M/S. A.S. Sachdeva & Sons vs Delhi Development Authority
1996 Latest Caselaw 37 Del

JUDGMENT

K. Ramamoorthy, J.

1. The D.D.A. had entrusted the work of the construction of 54 three bed rooms, 54 two bed rooms and 54 scooter garages at Rajouri Garden, New Delhi.

2. The dispute arose between the parties and the disputes were referred to Mr. K. D. Bali as sole Arbitrator, for adjudication. There were ten claims made by the contractor Sachdeva & Sons. The award was passed by the sole Arbitrator on 20.2.1992.

3. On Claim No. 1 the contractor claimed Rs. 11,930/- on the ground that an unlawful recovery of rebate against monthly payments were by the D.D.A. and therefore, the claimant was entitled to the return of the same. The Arbitrator rejected the claim. The contractor has not filed any objections. Therefore, it has become final.

4. On Claim No. 2, a sum of Rs. 11,930/- was made on the ground that there was a recovery of rebate against the payment of final bill within six months without fulfillling the contractual obligations. A sum of Rs. 11,930/- was awarded by the Arbitrator.

5. The D.D.A. has not filed any objections and, therefore, the award on claim No. 2 is confirmed.

6. Under Claim No. 3 a sum of Rs. 10,000/- was claimed by the claimant as it was unlawfully withhold by the department while paying the final bill. The reason given by the D.D.A. for withholding the sum of Rs. 10,000/- was that a proposal of reduced rate statement was finally approved and only a sum of Rs. 7,951.06 was liable to be released.

7. The argument by the claimant was that the D.D.A. had already recovered on account of reduction/deduction items, a sum of Rs. 40,943.63 from the final bill, which is the subject matter of Claim No. 5 and, therefore, the D.D.A. was not entitled to adjust any further amount from the amount withheld by it. The Arbitrator observed "after carefully considering the documents placed before me and submissions made by the parties, I decide that the claimants are entitled to release of withheld amount and accordingly I award Rs. 10,000/- in favour of the claimants against this claim."

8. The objection by the D.D.A. is that under Clause 25 of the agreement the Arbitrator is bound to give reasons for his decision and when the D.D.A. was prepared to release the sum of Rs. 7,951.96 retaining the sum of Rs. 2,048.84, the Arbitrator cannot, without assigning any reasons, direct the payment of Rs. 10,000/-. I do not find any substance in the objection raised by the D.D.A. sitting under Section 30, of the Arbitration Act, 1940. I, therefore, confirm the award under this claim.

9. In Claim No. 4 a sum of Rs. 11,480.74 is claimed by the claimant on the premises that the recovery was made by D.D.A. at penal rates against the supply of steel GI/SCI pipes.

10. The contention by the contractor before the Arbitrator was that no proof was available that there were any surplus materials with the contractor after the completion of the work and there was no allegation against the contractor that he was guilty of any wastage or pilferage. If there was any excess consumption, it had gone into the work and on that score, only a single rate of recovery could he made and that was exactly made by the D.D.A. The contractor proceeded to contend that the D.D.A. had not incurred any actual loss and, therefore, the recovery was bad in law. The D.D.A. on the other hand, relying upon Clause 42 of the Agreement, contended that the right was given to the D.D.A. to make the recovery and the Arbitrator had acted in contravention of what the parties have agreed in Clause 42 of the Contract.

11. The Arbitrator held that the D.D.A. had not made out a case for the levy of penal rate recovery and there was no proof of any loss and accordingly, passed an award directing the D.D.A. to pay Rs. 11,480.74 to the claimant.

12. In the objection petition the same contention is reiterated by the D.D.A Mr. V. K. Sharma, learned counsel appearing for the D.D.A. relied upon the decisions of the Supreme Court in Vishwanath Sood v. Union of India and another , and Continental Construction Co. Ltd. v. State of Madhya Pradesh , and submitted that the Arbitrator had committed an error in discarding Clause 42 of the Agreement and that would amount to misconduct and, therefore, the award is liable to be set aside. The Supreme Court has time and again held that the court is not sitting in appeal over the award and unless there is a gross misconduct and errors apparent on the face of the record, the award by an Arbitrator cannot be rightly set aside. On the facts of the instant case do not find any merit in the contention of the learned counsel for the D.D.A. I, therefore, confirm the award by the Arbitrator.

