Bedi Construction Co. vs A.P. Paracer And Anr.
1996 Latest Caselaw 234 Del

JUDGMENT

N.G. Nandi, J.

(1) This is an application under Sections 14 and 17 of the Arbitration Act, read with Section 3 of the Interest Act, 1978 by one of the parties to the arbitration proceedings, praying for the direction to respondent No. I, the sole Arbitrator, to file the original award rendered on 11.5.1992 with all its depositions, documents and for making the said award the rule of the Court and decree in favour of the petitioner.

(2) On filing of this petition and the same having been numbered as the suit, by order dated 10.7.1992, notice was issued to respondent No. I-Arbitrator, directing him to file the award along with the proceedings. After filing of the award along with the original proceedings, notice under Section 14(2) of the Act was issued to respondent No. 2. On receipt of notice, aforestated, respondent No. 2, the other party to the arbitration proceedings, vide Ia 103/93, filed objections under Sections 30 and 33 of the Arbitration Act and prayed for acceptance of the objections and the setting aside of the award contending that respondent No. I has committed legal misconduct and that the Arbitrator has committed error apparent on the face of the record.

(3) It is submitted by Mr. Sharma, learned Counsel for respondent No. 2, that the award is rendered on 19.5.1992; that claim No. I is not sustainable/justified and the same has been wrongly awarded. It is further contended that as regards claim No. 3 the interest could not have been granted at more than 12% by the Arbitrator as the Arbitrator has awarded interest @ 18% on the amount of Rs. 1,38,826.00 ; that the rate of interest awarded is not in accordance with the definition of rate of interest under the Interest Act. As regards Claim No. 4, it leas been submitted that no reasons have been given by the Arbitrator; that the agreement provides for the giving of reasons.

(4) As regards claim No. 5, it has been contended that the Arbitrator has overlooked the Cpwd circular, which is an important piece of evidence; that the same ought to have been taken into consideration for guidance; that there are no reasonings in support of the claim of Rs. 30,000.00 under Clause 10(c) of the agreement

(5) As regards Claim No. 6, it is contended on behalf of respondent No. 2 that the claim for the broken window glass panes for the sum of Rs. 9,199.50p. has been on conjectures and surmises. This claim has no basis of evidence and that no reasons have been assigned as to why Rs. 9,199.50p.for replacing of broken glass panes are awarded.

(6) As regards claim No. 7, it has been contended that the say of the petitioner for plastering done above 10 mtrs. height has been accepted as gospel truth by the Arbitrator. The award for Rs. 5,452.00 by the Arbitrator has been as the Arbitrator has misinterpreted para 3.2 of specifications; that according to the provisions contained in para 3.2 of the specifications, for heights and depths covers the claim on this score and that the decision on this score is wholly incorrect.

(7) As regards the grant of claim No. 10 in the sum of Rs. 3.00 lakhs on account of damages/loss of profit and loss of business due to prolongation of contract by 20 months, it has been contended by Mr. Sharma that there is no basis for awarding a sum of Rs. 9,000.00 per month; that there is definitely no genesis for awarding Rs. 9000.00 p.m.; that the grant of this claim is absolutely without giving any reasons or disclosing thought process, as to how the figure of Rs. 9000.00 p.m. has been arrived at; that there is inconsistency in statement of fact and the evidence; that there is absolutely no justification for grant of Rs. 9000.00 p.m. as damages; that as per the pleadings, the salary of the staff is Rs. 7300.00 p.m.

(8) As regards claim No. 13, it has been submitted that work was completed on 15.7.85, the flats have been handed over from 15.7.85 to 20.3.91 and it was for the petitioner to show the watch and ward expenses incurred; that there is no evidence for the claim of Rs. l,40,450.00 for watch and ward staff; that no reasons have been given for allowing tills claim and no basis of evidence.

(9) As against this, it is submitted by Mr. Rohtagi, learned Counsel for the petitioner, that what is required to be seen is whether there is any legal misconduct on the part of the Arbitrator; that there is no question of the Arbitrator exceeding the jurisdiction; that full opportunity was accorded to both the sides by the Arbitrator; that claim No. I has been for the refund of Rs. 10,000.00 , which was withheld in the final bill for a period of one year and eight months of the completion of the work. As regards claim No. 3, it is submitted that respondent's liability would be for a period of six months for defects, if any; that the petitioner is paid on 30.8.87 after one year and eight months of the completion; that the claim of interest by the petitioner, on this score, can not be said to be unreasonable or unjust or against the record and 18% rate of interest awarded by the Arbitrator is far below the rate of interest prevalent in the market; that the grant of interest is a discretion with the Arbitrator; that as regards claim No. 4 for the deductions in the final bill and awarding a sum of Rs. 29,208.00 does not require any further reasoning and the reasonings have been given in the award itself; that claim No. 6 is also supported by the reasons for granting the sum by the Arbitrator; that there is no justification in the objection with regard to claim No. 7 and that the claim is permissible, considering clause 3.15 of the agreement; that grant of claim No. 12 for Rs. 9000.00 p.m. has been on admitted facts; that it is the reasonable assessment of the damages / loss of profit on experience of an expert; that the finding with regard to the grant of claim No. 12 can not be regarded perverse and the same has been on the basis of the material on record. As regards claim No. 13, it has been contended that the work was completed on 15.7.85 and the flats were handed over by the contractor directly from 15.7.85 to 20.3.91; that watch and ward staff had to be kept by the petitioner as the number of flats were handed over to the allottees from time to time; that there is no illegality committed by the Arbitrator in granting the claim on this score. It is contended that claim No. 14 relate to the interest, just as claim No. 3; that claim No 15 relate to the costs of the arbitration proceedings.

