Delhi High Court
Batra Construction Company vs Union Of India And Another on 10 January, 1996
Author: D Gupta
Bench: D Gupta
JUDGMENT
Devinder Gupta, J.
1. I.A. 1437/87 are the objections preferred by the claimant and I.A. 2323/87 are the objections preferred by the respondent to the award made on 9th October, 1986 by Shri Sarvesh Chandra, Arbitrator, who had been appointed as the sole arbitrator by the Chief Engineer (NZ) C.P.W.D., New Delhi through his letter dated 24th November, 1983 under Clause 25 of the Agreement in respect of work relating to construction of I.S.I. Laboratory Building at Ghaziabad Phase-I, Mechanical Laboratory Workshop including water supply, sanitary installation and drainage (Balance Work) SH : Roof and Misc. work.
2. Against the 11 items of claim preferred by the claimants, Claim No. 1 and Claim No. 11 were allowed. Claimants were held entitled to the refund of an amount of Rs. 17,000 of security deposit with interest @ 9% p.a. from the date of reference till payment or decree whichever is earlier. Against Claim No. 2, recovery of only Rs. 8,873.76 was held justified. Against the 8 items of the Counter Claim, 6 items were upheld. Two items of the counter claim were rejected.
3. Learned Counsel for the parties were heard, who also took me through the entire record. The controversy is not much.
4. The compensation for the delay in completion of the work at 10% had been levied by the Competent Authority in terms of Clause 2 of the Arbitration Agreement, which amounted to Rs. 18,974. It was made a part of counter claim. The counter claim was disallowed on the ground that levy of compensation was not tenable since the contract was admittedly kept alive by the conduct of both the parties after the expiry of the stipulation date of completion without mutually fixing another date of completion in relation to which the question of delay could be considered.
5. Reading Clauses 2 and 25 of the agreement together, the question of levy of compensation, in terms of the decision of the Supreme Court in Vishwa Nath Sood v. Union of India, could not have been made the subject matter of arbitration and could not have been referred for adjudication. Clause 2 of the agreement makes the levy of compensation by the appropriate authority as final and binding and not arbitrable. The mere fact that reference had been made and no objection was taken before the arbitrator will not confer any jurisdiction upon the arbitrator, since as per terms of Clause 25 of the Agreement, this dispute could not have been referred for adjudication. In addition to referring the decision of the Supreme Court in Vishwa Nath Sood's case (supra), reference be made to another decision of this Court in D.D.A. v. M/s. Sudhir Bros. This to this extent, the objections of the respondent are liable to be allowed and the award of the arbitrator, insofar as it pertains to item No. 8 of the counter claim is liable to be set aside.
6. The other objection of the respondent is to the award made in claimant's favour for a sum of Rs. 17,000 being the security deposit. I do not find any error apparent on the face of the record for setting aside the award on Claim No. 1 of the claimant. The arbitrator rightly found that respondent was not justified in having withheld the payment of security deposit, which ought to have been paid to the claimant. On the question of interest also, the arbitrator's jurisdiction to award interest for the period allowed as per award cannot be disputed. The arbitrator held the claimant entitled to interest from the date of reference till the date of decree which ever is earlier. In view of the decision of the Supreme Court in Gujrat Water Supply & Sewerage Board v. Unique Erectors (Gujrat) (P) Ltd. and another, the objection of the respondent to that extent is not tenable and deserves to be discarded.
7. The claimant had prayed for an award of Rs. 23,042 for the work done and found to have been measured in the measurement book at page 16 on 26th April, 1981, which amount according to the claimant had not been paid. During the course of arguments learned Counsel for the claimant rightly conceded that no dispute is being raised by the claimant in so far as the allowing of counter claim to respondent under the head "Income Tax", "Excess consumption of cement", "Cost of top Steel", "Non-return of empty bags", "recovery of work done at risk and cost of the contractor" and "Compensation for delay in completion of work" is concerned. Having not disputed this amount, the only dispute remained with respect to deduction of Rs. 14,947 which had been made by the respondent from the final bill of Rs. 23,852.30 ? This deduction had been made due to less strength of R.C.C. work. No part of the award says that this deduction was upheld by the arbitrator, though it was made a specific part of claim by the claimant that it was entitled to the amount of final bill without any deduction. In case a respondent was entitled to any deduction on account of less strength R.C.C. work, it ought to have been made the subject matter of dispute and referred to arbitrator and since deduction was disputed and dispute was not raised by the respondent, the respondent was not justified in having made deduction and the award of the arbitrator does not say anything that deduction was justified. Thus out of the final bill amount of Rs. 23,852.30, respondent were not entitled to deduct the sum of Rs. 14,947. Respondents were held entitled only to adjust the amount due under sub-head (i) to (vii) in its Counter Claim No. 1 for which there was no dispute. No other point was urged or agitated.
8. In view of the above, both the objections are disposed of with the observation that award shall stand set aside insofar as it pertains to the decision of the arbitrator on the question of levying of compensation for the delay in the execution of work, namely, sub-head (viii) of counter claim No. 1, which could not have been referred to for arbitration and not within the power of the arbitrator. The validity of the levy of compensation is, therefore, taken out of award. It will, however, be open for the respondent to seek recovery of the amount of compensation in whatever manner it is open to it. In case any proceedings are taken, it will be open for the claimant to raise all defenses that may be open to it in law to contend that levy is bad. As and when the proceedings are taken out by the respondent, it is made clear that question of limitation will not be raised by either of the parties, in view of the procedure which had been adopted in this case by making reference to the arbitrator.
9. The award of the arbitrator for the sum of Rs. 17,000 and interest is upheld and counter claim under sub-heads (i) to (vii) in Counter Claim No. 1 is also upheld. It is also held that respondent was not entitled to deduct the sum of Rs. 14,997 from out of the final bill of Rs. 23,852.30.
10. In view of the above and with these modifications, the award of the arbitrator is made rule of the Court and decree in terms of the same is directed to be drawn up. Award shall from part of the decree. Claimant shall also be entitled to interest at the rate of 10% p.a. from the date of decree till payment.