13. "Under Claim No. 5, the contractor claimed Rs. 50,000/- on the ground that certain deductions were made by the D.D.A. in the final bill and those deductions were wholly unauthorised. The claimant contended that after the completion of the work on 30.11.1983 the D.D.A. had paid R/A bills 27 and 28 but the recoveries were made only at the time of payment of final bill. As per Clauses 14 and 17 of the Agreement the D.D.A. did not point out any defects in the work carried out by the contractor. The D.D.A. contended before the Arbitrator that a list mentioning the defects was handed over to the contractor and the D.D.A. filed the same showing analysis of the rates on the basis of which deductions were made by the D.D.A."

14. The contractor contended that such analysis was not given to the contractor and no details regarding the dates on which measurements were taken to find out the defects and no particulars were given to the contractor. The Arbitrator has opined that the D.D.A. has proceeded to analyse in an arbitrary fashion and the decision of the D.D.A. without giving any opportunity to the contractor, was in violation of the principles of natural justice and ultimately, the Arbitrator held that the contractor would be entitled to get Rs. 22,700/- as against the Claim of Rs. 50,000/-.

15. In the objection petition the D.D.A. has stated that the Arbitrator has not given the reasons as per Clause 25 of the Agreement and, therefore, the award suffers from an error apparent on the face of the record and, therefore, it has to be set aside. I am afraid, the contention on behalf of the D.D.A. cannot at all be accepted. Consequently, the award on Claim No. 5 is upheld.

16. On claim No. 6 the contractor claimed Rs. 50,000/- and according to him, that amount is payable by the D.D.A. to this balance of payment under Clause 10-C of the Agreement. The claimant subsequently restricted his claim for Rs. 25,503.03 on this head. The D.D.A. stated that only a sum of Rs. 5,827.36 was payable.

17. The Arbitrator awarded a sum of Rs. 25,500/- in favour of the contractor on the ground that the D.D.A. had not pointed out any mistake in the details given by the contractor.

18. In the objection, the same point that no reasons have been given by the Arbitrator as required under Clause 25 of the Agreement and that would vitiate the award. I have no hesitation in rejecting the contention on behalf of the D.D.A. when the Arbitrator has considered on all aspects of the matter and has given the award after considered the materials placed before him. The award is, therefore, confirmed.

19. On Claims No. 7 a sum of Rs. 2,00,000/- was claimed by the contractor on the grounds that no proper measurements were made, measurements made were wrong and wrong derivation of rates were made for GI/SCI. The parties details of such works and the D.D.A. itself admitted that a sum of Rs. 94,102.16 was due towards unmeasured work. The Arbitrator passed the award on that basis. Rightly, no objection has been filed by the D.D.A. The award on this claim is, therefore, confirmed.

20. On Claim No. 8 a sum of Rs. 4,80,000/- was claimed on account of losses/damages, on account of idle labour, T & P, on account of prolongation of the contract by 24 months. The contractor contended before the arbitrator that the D.D.A. as per its letter dated 11.11.1985 (Ex. C. 40) had shown that the reasons for delay were attributable only to the D.D.A. The D.D.A. contended that the work was delayed owing to unsystematic planning, shortage of materials and labour by the contractor. The D.D.A. also relied on Ex. R-27 (show cause notice was given to the contractor for the delay).

21. The Arbitrator has observed "regarding the details of proof of actual loss, no such details of account can be worked out in the work of a contractor and the damages have to be worked out on some reasonable assessment."

22. The Arbitrator has noticed that there was a delay of about two years in the completion of the work on account of irregular supply of cement, delay in taking decisions by the D.D.A. shortage of steel and pipes, late supply of doors and shutters which have to be supplied by the D.D.A. under the contract.