(10) It may be seen that the objections filed by the objector-respondent are with regard to claims No. 1,3,4,5,6,7 and 12 awarded by respondent No. 1, the Arbitrator. Claim No. 3 and claim No. 14 relate to interest. By both these claims, the Arbitrator has awarded 18% interest on the amount claimed. The jurisdiction of the Arbitrator to award interest on the claim amount as well as the pendente lite interest is not disputed. It need hardly be said that the grant of interest at particular rate is the discretion of the Arbitrator and the Arbitrator has power to award interest at particular rate and also interest pendente lite. In the case of M/s. Krishan Kumar Madhok v. Union of India, , it has been held that "an Arbitrator has power to award interest pendente lite. Though Section 34 does not in terms apply, the Arbitrator has the same power as the Court has." The grant of interest @ 18% as regards claim Nos. 3 and 14 can not be said to be an error, apparent on the face of the record or a legal misconduct by the Arbitrator in view of the settled legal position in respect of interest pendente lite and rate of interest being the discretion with the Arbitrator. The submission on this score, on behalf of respondent No. 2, is noted for being rejected.

(11) The grant of Rs. 10,000.00 as claim No. 1 is on account of the amount stated to be unjustifiably with-held by respondent No. 2 from the payment of final bill. It may be seen that the record reveals that the completion certificate was recorded by the Superintendent Engineer (C-34) after inspection of the work and it is stated therein that the inspections suggested that the work was carried out generally to specifications and completed satisfactorily and no visible defect was found. Relying on this certificate, the Arbitrator held that the amount was wrongfully with-held. It does not appear that the grant of claim of Rs. 10,000.00 for the unjustifiable withholding of the amount by respondent No. 1 is in any way contrary to the evidence or that there is any legal misconduct by the Arbitrator in granting this claim.

(12) Against a claim of Rs. 29,208.00 being claim No. 4 on account of unjustified deductions in the final bill due to reduction in rates, some items have been granted by the Arbitrator to the tune of Rs. 21,781.95p. According to the reasons assigned by the Arbitrator, the respondent could not produce any convincing reason as to why the rates of certain items of work were paid at reduced rate for the alleged defective quality when the Superintendent Engineer's completion certificate unequivocally stated that the quality of work was satisfactory and there was no visible defects. When the certificate of the Superintendent Engineer suggests the quality of work to be satisfactory with no visible defects, the deduction of Rs. 29,920 .00 as per R.I.S. No. 7 has to be necessarily held to be unjustified deduction in the final bill when the respondent could not produce any convincing evidence with regard to the payment of certain items at reduced rates. The grant of claim No. 4 can not be regarded, in any manner, to be legal misconduct of any nature on the part of the Arbitrator. There does not seem any error apparent on the face of the record as far as the grant of this claim is concerned.

(13) As far as claim No. 5, grant of Rs. 30,000.00 is concerned, the same has been on account of the balance payment due under Clause 10(c) of the agreement. The payment under this clause has been by the respondent on the basis of Cpwd circular after the statutory increase in the minimum wages. The Arbitrator has added extra 1% while working out clause 10(c) payment for work done above floor 2 level on the basis of Cpwd circular after statutory increase in the minimum wages. I do not see any error apparent on the face of the record and thereby any legal misconduct by the Arbitrator in granting this claim on the basis of CPWD circular issued after statutory increase in the minimum wages.

(14) As far as claim No. 6 is concerned, the Arbitrator has awarded Rs. 9,199.50 being 50% of the claim amount of Rs. 18,399.00 on account of replacement of broken window glass panes after the completion of the work by the contractor. This claim has been for the expenses incurred by the contractor, for replacing the broken window glass panes on the handing over of the flats to the allottees after the completion of work. On the ground floor and first floor, the breakage of window glass panes would be more. The assumption drawn by the Arbitrator is absolutely reasonable and the amount awarded for the breakage during 2-3 years, in any way, does not suggest any error apparent on the face of the record. Legitimate inferences and assumptions have to be drawn. No legal misconduct can be said to have been committed by the Arbitrator while granting this claim.

