Arvind Construction Co. vs The Executive Engineer
1997 Latest Caselaw 20 Del

JUDGMENT

K. Ramamoorthy, J.

(1) That the petitioner was awarded the work of development of Rohni Project Phase-1 SH:P/L sewer line in Sectors Iii and Vii vide Agreement No. 24/HD-XII/A/82-83. The disputes arose between the Contractor v. M/s. Arvind Construction Co. and the DDA. The Arbitra tor passed the award on 17.8.1994.The Dda has filed objection petition being IANo.461/95.The Contractor has not filed any objections.

(2) Claim No. 1 relates to the refund of security deposit. It is stated by the claimant that a sum of Rs. 1,00,000.00 was deposited towards the security deposit and the DDA had paid only Rs.50,059.00 And the balance of Rs. 49,941 .00 hadn ot been paid. This claim is considered by the Arbitrator under three paragraphs. Para (i) relates to an amount of Rs. 663.00 that was pressed into by the Contractor.

(3) Para (ii) relates to an amount of Rs. 29,853.00 recorded from the security deposit by the DDA. The claim was that this sum recovered by the Dda without any notice and any justification. Before the Arbitrator a document was Filed which is Exhibit R-2, which is found in File No. 3 that is dated 6.1.1989 seeking to recover Rs. 29,853.00 from the Contractor with reference to some other work entrusted by the Dda to the Claimant. Clause 29 of the agreement provides thus :

CLAUSE29 (1) Whenever any claim or claims for payment of a sum of money arise out of or under the contract against the contract, die Engineer-in-Charge of the Dda shall be entitled to withhold and also have a lien to retain such sum or sums in whole or in part from the security. If any deposited by the Contractor and for the purpose aforesaid the Engineer-in-Charge of the Dda shall be entitled to withhold the security deposit. If any furnished as the case may be; and also have a lien over the same pending finalisation for adjustment of any such claim. In the event of the security being insufficient to cover the claimed amount or amounts or if no security has been taken and have a lien to retain to the extent of such claim amount or amounts referred to above, from any sum or sums found payable or which at any time thereafter may become payable to the Contractor under the same contract or any other contract with the Engineer-in-Charge of the Dda, or any contracting person through the Engineer-in-Charge pending finalisation or adjudication of any such claim. It is an agreed form of the contract that the sum of money or monies so withheld or retained under the lien referred to above, by the Engineer-in- Charge of Dua till the claim arising out of or under the contract is determined by the Arbitrator (if the contract is governed by the arbitration clause) or by the Competent Court, as the case may be and that the Contractor will have no claim for interest or damages whatsoever on any account in respect of such withholding or retention under the lien referred to above and duty notified as such to the Contractor. For the purpose of this clause, where the Contractor is a partnership firm or a limited company, the Engineer-in-Charge of the Dda shall be entitled to withhold and also have lien to retain towards such claimed amount or amounts in whole or in part from any sum found payable to any partner/ Limited Company as the case may be whether in his individual capacity or otherwise.

2.Delhi Development Authority shall have right to cause an audit and technical examination of the works and the final bills of the Contractor including all supporting vouchers, abstract etc. to be made after payment of the final bill and if as a result of such audit and technical examination any sum is found to have been overpaid in respect of any work done by the Contractor under the contract or any work claimed by him to have been done by him under the contract and found not to have been executed, the Contractor shall be liable to refund the amount of overpayment and it shall be lawful for Delhi Development Authority to recover the same from him in the manner prescribed in Sub-clause (1) of this clause or in any other manner legally permissible and if it is found that the Contractor was paid less than what was due to him under the contract in respect of any work executed by him under it, the amount of such underpayment shall be duly paid by Delhi Development Authority to the Contractor: Provided that Delhi Development Authority shall not be entitled to recover any sum overpaid nor the Contractor shall be entitled to payment of any such paid short where such payment has been agreed upon between the Chief Engineer or Executive Engineer on the one hand and the Contractor on the other under any term of the contract permitting payment of work after assessment by the Chief Engineer or the Executive Engineer.

