M/S. Kailash And Associates vs New Delhi Municipal Corporation
1996 Latest Caselaw 208 Del

JUDGMENT

N.G. Nandi, J.

1. Arbitrator Shri P. P. Dharwadker filed award dated 5.11.1993 under Section 14 of the Arbitration Act, 1940 (hereinafter referred to as the 'Act' deciding disputes between M/s. Kailash Nath and Associates New Delhi Municipal Committee and the said award filed by the arbitrator for making the same rule/decree of the court as Suit No. 2740/93.

2. After the filing of the award by the arbitrator, notices under Section 14(2) of the Act have been issued to the parties to the award viz., M/s. Kailash Nath Associates and the NDMC. M/s. Kailash Nath Associates filed objections under Sections 30 and 33 of the Arbitration Act against the award dated 5th November, 1993 made/published by the sole arbitrator Shri P. P. Dharwadker vide I.A. No. 7883/94 with the prayer to condone the delay under Section 5 of the Limitation Act vide I.A. No. 8008/95. The NDMC has not filed any objections to the award.

3. In the say of the objector/petitioner (M/s. Kailash Nath & Association) the award dated 5.11.1993 is without application of mind, inconsistent with the findings, based upon presumptions and extraneous considerations and thereby the arbitrator has committed legal misconduct and the award is liable to be set aside. The arguments advanced by Mr. Rajesh Lakhanpal, learned counsel for the objector/petitioner are that there is non application of the mind-on the part of the arbitrator inasmuch as the award is contradictory to the findings; that the arbitrator has ignored the evidence produced by the objector/petitioner; the arbitrator is bound to call for items wise details before rejecting the petitioner's evidence, that there is no evidence for arriving at the findings that the petitioner is guilty of delay and when the respondent is held guilty of delay then how claim No. 1 has been dismissed in toto; that the arbitrator is guilty of breach of duty which has led to miscarriage of justice.

4. At page 2 bottom it has been observed" Though they went so far as not even to take responsibility for delayed supply of drawings by the Architects which is a 'third party', the Architects could not be made a party to this dispute, as the agreement is bi-partite between the claimant and the respondents only and the respondents must share the blame for inadequate co-ordination from their side on this account. There was, however, no worth while plan of action by the respondents which they could enforce on the claimants because of inadequacies from their own side."

5. At page 3 in the second paragraph it is observed "On the other hand the respondents could not sustain that no loss has been suffered by the claimants due to established hindrances which impeded the progress of work atleast in part, and the claimants were entitled under the normal rules of business for enhancement of rates in the escalating economy, for no fault of theirs."

6. In paragraph 4 bottom it is observed "in this case, though it could be established by the claimants that atleast part of the delay was attributable to the respondents, it could not also be rules out that part of the delay is attributable to the claimants themselves. I therefore, in the absence of information on the exact contribution by the two sides, hold them both equally responsible for the delay and the consequent award/damages."

7. It will be seen from the above the that the learned Arbitrator has found the claimant as well the respondent NDMC equally responsible for the delay. As far as for the purpose of findings NDMC partly responsible for the delay, the reasons given in the award suggest as pointed out above, that there was delay in supplying of drawings by the Architects and there was no worthwhile plan of action by the respondents which they could enforce on the claimant and because of that the delay has been party attributed to the NDMC, as the work was held upon due to the established hindrances atleast in part. Thus, it will be seen from the findings that the claimant as well as NDMC both and found to be equally responsible for the delay.

8. It is observed at page 4 that the contract agreement protects the interests of the respondent (Clause 2, 5, 10-C, 10-CC Special Conditions 1(A) refers), and that the enhancement claimed by the claimants is not maintainable. The claimant has not been awarded amount under claim No. 1 for the enhancement at the interest of the respondent/NDMC was found to have been protected by the clauses referred to above in the award.

9. It need hardly be said that this court is not sitting in appeal against the award made/published by the Arbitrator under Section 17 of the Act and the re-appreciation of the evidence/reasoning is beyond the purview of the proceedings under Sections 14, 30 and 31 of the Act.

10. On behalf of the claimant/objector reliance is placed on the decision in case of State of Kerala and another v. K. Kurian P. Paul .

11. In paragraph 6, it is observed that "it is settled principles of law that the award rendered by the arbitrator should be read reasonably as a whole and it is enough if short intelligible indications of the grounds in the mind of the arbitrator are discernible and the court does not sit in appeal over the award and review the reasons."

12. Reliance is also placed on the decision in the case of Dewan Singh v. Champat Singh and others , wherein it has been held that "it is normally an implied term of an arbitration agreement that the arbitrators must decide the dispute in accordance with the ordinary law. That rule can be departed from only if specifically provided for in the submissions. There may be misconceptions or wrong assumptions in the mind of the arbitrators. If the parties are not given opportunity to correct those misconceptions or wrong assumptions, grave injustice may result."

13. Relaying on this judgment, it has been argued that the arbitrator before ignoring the evidence produced by the claimant and before observing that the claimant failed to give detailed item wise justification for the basis of enhancement of 33.5% above the agreement rates should have given an opportunity to the claimant to produce the detailed items wise justification instead of increase in cost index over the 21 months period over other works allotted by NDMC. It has been suggested from the observation in the award at page 3 that the claimants were asked to give detailed justification for the basis of the enhancement of 33.5% above the agreement rates as claimed by them. It appears that the claimants failed to do so and remained contented by producing increase in cost index, rather than giving items wise details which is not accepted by the arbitrator. It is not contended that the arbitrator had not given opportunity to the claimants to produce detailed justification which would mean items wise justification, though asked by the arbitrator. The principle laid down in the Supreme Court judgment (supra) would not be applicable to the present case for this reason.

14. On behalf of the respondent reliance is placed on the decisions in the case U.P. Hotels etc. v. U.P. State Electricity Board , where it is held "Even assuming that there was an error of construction of the agreement that the error apparent on the face of the record and in the interpretation of the agreement, if the view taken by the Umpire/Arbitrator is possible then the award would not be amenable to interference or correction by the Courts of law."

15. Whether the arbitrator has erred in not awarding damages holding the NDMC to be equally responsible for the delay and the contract agreement protected the interest of the NDMC referring to Clauses 2, 5, 10-C, 10-CC and Special Condition 1(A) would not call for interference in the award and review the reasoning given by the Arbitrator, since the same would not be suggestive of any legal misconduct on the part of the arbitrator. There does not seem any contradiction in the findings in the award for the reasons that the damages have been refused to the claimant as the NDMC is found to be protected by the contract agreement in respect of the claim for which the NDMC is found to be partly responsible. Thus, the reason for not awarding the damages to the claimant for the delay which has arisen partly due to the NDMC is that the interest of the NDMC is protected by the contract agreement according to the Arbitrator. This cannot be regarded in anyway contradictory to the findings/observations by the Arbitrator in the earlier part of the award.

16. Under the circumstances it cannot be said that the award rendered by the Arbitrator is liable to be set aside on the grounds contended by the claimants/objectors and the objections liable to be dismissed and the award made rule of the court.

17. In the result I.A. 7883/94 is dismissed the award dated 5.11.1993 rendered by the sole Arbitrator is made decree/rule of the court and the same shall form part of the decree.