(15) Against claim No. 7, a sum of Rs. 15000.00 has been granted. It is on appreciation and interpretation of para 3.2 under the heading "Specifications" on page 48 of the agreement. It is not disputed that the agreement itself provided different rates for work at different heights. It will be open to the Arbitrator to interpret the term of the contract and interpretation of the terms/clause of the contract, can not be regarded as an error apparent on the face of the record, so as to amount to legal misconduct by the Arbitrator.

(16) As far as claim No. 12 is concerned, against the claim of Rs. 3.00 lakhs, on account of damages/loss of profit and loss of business due to prolongation of contract by 20 months, the award amount is @ Rs. 9000.00 p.m. amounting to Rs. 1,68,750.00 for a total delay of 18 months and three weeks. It may be seen that the stipulated "date of completion of work is 22.12.83, the actual date of completion of work is 15.7.85, the period of prolongation of work is 18 months and 3 weeks. It is not suggested that the delay is, in any manner, attributable to the contractor/ claimant so as to suggest the award on this account to be an error apparent on the face of the record/contrary to the evidence so as to be a legal misconduct by the Arbitrator. It is suggested from the arbitration record and proceedings that the building contract was extended much beyond the stipulated date, the hinderence register suggests the delay attributable to DDA-respondent No. 2. It is not the say of the respondent before the Arbitrator that the contractor did not employ sufficient staff at site during the extended period. The amount of Rs. 1,68,750.00 @ Rs. 9000.00 p.m. for the total period of delay of 18 months and 3 weeks solely attributable to the respondent, can not be regarded as an error apparent on the face of the record or contrary to the evidence. As observed above, it would be legitimate for the Arbitrator to draw reasonable assumptions and inferences so as to reach a finding. Grant of claim on this score, does not sound in any manner questionable.

(17) Vide claim No. 13, the Arbitrator has awarded Rs. 1.25 lakhs on account of watch and ward kept by the claimants after the completion of the work till the handing over of the flats. It is the admitted position that construction work of the flats was completed on 15.7.85 and process of handing over of possession of the flats to the allottees, started from 28.7.86 and lasted upto 20.3.91. The flats in question have been handed over by the petitioner directly to the allottees. It need hardly be said that the petitioner would be required to employ staff so that no trespasser or intruder occupies any of the flats. It is not the says of the respondent that respondent had made any arrangement for watch and ward staff to prevent any trespasser or intruder getting into the flats in question. The claimant was necessarily required to stay on the site beyond the date of completion till the handing over of the flats to the allottees and the claimant had admittedly made arrangement for watch and ward staff during the extended period. Under the circumstances, it can not be said that the Arbitrator committed any error apparent on the face of the record while granting the claim under this head.

(18) In the case of Trustees of the Port of Madras v. Engineering Constructions Corporation Limited , it has been held that

"THE error apparent on the face of the award contemplated by Section 16(1)(c) as well as Section 30(c) of the Arbitration Act is an error of law apparent on the face of the award and not an error of fact. It is equally clear that an error of law on the face of the award means an error of law which can be discovered from the award itself or from a document actually incorporated therein........."

"s case of M/s. Sudarshan Trading Co. v. The Government of Kerala and another , it has been held that "the Court can not interfere with the award to probe into 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......... Reasonableness of the reasons given by the Arbitrator can not be challenged in the Court." It is further held that "interpretation of the contract is a matter for the Arbitrator which falls within the powers of the Arbitrator and the Court can not substitute its own decision".

in the instant case, the award rendered by the Arbitrator, following the above principles laid down, can not be said to suffer from any infirmity so as to hold the award suggesting any error apparent on the face of the record. The Arbitrator, looking to the arbitration record and proceedings, can not be said to have commit- ted any legal misconduct in granting the claims, as suggested in the award, as aforestated. In my opinion, the award rendered by the learned Arbitrator, does not call for any interference and the same deserves to be made rule of the Court and decree in favour of the petitioner.

(19) In the result, the objections to the award, filed by the respondent-DDA vide Ia No. 103/93 are dismissed and the petition is granted, the award dated 11.5.1992, relating to the work "Construction of 1552 (MIG) Houses (NP) Pkt.J&K, Dilshad Garden, SH; C/o 176 Mig Houses including internal development of Group Vi, Agreement No. 31 /EE/HDX Vlll/82-83", rendered by respondent No. I, the sole Arbitrator Shri A.P. Paracer, is hereby made rule of the Court and decree on the basis of said award, as prayed in the petition granted.

(20) PETITIONER/CLAIMANT would be entitled to 12% interest on the award amount from the date of the decree till the realisation of the amount. The award shall form part of the decree.