Hans Raj vs Delhi Development Authority And ...
1996 Latest Caselaw 190 Del

JUDGMENT

S.D. Pandit, J.

(1) The present petition is filed by Shri Hansraj, sole proprietor of Hansraj Construction Company to direct the respondent No. 3, S. Nagrajan to produce the award and proceedings of the award and to make the award the Rule of the Court.

(2) The work of 960 Janta houses in Block-IV, Lawrence Road, Delhi was awarded by respondents 1 & 2 to the petitioner by Agreement No. 11/EE-HDV/ A/81-82. As regards the said work certain disputes had arisen between the parties and as per the agreement between the parties respondent No. 3. Mr. S. Nagrajan was appointed as the sole Arbitrator. The said Arbitrator entered upon reference on 16.7.87 and published his Award on 27.11.1990.

(3) After the petitioner had filed the present petition notices were served on respondents 1 to 3. In pursuance of the notice served on defendant No. 3, defendant No. 3 filed his award and proceedings of arbitration in the Court and, thereafter, the respondent Nos. 1 & 2 filed IA. 3055/91 under Sections 30 & 33 of the Arbitration Act, 1940 raising various objections. It is contended on behalf of the respondent that Arbitrator had ignored the material on record and had misinterpreted the various provisions of the contract between the parties. They further contended that the Arbitrator had misconducted himself as he failed to give reasons for his award though under clause 25 of the agreement the was to give reasons. It is also contended that the reasons are necessary in order to indicate the trend of the thought process of the Arbitrator. The Arbitrator has only recorded conclusions. It is further contended that allowing of Claim Nos. 1,9 & 10 by the Arbitrator is improper as no reasons for allowing those claims are given by him. It is contended that the provisions of Section 34 of Code of Civil Procedure were not applicable and Arbitrator was not also a Court and, therefore, he was not justified in awarding interest. Therefore, in these circumstances, it is contended that the award passed by the Arbitrator should be set aside.

(4) The objections filed by the respondent are resisted by the petitioner by filing his reply to the same and he has supported the award passed by the Arbitrator.

(5) Therefore, the points which arise for my consideration and my findings thereon for the reasons hereinafter stated are as under :- S. No. Issue Finding 1. Whether the Arbitrator has committed any misconduct in passing the award ? No. 2. Whether there are any mistakes apparent on the face of the record ? No. 3. Whether the objections filed by the respondent are to be allowed ? No. 4. What order? As per final order.

(6) Before going into merits of the matter it must be mentioned here that while considering the award the Court cannot sit as an Appellate Court. The Court cannot have reappreciation of the evidence produced before the Arbitrator. If on the view taken of a contract the decision of the Arbitrator on certain amounts awarded is possible even though perhaps not only the correct view, the award cannot be quashed by the Court unless the Court comes to the conclusion that the view taken by the Arbitrator is not at all possible. The Court can set aside the award or interfere with the award passed by the Arbitrator only in case if the Arbitrator has committed misconduct or there are any mistakes apparent on the face of the award. Therefore, bearing this position of the proceedings in mind I proceed to consider the objections raised to this Award by the respondent.

(7) It is true that as per Clause25 between the parties the Arbitrator is supposed to give reasons for his award. It must be remembered that merely because the award must be a reasoned award one cannot expect that the Arbitrator should deliver a judgment with detailed reasoning for his conclusions. The Award must indicate that he had the overall material produced before him as well as submissions made before him for arriving at the conclusion to which he has arrived. If this position is taken into consideration then I am unable to accept the contention of learned Counsel for the respondnet objector that the award in question is not a reasoned award. The Arbitrator has dealt with Claim No. 1 in his Award as under: Claim No. 1: Claimants claim Rs. 4 lakhs for work done, but not yet paid : The claim is in two parts :- (a) Work done in some items measured and paid, was less than the actual quantities done - claim amount Rs. 6,19,471 .00 ; (b) For several items, only part rates (less than the agreement rates), have been paid - claim amount Rs. 4,29,039.00 but the over-all claim was restricted to Rs. 4 lakhs as per the Reference. Part (a): After examining the details and reconciling the me a sure ments recorded (Exhibit R-42), it has become obvious that less quantities have been paid amounting to Rs. 2,25,983.00 only. As such, I award that the respondents do pay a sum of Rs. 2,25,983.00 to the claimants. Part (b): The claimants stated that part rates have been paid for many items in the 33rd R/A bill and thereafter no further bills have been paid and the amount due to them is Rs. 4,29,093.00 as per Exhibit Annexure 'B'. The respondents stated that part rates were paid due to defects which were rectified later and the total amount available with them due to such part rates was Rs. 4,03,578.46. However, for such items as 2.2; 4.1; 5.4 (a & b); 5.6; 5.7a; 10.1; 11.1; 12.5;3.1;3.11; node fact rectification was done and those it berns were used as executed by the claimants. The amount involved in those items was Rs. 91,094.00 and accordingly, I award that the respondents do pay a sum of Rs. 91,094.00 to the claimants. Thus, for Claim No. 1, I hereby award that the respondents do pay a sum of Rs. 3,17,077.00 to the claimants.