(4) This clause enables the Dda to recover the amount from the Contractor from the security deposit/available with the Dda for any other work and other than the work for which the security deposits have been made due from' the Contractor. In other words, whatever the number of works given to the Contractor, the Dda is empowered to recover from the security deposit from any one of the Contractors. Exhibit R-2 was not challenged before the Arbitrator.

(5) The Arbitrator has awarded a sum of Rs. 29,853.00 giving the following reasons: An amount of Rs. 2.9,853.00 recovered from the security deposit which was to have been released in January, 1986 whereas the same was released only on 25.10.1989 for reasons not readily manifest and the amount of Rs. 29,853.00 was recovered without notice on 6.8.1988by raising the debit against the claimants for alleged damage, the Claimant was supposed to have done a work executed by another Ee of the respondent authority which was not even contemporaneous. This recovery is basically untenable, time-barred and was without any notice and accordingly the respondent's action is not held valid.

(6) Learned Counsel for the Dda has filed objection petition and submitted that the Arbitrator has committed error which is apparent on the face of the record and has ignored the relevant clause namely,Clause29and also important document Exhibit R-2 and, therefore, the award on this part has to be set aside. The Contractor has filed the reply to the objection petition reiterating the reasoning given by the Arbitrator.

(7) I find considerable force made by the learned Counsel for the DDA. I fail to see how the question of any limitation would arise when there is a specific right given by the parties to the Dda to recover from the security deposit available with the DDA. The Arbitrator has assumed that for the purpose of invoking the right under Clause 29 of the agreement, the work for which the recovery is sought to be made by the Dda submitted be contemporaneous. The Contractor had sufficient opportunity of challenging Exhibit R-2 which be agreed and the way in which the recovery was made by the DDA. Once the process of recovery made by the Dda had become final and conclusive as against the contract that cannot he got over by the way in which that has been done by the Arbitrator. Therefore, the award of the Arbitrator about this sum of Rs. 29,853.00 cannot at all be sustainable.

(8) Para (iii) of Claim No. 1 relates to the recovery of Rs. 19,425.00 . The Contractor was entrusted with 7058 manhole covers and the balance which he should have been given to the Dda was 21. That is clear from the Exhibit R-3 filed by the Dda before the Arbitrator. Towards the costs of 21 manhole a sum of Rs. 19,425.00 is recovered. The document R-3 was before the Arbitrator but yet the Arbitrator would state thus : An amount of Rs. 19,425.00 was recovered for non-supply of 21 numbers of manhole covers by the claimants to the respondents authority which had not been established in controvertibly at the hands of the respondents authority.

(9) It is clear from R-3 that there was a balance of 21 manhole covers, therefore, R-3 had not been challenged. The Arbitrator does not have referred to Exhibit R-3. In reply to the objection it is stated by the Contractor as under : It is denied that the findings of the learned Arbitrator with respect to Claim No. (iii) are erroneous on the face of that the error is apparent. The claim of the petitioner was allowed by the learned Arbitrator since the allegation of short supply of manhole covers was not established incontrovertibly by the respondent. The petitioner had constructed 7058 manholes and provided the manhole covers to the respondent who paid the full amount while releasing pay men ton 28.6.1985. Out of these, 21 manhole covers were placed in position as per the directions of the respondent and the remaining manholes were handed over to them. At no point of time did the respondent, for the last 4 years, intimated about the short supply or liability of the petitioner on this account. The learned Arbitrator was therefore correct in awarding the amount of Rs. 19,425.00 which had been deducted from the Security Deposit. This is not at all be accepted and the award of the Arbitrator on Claim No I (Para iii) cannot at all be sustained.

