A.S. Sachdeva & Sons vs Delhi Development Authority
1997 Latest Caselaw 1032 Del

JUDGMENT

C.M. Nayar, J.

1. The present petition is filed under Sections 14, 17 and 18 of the Arbitration Act, 1940 for issuance of direction to the respondents to file arbitration agreement, proceedings and award dated May, 20, 1992 and for making the same rule of the court.

2. The arbitrator was appointed by the Engineer Member, Delhi Development Authority, respondent herein, vide his letter No. EM 2(76) 75 Arb./404-08 dated February 4, 1978 to decide and make an Award regarding the claims/disputes of the petitioner claimant arising from the contract agreement executed between the parties in terms of the Clause 25 of Agreement. The petitioner was assigned the work of construction of 500 Dwelling Units and Development of land in Group Housing Pocket in Wazirpur, Phase-III, Sh. Construction of 114 Dwelling Units in MIG Group at Wazirpur Phase III and International Development of 114 Hects of Land. The disputes arose between the parties which, as a consequence, were referred to the arbitrator by the respondent Authority. The claims which were referred to the arbitrator may be enumerated as below :

"Claim No. 1 : Claim for Rs. 1,16,739/- as losses on account of infractions expenditure suffered by them due to non-fulfilment of various contractual obligations such as delay in the supply of drawings and handing-over of the site.

Claim No. 2 : Claim for Rs. 19,014/- towards hire charges of idle shuttering due to delay in supply of drawings.

Claim No. 3 : Claimants claim Rs. 12,557.62 on account of difference between the ornamental grills and ordinary/plain grills.

Claim No. 4 : Claim for Rs. 1.25 lacs on account of rise in the wages of labour and price of materials under Clause 10(c).

Claim No. 5 : For Rs. 2,000/- on account of rates less paid for the NBCC Bricks.

Claim No. 6 : Claim for Rs. 12,500/- being the difference of provision of Ford hem Cistern in place of vitreous China clgistern.

Claim No. 7 : Claim for Rs. 21,250/- on account of difference in rates of bricks which were not paid by the Department.

Claim No. 8 : Claim for Rs. 2,140.92 towards extra expenditure incurred on the chiseling of wells.

Claim No. 9 : For Rs. 9,450/- on account of extra weight of steel (Not pressed by the claimants since paid).

Claim No. 10 : For Rs. 51,583.59 being difference of rates of steel windows already paid and actually provided.

Claim No. 11 : Claim for pendente lite interest.

3. The arbitrator on appreciation on evidence on record held as follows :

"(i) The claim arises out of the allegations or delays in handing-over of site, supply of drawings etc. by the respondents consequently it is alleged that execution of work got prolonged upto 15-11-1976 beyond the stipulated date of completion, i.e. 12-10-1974. The claim for losses allegedly suffered by the claimants on account of the alleged prolongation of contract include infructuous expenditure on idle labour and alleged losses on account of expenses, overheads, establishment etc. The details of the claim are set out in Annexure A.

(ii) That it is reasonable to compensate the claimants by award of damages, if breaches of contract are established.

(iii) Payments made under Clause 10(c) of the contract could only be made if there was no delay on the part of the claimants in the execution of the work. It is an admitted fact that payments had been made throughout to the claimants by the respondents under Clause 10(c) and as such, I hold that the claimants were not at all responsible for the prolongation of the contract.

(iv) The vouchers and all relevant records relating to expenses on labour employed and establishment were shown to the respondents by the claimants. No objection was raised by the respondents which would justify rejection of the evidence produced.

(v) The difference between the total expenditure incurred by the claimants on labour, establishment, T&P, etc. during the currency of the contract including the period beyond the stipulated date of completion and the reasonable amount of expenditure which should normally have been incurred on labour, establishment and T&P, etc., is payable to the claimants."

4. The respondents were given an opportunity to verify the record of the claimant so that it could correct or contradict the particulars set out in the claims statement. This opportunity was availed of by the respondents and after verification confirmed vide Exhibit R. 6 as under :

"The said record has been deeply looked into by the respondents and it is submitted that through the record was produced is in conformity with the claim as preferred before the Ltd. Arbitration but the respondents did not maintain any record in respect of individual idle labour. However, from the cement register and the hindrance register, it is apparent that there has been stoppage of works resulting in idle labour and that may have created this problem".

The ceasing of the Award in respect of this claim would clearly show that the arbitrator has considered the evidence as well as documents on record and held the claimant entitled to a sum of Rs. 83,580/-.

5. This claim was partly allowed for a sum of Rs. 9,770/-.

6. The amount of Rs. 12,577.62 was allowed on the basis of factual assessment of material on record and no fault can be found with the same.

7. In respect of this claim it was conceded that the claimant had submitted the claim of Rs. 77,868/- against agreement items. Respondents verified and certified the statement of claim as submitted by the claimant to the extent of Rs. 77,868/- and found to be correct. Similarly, in respect of claim of non-schedule items, the amount of Rs. 19,760/- was awarded. The total award for a sum of Rs. 97,628/- was based on actual assessment by the respondents and, therefore, this award is also unassailable.