(8) If the above decision of the Arbitrator as regards Claim No. 1 is considered then I am unable to accept the contention of learned Counsel for the respondent that the said award is without reason. No doubt the reasons given by the Arbitrator are not detailed reasons but merely because of the absence of detailed reasons it could not be said that there are no reasons. It is settled law that in sufficieny of the reasons could not be a ground for setting aside the award - No error of law has been pointed out in the conclusion to which the Arbitrator has arrived. Similarly, there is also no error of fact. If the above wording of the Arbitrator is read then it would be quite clear that he has made his thinking known on the basis of which he has acted and that in law is sufficient to meet the requirements of a reasoned award. In the case of Sudershan Trading Co. v. Government of Kerala, [1982 (2) Scc 38] the following principles are laid down by the Apex Court : "ONLY in speaking award Courts can look into the reasoning of the award. It is not open to the Court to probe in the mental process of the Arbitrator and speculate where no reasons are given by the Arbitrator as to what impelled the Arbitrator to arrive at his conclusion. Furthermore, reasonableness of the reasons given by the Arbitrator cannot be challenged. Appraisement of the evidence before the Arbitrator is never a matter which the Court questions and considers. If the parties have selected their own forum, the deciding forum must be conceded the power of appreciation of evidence. The Arbitrator is the sole Judge of the quality as well as the quantity of evidence and it will not be for the Court to take upon itself the task of being a Judge on the evidence before the Arbitrator."

(9) In a recent decision in the case of State of Rajasthan v. Puri Construction Co. Ltd., [1995 (1) Alr 1] the apex Court has taken the same view.

(10) As regards the other claims also the Arbitrator has given his own reasoning in a very brief manner but that does not mean that there is no reasoning. He has first considered whether the claim is to be allowed and to what extent it is to be allowed. Where he had not found substance in the contention of the claimant he has rejected his claims.

(11) It is the contention of Ms.Anusuya Salwan, learned Counsel for the Dda that Claim No. 2 ought not to have been allowed by the Arbitrator in view of the provisions of Clause 10-C of the agreement between the parties. Clause 10-C of the agreement reads as under : "IF during the progress of the works, the price of any material incorporated in the works, (not being a material supplied from the Engineer-in-charge's stores in accordance with Clause 10 hereof) and/or wages of labour increases as a direct result of the coming into force of any fresh law, or statutory rule or order 581 (but not due to any changes in sales tax) and such increase exceed ten percent of the price and /or wages prevailing at the time of receipt of the tender for the work, and contractor thereupon necessarily and properly pays in respect of the material (incorporated in the work) such increased price and /or in respect of labour engaged on the execution of the work such increased wages, then the amount of the contract shall accordingly be varied provided always that any increase so payable is not, in the opinion of the Superintending Engineer whose decision shall be final and [binding] attributable to delay in the execution of the contract within the control of the contractor. Provided, however, no reimbursements shall be made if the increase is not more than 10% of the said prices/wages and if so the reimbursements shall be made only on the excess over 10% and provided further that any such increase shall not be payable if such increase has become operative after the contractor extended date of completion of the work in question. If during the progress of the works, the price of any material incorporated in the works (not being a material supplied from the Engineer-in-charge's stores in accordance with Clause 10 hereof) and/or wages of labour is decreased as a direct result of the coming into force of any fresh law or statutory rule or order [but not due to any changes in sales tax] and such decrease exceeds ten percent of the prices and/or wages prevailing at the time of receipt of the tender for the works. Delhi Development Authority shall in respect of materials incorporated in the work [not being materials supplied from the Engineer-in-charge's stores in accordance with Clause 10 hereof] and/or labour engaged in the execution of the work after the due date of coming into force of such law, statutory rule or order be entitled to deduct from the dues of the contractor such amount as shall be equivalent of difference between the prices of materials and/or wages as they prevailed at the time of receipt of tender for the work minus ten percent thereof and the prices of materials and or wages of labour on the coming into force of such law, statutory rule or order. The contractor shall for the purpose of this condition keep such books of account and other documents as are necessary to show the amount of any increase claimed or deduction available and shall allow inspection of the same by a duly authorised representative of Delhi Development Authority and further shall at the request of the Engineer-in-charge furnish verified in such a manner as the Engineer-in-charge may require any document so kept and such other information as Engineer-in-charge may require. The contractor shall, within a reasonable time of his becoming aware of any alteration in the prices of any such materials and/or wages of labour, give notice thereof to the Engineer-in-charge stating that the same is given in pursuant to this condition together with all informations relating thereto which he may be in a position to supply."

