Gauri Shankar vs Delhi Development Authority
1997 Latest Caselaw 699 Del

JUDGMENT

K. Ramamoorthy, J.

(1) The Claimant M/s Gauri Shankar (hereinafter referred to as the Contractor) was entrusted with the work of construction of local shopping Centre at West of Trilokpuri (opposite Pocket I) Scheme No. 560/2 (Balance Work) by the Delhi Development Authority (hereinafter referred to as DDA). By letter dated 30.09.1992 the Superintending Engineer was appointed as a sole arbitrator by the Engineer member.

(2) The contractor made 19 claims and there was no counter claim by the DDA. Mr. Shailash Kapoor argued on behalf of the Dda and Mr. C.R. Soma Shekhran Sr. Advocate argued on behalf of the contractor. The arbitrator had rejected the preliminary objection raised by the Dda that the claims are not arbitrable stating that it had taken to recourse of become a judge of its own course.

(3) Ia No.861/95 is filed by the contractor challenging the award in so far as against it with reference to claim No.18 relating to the rate of interest. The Dda has filed Ia No. 173/96 challenging the award with reference to claim Nos 1,6 to 9, 17 and 18.

(4) On claim No.1 the contractor has claimed a sum of Rs.60,000.00 on account of rebates deducted from various bills without fulfillling the conditions. The Dda had objected the award on claim No.1 on the ground that there has been non- application of mind by the arbitrator and the arbitrator has ignored the substantial points over- looking the vital contention raised by the Dda in opposition to the claim. In the objection petition the Dda has further stated that there was no such dispute in existence at all between the parties, that the rebates had been accepted by the contractor while accepting the final bill on 23.04.1992. The arbitrator had not given any reasons and there has been perverse interpretation to the clause 2(a) (b) and (c) in the contract and the award is contrary to clause 7. The arbitrator has held: The respondent (s) have breached the Conditions No.2 (a), (b) and (c) manifested in the letter of Award of contract, hence, wrongly availed rebates for few monthly sanction to extra and substituted items, hence, the claim of the claimant(s) is partly justified. I, decide that the Respondent(s) do pay Rs. 13,084.90 (Rs. thirteen thousand eighty four and paise ninety) only, to the claimant(s) on account of refund of rebates already availed.

(5) After considering the documents the arbitrator had awarded a sum of Rs. 13,084.90. The challenge by the Dda on this part of the award is without any substance. It is not a case where it could be said that the arbitrator did not consider any material. The arbitrator has only partly allowed the claims. Therefore, the attack by the Dda on this part of the award is totally unjustified. I reject the objection filed by the Dda on this score and I confirm this part of the award.

(6) On claim No.2, the claimant has claimed a sum of Rs. 4,90,000.00 towards payment of final bill. The arbitrator had awarded a sum of Rs. 25,000.00 that has not been challenged by the DDA.

(7) On claim No.3 the claimant has claimed a sum of Rs. 1,00,000.00 towards release of bank guarantee/security deposit. This claim was not pressed by the claimant.

(8) Claim No.4 was rejected by the arbitrator.

(9) On claim No. 5, the contractor has claimed a sum of Rs.10,000.00 towards release of amount withheld illegally in the various bills. The arbitrator has awarded a sum of Rs. 5,000.00 and that is also not challenged by the DDA.

(10) On Claim No. 6, the claimant has claimed a sum of Rs. 2,50,000.00 towards work done under various items at the directions of the department but not paid by the department. The arbitrator had award a sum of Rs.30,100.00 . The Dda had objected to the award on the ground that the award is contrary to clause 12 of the General Conditions of the contract and contrary to clause 8(A) and clause 7 and there was no dispute raised by the contractor under clause 25 i.e within 90 days of the intimation of readiness for the payment of the relevant bills and there is no application of mind by the arbitrator. In reply thereto the contractor has stated that the Dda had neither denied the execution of pumping out of water nor did the Dda raise any plea in its counter statement on the basis of clause 12 of the agreement. The Contractor has filed the rate analysis Exhibits C- 2, C-6, C-9, vouchers C-42 (i) to (iv) to prove the payments made by the petitioner to the persons who carried out the work. The Dda did not dispute the correctness of the evidence produced. The arbitrator has rejected all the objections which were made as preliminary objections and, therefore, it is not open to the Dda to raise frivolous objections. There has been no violation of clause 7, 8A and 25 or clause 12 of the agreement.