(10) On Claim No. 2, the Claimant claimed a sum of Rs. 78,079.00 under Clause 10C with reference to the increase in labour and materials. It was obligatory on the part of the Contractor to maintain books of accounts showing the amount paid by him for increase of labour and materials in order to make the claim under Clause 10C. It is not the case of the Contractor that any books of accounts were produced before the Arbitrator justifying the claim of Rs. 78,079.00 . The Arbitrator refers Exhibit R-6 filed before him which give details of the statement due to increase of wages of labour. Exhibit R-6 cannot be taken as the document in evidence of payment has been filed establishing the claim of the Contractor. The Arbitrator had apparently proceeded on the basis of this Exhibit R-6 and the endorsement made by him in Exhibit R-6 in the following manner. This difference from C's value is on a/c of error in arithmetic and no enhancement is to be included with this correction. The correct figure shall be Rs. 37,050.00 . But this amount is not admissible as per Ioc of the agreement. Reference to debarring efforts due to Clause 25 and Clause 10 for non submission of evidence/documentary proof for enticement otherwise this claim is totally untenable.

(11) Under Clause 25 of the agreement the Arbitrator is bound to give reason for giving his award. The Arbitrator would state in award as thus : I allow a sum of Rs. 37,050.00 against this claim, in favour of the Claimants overruling the objections raised by the respondents on the admissibility of the claim perse and direct the respondents to pay the said sum so awarded to the Claimants.

(12) This is hardly a reasoning. In reply to the objection petition it is stated this by the Claimant. I have a doubt about what is stated in the second sentence in para (g). "It is pertinent to mention that the respondent in effect admits that the payment made on28.6.1985 was subject to Clause 10(c) of the contract."

At the end of the same para wherein it is stated by the Contractor that the Dda did not dispute the same before the learned Arbitrator and is estopped from filing any objection to the award given by the Arbitrator. Learned Counsel for the Dda before the Arbitrator as against Claim No. 2 by the Claimant. The Dda has stated before the Arbitrator thus.

(13) The respondent's letter dated 9.2.1989 ibid may please be relied, without admitting the claim it is further submitted that the amount under clause IO-C shall work out much less as compared to the claim preferred by the Claimant. Therefore, the allegation that the Dda did not dispute the claim before 'the Arbitrator is not at all correct. Learned Counsel for the Dda submitted that as the final bill was submitted on 28.6.1985 and endorsement was made by the Claimant himself that the payment by the Dda on 28.6.1985 was not final and it is accepted by the Claimant subject to Clause IOC. Therefore, the point taken in para (g) that there was an admission from the payment under Clause 10(C) is also not correct.

(14) The award of the Arbitrator on this claim (Claim No. 2) cannot at all be sustained. Therefore, the award of sum of Rs. 78,079.00 stands set aside.

(15) The Claim No. 3 relates to Rs. 20,000.00 withheld from the final bill for repair of manhole by the DDA. The Arbitrator has awarded Rs. 20,000.00 giving the following reasons: An amount of Rs. 20,000.00 withheld by the respondents authority duly (sic.) facts stands replaced over-ruling the subsequent objections raised by the respondents authority on the admissibility of the claim and accordingly I do award a sum of Rs. 20,000.00 in favour of the claimants and direct the. respondents to pay the same sum to the claimants.

(16) I do not think that the objection made by the Dda as against this claim is sustainable. The award of Rs. 20,000.00 is upheld.

(17) Regarding Additional Claim No. 1 for interest @ 18% from 29.4.1985 i.e. the date of completion of work till realisation. The Arbitrator had awarded interest @ 12%per annum from 18.12.1989 on the sum of Rs. l,06,328.00 till the date of payment. They awarding of interest could be confined only to the award of Rs. 20,000.00 . Therefore, interest @ 12% is only with reference to Rs. 20,000.00 .

(18) Accordingly, the award of the Arbitrator in Claims No. l(ii) and (iii) and Claim No. 2 stand set aside. Award is made rule of the Court with reference to Rs. 20,000.00 on Claim No. 3 with interest @ 12% per annum on the sum of Rs. 20,000.00 from 18.12.1989 till the date of payment.

(19) Accordingly, there shall be a decree setting aside the award with reference to Claim Nos. l(i), (ii) and .(iii) and Claim No. 2. Directing the Dda to pay to the Claimant a sum of Rs. 20,000.00 with interest @ 12% from 18.12.1989 till the date of payment. Directing the parties to bear their own costs.