(12) In the instant case the contract of the claimant/petitioner was not terminated on account of his failure to fulfill the contract within the stipulated period. It is an admitted fact that the contract work was carried out beyond the stipulated period mentioned in the contract between the parties. The extension of time was granted from time to time by the respondent. The respondent has ultimately terminated the contract as it was the claim of the respondent that the claimant had abandoned the work. If this admitted position is taken into consideration then it would be quite clear that Clause 10-C, quoted above,hasnoapplication to the facts of the case. It must be also further mentioned here that admittedly the work was carried out till August 1986 and the difference of wages was claimed on account of revision of wages in March, 1982, June 1984 and October, 1985 and the Arbitrator has awarded the amount on account of revision of wages which took place in March, 1982 and June, 1984. Therefore, in these circumstances, the case law cited by Ms. Anusuya Salwan of R.S. Rana v. D.D.A. f-fAm. (1993 (2) Alr 165) and Sutihir Bros. v. D.D.A. [1995 Ii Ad Delhi 643] has no application to the facts of the case before me. Therefore, in these circumstances, allowing of Claim No. 2 by the Arbitrator could not be said to be bad or erroneous on the face of the record.

(13) The Arbitrator has allowed Claim No. 3. Claim No. 3 is in respect of the amount of Rs. 1,00,000.00 towards the refund of security deposit. The Arbitrator has allowed the refund of the said deposit by observing as under :- "AFTER going through the respective pleadings I hold that the revision of the contract long after the contract period and that too without fixing the specific time was not justified and not valid. Accordingly, I award that the respondent do pay a sum of Rs. 1,00,000.00 to the claimants."

(14) Claim No. 3 is corresponding to counter-Claim No. 3 of the respondent/ Objector. Respondent/Objector has made counter Claim Nos. 4 & 6. By counter Claim No. 4 the respondent has claimed Rs. 25,00,000.00 for the balance of work executed through other agencies. Now the reasoning given by the Arbitrator for counter-claim No. 3 and counter Claim Nos. 3, 4 & 6 is contradictory and inconsistent. In the reasoning of counter Claim No. 4 the Arbitrator has held that on inquiry and on the material on record he had found that correct amount under the said counter claim is of the sum of Rs. 5,81,391.77 as against Rs. 20,00,000.00 referred to Arbitrator. But he further mentions that on query with the Counsel for the claimants it was confirmed that the amounts due to extra cost have been recovered from the allottees of the houses. As the amounts of the extra work were already recovered from the allottees the said claim, i.e. the counter claim is negatived by the Arbitrator. No doubt he has further added as one of the reason for negating the said claim that the revision of the contract was not valid and legal. That is also the reason given for not allowing the forfeiture of the security deposit. But the counter Claim No. 6 was of the amount of Rs. 15,00,000.00 towards the cost of rectification of defects through other agencies. That counter claim of claiming amount for rectification of defects through other agencies has been allowed by the Arbitrator and he had awarded the amount of Rs. 5,40,682.00 in favour of the respondents towards the said claim. If the reasoning given by the Arbitrator as regards counter Claim Nos. 4 & 6 is taken into consideration then he accepts the position that the termination of the contract was effected to by the respondent and unless he finds that revision of contract was valid and legal he would not have allowed both these counter claims. It is very pertinent to note that the respondent had issued notices after August 1986 to the claimant to carry on the work and only on his failure to respond his contract has been terminated. No doubt the contract is not terminated on account of non-fulfilment of the contract within the stipulated period, the conclusion of the Arbitrator that there was extension of time beyond the agreed period between the parties, but that does not justify giving up the work in the middle. If the contractor abandons the work and because of his abandoning the Delhi Development Authority had to get the work done through other agencies as well as to get the defects rectified through other agencies then the act of the Executive Engineer of Delhi Development Authority in forfeiting the security deposits would be quite justified. Therefore, the finding of the Arbitrator as regards Claim No. 3 and counter Claim No. 3 is quite contradictory and inconsistent with his findings and reasoning for counter Claim Nos. 4 & 6. Therefore, in these circumstances, the power exercised by the authorities to forfeit the security deposit could not be interfered with by the Arbitrator and that act of the Arbitrator is beyond his jurisdiction in view of the terms of the contract between the parties.

(15) Therefore, in view of the above discussion I hold that the objections filed by the respondent will have to be partly allowed by varying and setting aside the finding recorded by the Arbitrator as regards Claim No. 3. The Claim No. 3 of the claimant must be rejected and the counter Claim No. 3 will have to be allowed.

(16) Therefore, I hold that the Award passed by the Arbitrator will have to be modified by holding that instead of the total amount of Rs. 5,19,781 .00 the liability of the respondent would be to pay Rs. 4,19,781.00 . I, therefore, order that with the above modification the Award passed by the Arbitrator on 27.11.1990 should be made Rule of the Court. Respondent is liable to pay 12% future interest on the said amount of Rs. 4,19,781.00 from the date of this decree.