23. The arbitrator is an engineer by himself. He has rich experience to find out the loss that would have occasioned to the contractor. The Arbitrator has held "due to prolongation of the contract, the contractor invariably suffers losses on various accounts like price index, idle, labour, T & P and various other reasons etc. The overall delay being of 24 months, I decide that the claimants are entitled to reasonable compensation and I award Rs. 1,92,000/- in favour of the claimants against this claim."

24. In a matter like this, the award cannot be faulted on the ground that reasons have not been given. The Arbitrator, being an engineer, has got the necessary equipment and experience to assess the loss referred to by th contractor. I do not appreciate the contention on behalf of the D.D.A. that reasons should have been given by the Arbitrator for coming to the conclusion that the contractor was entitled to the sum of Rs. 1,92,000/-. In my view the reasons given by the Arbitrator is in accordance with law and some amount of guess work in a matter like this is inevitable and on that score it cannot be contended that the reasoning is not in accordance with terms of Clause 25 of the Agreement I, therefore, find it difficult to accept the argument on behalf of the D.D.A. Accordingly I confirm the award on this claim.

25. Claim No. 9 would relate to payment of interest, pre-suit, pendente lite and future interest. The Arbitrator had awarded interest on the amount awarded by him on Claims No. 2 to 7 at 15% from 12.4.1989 to 19.1.1991, i.e., the date on which he entered upon reference. The Arbitrator himself has calculated the amount at Rs. 46,124/-. The Arbitrator has awarded pendente lite interest at 15% p.a. on Claims 2 to 7 from 20.1.1991 to 20.2.1992, i.e., later the award and the amount comes to Rs. 28,553/-. The Arbitrator has awarded interest @ 15% p.a. on the sum of Rs. 3,67,713/- from the date of award till the date of payment or decree, whichever is earlier.

26. In the objection petition the D.D.A. has stated that the awarding of interest cannot be a matter of course and the Arbitrator should have considered as to who was responsible for delaying the proceedings and the principles laid down by the Hon'ble Supreme Court in State of Orissa v. G. C. Ray (1992 (1) Arb. LR 145), should have been followed by the Arbitrator and inasmuch as the Arbitrator has not assigned any reasons in this behalf, the award of interest by the Arbitrator is not in accordance with law and, therefore, it is liable to be set aside. It is also stated in the objection petition that the interest would have been restricted only to 9% to 10%. It is also stated in the objection petition that the arbitrator reopened the petition after conclusion in respect of pendente lite interest and there was thus, a misconduct committed by the arbitrator.

27. I do not find substance in any of the contentions. The award of interest at 15% is reasonable having regard to the bank rate prevailing since 1980, I have no hesitation in confirming the award of interest by the arbitrator on claim No. 9.

28. On claim No. 10 a contractor claimed Rs. 5,500/- towards cost of arbitration proceedings. The arbitrator directed the parties to bear their respective costs. The arbitrator cannot be said to have committed an error and parties have not filed any objections, in my view rightly, against this part of the award.

29. The learned counsel for the parties brought to my notice a number of authorities for the purposes of explaining the scope of jurisdiction of this court under Section 30 of the Arbitration Act and also the power of the arbitrator to award interest. In view of the fact that the Hon'ble Supreme Court has laid down the principles in various cases and the principles are well known, I do not want to burden this judgment with the authorities cited at the bar.

30. For these reasons the objection petition IA 2217/92 is dismissed and award passed by the arbitrator is confirmed and is made rule of the court.

31. There shall be a decree (1) directing the D.D.A. to pay a sum of Rs. 46,124/- to the contractor, (2) directing the D.D.A. to pay Rs. 28,553/- to the contractor and (3) directing the D.D.A. to pay a sum of Rs. 3,67,713/- with an interest at 15% p.a. from the date of the award (20.2.1992) upto the date of payment.

32. There shall be no order as to costs.