8. The award of Rs. 539/- was made as both parties had agreed to this figure.

9. In respect to these claims the Award is Nil.

10. The amount of Rs. 21,250/- was awarded on the ground that the permits issued to the petitioner/claimant were not honoured and they had suffered a loss. The arbitrator held that it was the responsibility of the respondent to ensure that the permits issued by them were honoured. There is no illegality and infirmity in this finding.

11. In respect this claim the arbitrator took notice of the fact that the respondent had stated that they had checked the rates from the analysis filed by the claimant and the amount worked out was Rs. 18,131/- which was awarded.

12. The learned counsel for the respondent, in respect of the above claims has made no serious challenge to the Award and the objections in respect of the same are, accordingly, rejected. In any case no challenge can be made on the basis of settled law that interference is not called for in the present facts by reappraising evidence on record which has been validly considered.

13. The learned counsel for the respondent has, however, vehemently argued that the arbitrator had no jurisdiction to award pendente lite interest with effect from the date of the reference i.e., February 27, 1978 till the date of the award. It is contended that the arbitrator has exercised his powers in a capricious and an arbitrary manner. Reliance is placed upon the judgment of the Supreme Court as reported in Secretary, Irrigation Department, Govt. of Orissa and others v. G. C. Roy (JT 1991(6) SC 346 = 1992(1) Arb. LR. 145). Paragraph 44 of the judgment reads as follows :

"Having regard to the above considerations we think that the following is the correct principle which should be followed in this behalf;

Where the agreement between the parties does not prohibit grant of interest and where a party claims interest and that dispute (alongwith the claim for principal amount or independently) is referred to be arbitrator, he shall have the power to award interest pendente lite. This is for the reason that in such a case it must be presumed that interest was an implied term of the agreement between the parties and therefore, when the parties refer all their disputes or refer the dispute as to interest as such to the arbitrator, he shall have the power to award interest. This does not mean that in every case the arbitrator should necessarily award interest pendente lite. It is a matter within his discretion to be exercised in the light of all the facts and circumstances of the case, keeping the ends of justice in view."

14. In the objections filed on behalf of the respondent the following pleas as contained in sub-paragraph (d) of paragraph 2 have been referred :

"(i) In this case the learned arbitrator Shri Tirlok Singh was appointed arbitrator in February, 1978. As per the page 1 of the award, statement of facts was filed on 23-5-1978 and as per page 2 of the award counter statement of facts was filed on 5th August, 1978. Thus, the learned arbitrator did not hold any effective hearings until August, 1978. Therefore, the grant of pendente lite interest from 27th February, 1978 is apparently an error.

(ii) Secondly, the learned arbitrator conducted the proceedings in this case between 1978 to May, 1982 only. In May 1982 the learned Arbitration was promoted to that rank of Chief Engineer and he stopped the proceedings. Proceedings were started sometime towards the end of 1990 or early 1991 and as such the proceedings remained suspended purely on account of the learned Arbitrator for almost for a period of more than 8.1/2 years. The learned arbitrator has given the advantages/benefit of this period for the purpose of granting pendente lite interest to the petitioner which is highly unjustified and unwarranted. Even in the judgment pronounced by the Supreme Court of India in December 1991, it has been held that though the learned Arbitrator has the power to grant pendente lite interest but the same must not be granted as a matter of course. The learned Arbitrator in this case has totally overlooked the fact that the matter was kept pending by him for almost 8/9 years because of his promotion as Chief Engineer for which the respondent cannot be held liable. The ward of pendente lite interest, therefore, in these facts and circumstances in highly irregular, not a proper exercise of the jurisdiction by the learned Arbitrator and is liable to be set aside. It will be interesting to note here that as per the award the principal amount awarded against various claims is about Rs. 2.5. lakhs against which the interest amount as awarded by the learned Arbitrator for the pendente lite period comes to Rs. 4.16 lakhs."

15. The learned counsel has, however, conceded that the delay was caused not on account of the conduct of the petitioner and the matter was held up by the arbitrator for the reasons as stated above. There has not been any serious effort on the part of the respondents to pay even the admitted amounts to the claimant. Therefore, it cannot be said that the award of pendente lite interest is unreasonable as no delay has been held to be attributable to the claimant. The arbitrator has jurisdiction to award interest and even the judgment as cited above vests that power in the arbitrator which cannot be taken away merely on the ground that there has been delay in the proceedings. The respondent should have at least paid the admitted amounts.

16. In view of the aforesaid reasons, there is no force in the objections of the respondent. The same are, accordingly, rejected. The Award dated May 20, 1992 is made rule of the Court. The petitioner claimant shall also be entitled to interest at the rate of 12 per cent per annum from the date of decree till realisation. Let decree be drawn accordingly. There will no order as to costs.