10.The arbitrator has held:

THEclaimant(s) have not produced cogent evidence of raising specific issue during the progress of work regarding extra expenditure incurred for execution under item No.1.5 (filling Jamuna sand) and item No. 3.8 (straightening and cutting of steel bars), hence, the claim of the claimant(s) is not justified.

THEclaimant(s) have also claimed for extra work done for pumping out sewerage water due to broken sewer line and repair of the line. Neither the respondent(s) produced any evidence of refuting the work done nor produced any evidence of reply to Exhibits, C-2, C-6 and C-9 of the claimant(s) in this regard. Claimant(s) claim is therefore, justified.

I decide that the respondent(s) do pay Rs. 30,100.00 (Rs. thirty thousand one hundred) only to the claimant(s).

After considering all the materials placed before the arbitrator, the contractor has proved his claim only to the extent of Rs. 30,100.00 . Thus it could be seen that the arbitrator had considered all the materials applying his mind. Though Ex.C-42 is referred to by the contractor in the reply that is not referred to by the arbitrator in his award, but Mr. Soma Shekharan learned Senior counsel for the contractor brought to my notice that Ex.C-42 and Mr. Kapoor learned counsel for the Dda could not give any effective answer to this. Therefore, I do not find any error in the reasoning given by the arbitrator and I confirm this part of the award.

(11) On claim No.7, the claimant has claimed a sum of Rs. 6,50,000.00 towards payment under clause 10C of the agreement. The main objection is that the contractor has not proved his claim by producing the materials showing the actual payment made to the labourers. No claim was raised during the current year of the contract till November 1990. The contractor produced documents in March 1992. In the reply the contractor has stated that Exhibit C-57 alongwith the rate analysis submitted and Exhibits C-7 and C-21 would show the payments made by the contractor. The arbitrator was satisfied about the documentary evidence produced by the contractor and, therefore, the award is in accordance with law. The arbitrator gave the following reasoning:

THEclaimant(s) have reduced the claim to Rs.4,50,242.00 . The claimant(s) have raised the claim under clause -10(c) of the agreement, before finalisation of final bill (ext.C-7). The respondent(s) have not attributed any delay on the part of claimant(s) even for completing the work after stipulated date of completion.

THEclaimant(s) have submitted details of claim and relevant documents for claim under clause -10(C) before finalisation of the bill, but, neither the details have been traversed, nor adverse comments have been given on the analysis by the respondent(s).

I decide that the claim of the claimant(s) is justified and respondent(s) do pay Rs. 3,96,931.30 (Rs. three lakhs ninety six thousand nine hundred thirty one & paise thirty) only to the claimant(s).

Iam satisfied that the reasoning given by the arbitrator is in accordance with law and there is proof of payment and the claim was fully justified under clause 10C. Accordingly, this part of the award is confirmed.

(12) On claim No. 8, the contractor claimed a sum of Rs.3,10,000.00 towards damages on account of salary of staff, establishment and under utilization of T&P due to prolongation of the contract beyond stipulated date of completion due to non-fulfilment of contractual obligations by the department. The arbitrator has awarded a sum of Rs. 28,400.00 . On claim No.9, the contractor has claimed a sum of Rs.10,00,000.00 on account of rise in prices of labour and material for the work done beyond stipulated date of completion. The Dda has filed the objection of claims 8 and 9 on the ground that the arbitrator was guilty of violation of principle of natural justice, one is contrary to clause 10 of general condition and clause 1 of conditions of specifications and there were no disputes between the parties at the time of invocation of arbitration by the claimant. With reference to claim 8 the arbitrator has given his reasoning in the following manner:

THEclaimant(s) have claimed (Exzt.C-9) the damages for idling of staff and T&P as detailed in Annexure -A (iv). The respondent(s) have delayed approval of structural design (Ext.C-5), hence, the claimant(s), staff remained idle for four months. I hold that the respondent(s) do pay Rs. 28,400.00 (Rs. twenty eight thousand four hundred) only, to the claimant(s).

With reference to claim No.9 the arbitrator has given his reasoning in the following manner:

THEclaimant(s) have claimed extra rates on account of rise in market rates (Ext. C-9) for execution of work in prolonged period. The respondent(s) have not refuted the claim during the progress of work and also did not grant extension of time under clause -5 of Agreement. The breach of agreement is on the part of the respondent(s) on account of default of non approving structural drawings in time and also changing the entire architectural drawings on 23rd April 1988 (Ext. C-35A). The claimant(s) have produced evidences of rise in cost index as per C.P.W.D. Circulars (Exhibits - C 22 & C-23). Accordingly, an average rise of cost index comes to 15.17% on Rs. 36,88,891.00 work done in prolonged period after deducting the cost of material supplied by the respondednt(s) and procured by the claimant(s) thereby, rise in work cost becomes Rs. 5,59,604.76. The claimants have been awarded Rs. 3,96,931.30 for rise in the wages of the labour in claim No.7, hence, after deducting this amount, I, decide that the respondent(s) do pay Rs. 1,62,673.50 (Rs. one lakh sixty two thousand six hundred seventy three & paise fifty) only, to the claimant(s).

