claimed by the society towards fee for counsel and technical Consultant. The arbitrator has rejected it by slating that that has to be borne by the society.

(31) The objector would state in the objection petition that the reasoning given by the arbitrator is arbitrary and the contractor had dragged the society to court and, therefore, it should be borne by the contractor.

(32) I do not find any substance in this objection. Accordingly, it is rejected and the award is confirmed.

(33) On counter claim No. 11 regarding pendentelite and future interest, the arbitrator has awarded in the following terms :

"I award interest at the rate of 18 (Eighteen) percent per annum to be payable by the claimants to the respondents as under :-

(A)On the amount of award under claim No. 9 i.e. Rs. 49,893.32 and claim No. 5 i.e. Rs. 35,500.00 from the date of publication of award to the date of the decree or the date of payment whichever is earlier.

(B)On the amount of award under claim No. 8 i.e. Rs. 33,000.00 from the date of actual payment to the local commissioner to the date of the decree or the date of payment whichever is earlier."

(34) The contractor has not filed any objections. Therefore, it is confirmed.

(35) Under counter claim No. 12 with reference to the cost of arbitration proceedings, the arbitrator had directed the parties to bear their respective costs. That is also objected to by the society. The Court cannot interfere with the discretion exercised by the arbitrator and the arbitrator, in my view, cannot be said to be wrong in taking that view. The objector has prayed the following reliefs in the objection petition :-

"(A)To set aside the award of the Id. arbitrator :-

(A)awarding claims No. 13 of the petitioner - contractor and partially awarding its claim No. 1,2 & 5 to it.

(B)rejecting the objector society's counter claims No. 5 & 8.

(B)To modify the award itself and reject the petitioner contractors claim No 13 and its partly accepted claims No. 1,2 & 5 and allowing each of the counter claims of the objector society, referred to, in full, with interest @ 18% per annum, from the due date till realisation,

(C)To award the respondent society costs of these proceedings; and

(D)To award such other relief (s) to the objector society as this Hon'bie Court may deem just and proper in the facts and circumstances of the case."

(36) I do not feel inclined to accede to the prayer made by the objector.

(37) The learned senior counsel Mr. S.L. Watel for the Society and Mr. O.P. Khadaria for the contractor had filed written submissions and also cited number of authorities in support of this respective contention" I don't feel it necessary to refer to the authorities because the principles arc so well settled by the decisions of the Supreme Court. It will be wholly unnecessary to repeat them in every case arising under the arbitration proceedings between the parties.

(38) The objection petition is dismissed. I confirm the award in the above terms. The award is made rule of the court and the parties shall be entitled to future interest at the awarded rate in respect of the amounts awarded in their favour till the payments arc made as per the award. There shall be no order as to costs.