The arbitrator who is an expert in the field had taken into account the cost index and also other relevant aspects in assessing the amount that could be awarded to the contractor. I do not find any error in the amount arrived at by the arbitrator on claims 8 and 9 and, therefore, this part of the award is confirmed.

(13) Claim No. 10 was rejected by the arbitrator.

(14) Claim No.11 was not pressed by the claimant.

(15) Claim No. 12 was rejected by the arbitrator.

(16) Claim No. 13 was not pressed by the contractor.

(17) Claim No.14 was not pressed by the contractor.

(18) On claim No. 15, the contractor has claimed a sum of Rs.20,000.00 on account of soil (testing) investigation work done at the directions of the Department but not paid by the department. The arbitrator has awarded a sum of Rs. 16,000.00 . The objection by the Dda is that the arbitrator had exceeded his jurisdiction and there was no dispute in existence at the time of invocation of the arbitration. The arbitrator has given his reasoning in the following terms: @SUBPARA = The claim of the claimant(s) is for cost of work done for soil investigation for determining bearing capacity of soil. The respondent(s) argued that the claim is time barred. I decide that the claim is not time barred and the determination of bearing capacity of soil is the responsibility of the Respondent(s) in terms of agreement, hence, the claim of the claimant(s) is justified. The respondent(s) do pay Rs. 16,000.00 (Rs. sixteen thousand) only to the claimant(s). The arbitrator is fully justified in taking view and fixing the amount at Rs. 16,000.00 and there is no error apparent on the face of the record. Therefore, I confirm this part of the award.

(19) Claims 16 and 17 were rejected by the arbitrator.

(20) On claim No. 18, the claimant has claimed interest @ 24% on all the above amounts due, but not paid by the department. The arbitrator had awarded simple interest @ 12% with effect from 15.04.1992 till the date of payment or decree whichever is earlier. The contractor in its objection petition stated that the arbitrator committed an error in not granting interest on the claims 1, 2, 5, 6, 7, 8, 9 and 15 for the period from 16.03.1992 to 14.04.1992 and interest on the sum of Rs. 2,83,622.30 for the period from 16.03.1992 to 31.03.1993. The contractor claimed interest @ 24% per annum. The Dda had objected to this part of the award stating that the award with reference to claim No. 18 is liable to be set aside.

The arbitrator has given his findings as under:

The respondent(s) have prepared the final bill of claimant(s) in February 1991, but, made the payment in March 1993. The claimant(s) claimed interest for which notice was issued w.e.f. 16th March, 1992 (Ext. C-1). The respondent(s) have sought many adjournment. I decide that the respondent(s) do pay simple interest @ 12% per annum w.e.f. 15th April 1992 till the date of payment or decree whichever is earlier.

MR.C.R.Soma Shekhran Sr. Advocate for the claimant relied upon the judgment of this court reported in Civil Engineers (India) Vs. Delhi Development Authority , for the purpose of justifying the objection by the contractor towards the claim of interest @ 18% per annum. The award of interest depends upon the facts and circumstances of each case. There cannot be any inexorable principle to be followed in every case. I am of the view that the award of interest @ 12% per annum is quit justifiable and correct in law. Therefore, I confirm this part of the award.

(21) On claim No.19 the claimant has claimed a sum of Rs. 20,000.00 towards cost of arbitration proceedings. No award has been passed by the arbitrator. The arbitrator has directed the respondent to pay Rs. 400.00 to the contractor if it is not paid already which was the cost of the award on 17.06.1994.

(22) Accordingly, the award is made rule of the court. The suit and IAs stand disposed of.

(23) There shall be a decree;

a) directing the Dda to pay to the claimant a sum of Rs.6,77,189.70.00

B)directing the Dda to pay to the claimant interest on the sum of Rs.6,77,189.70 @ 12% per annum with effect from 15.04.1992 till the date of payment;

C)directing the Dda to pay to the claimant a sum of Rs.400.00 as the cost of the proceedings.

D)directing the parties to bear their own costs.