Sita Construction Co. vs Union Of India
1997 Latest Caselaw 856 Del

JUDGMENT

K.S. Gupta, J.

(1) M/S Sita Construction Co. has filed petition under Section 14 of the Arbitration Act alleging that consequent on a dispute in a contract for construction of Dtc depot at Wazirpur III. New Delhi the matter, in controversy was referred in the arbitration of N.H.Chandwani, respondent No. 2 as per Clause 25 of the contract entered into between the parties. Respondent No. 2 made and published the award on 26.12.89. It was prayed that respondent No. 2 be directed to file the award in question alongwith arbitration proceedings for further proceedings in the matter.

(2) In response to the notice of the filing of the award in Court, Uoi, respondent No. 1 filed objections under Sections 30 & 33 of the Arbitration Act on 28.9.90. It is alleged that the award in respect of claim No. 1 and counter-claims No. 1, 2 & 3 is bad in the eyes of Law. In regard to claim No. 1, it is stated that the contract was closed by respondent No. 1 as per Clause 13 of the agreement after giving notice to the petitioner vide letter dated 29.12.88. Arbitrator misconducted in awarding 2,94,000.00 to the petitioner overlooking said Clause 13 of the agreement. Arbitrator is stated to have further misconducted the proceedings by declining to pass award in respect of counter-claims 1, 2 & 3 in favour of respondent No. 1. Grounds of challenge in that behalf need not be discussed in detail as that objection was not pressed during the course of arguments on behalf of respondent No. 1.

(3) Needless to say that the petitioner has contested the petition by filing reply.

(4) Submission advanced by Ms.Sudha Srivastava appearing for respondent No. 1, was that the decision taken by the Engineer-in-charge closing the contract as per Clause 13 of the agreement communicated through the letter dated 29.12.88 to the petitioner was final and as such Rs. 2,94,000.00 could not have been legally awarded by the arbitrator to the petitioner by way of claim No. 1. In support of the submissions, strong reliance was placed by her on the decisions in Vishwanath Sood vs. Uoi & Anr. 1989(1) Arb L.R. 357 Dda vs. M/s. Sudhir Brothers 1995(2) Arb.R 306 & R.S. Rana vs. D.D.A. & Anr. 1993(2) Arb.L.R. 165.

(5) It is not in dispute that the petitioner claimed a sum of Rs. 3,63,240.00 on account of loss of profit and damages by way of claim No. 1 and against that claim, Rs. 2,94,000.00 were awarded to it by the arbitrator. It is further not in dispute that the stipulated date of commencement of the construction work was 28.4.88 and the work was to be completed within a period of 12 months by the petitioner. It is also not in dispute that to enable the petitioner to proceed with the work, respondent No. 1 was to supply the drawings and after respondent No. 1 failed to get the approval of the drawings from the Dda, notice dated 12.12.88 was sent by the petitioner to respondent No. 1 calling upon it to furnish the drawings and to accord permission to start the work within ten days from the date of receipt of the notice failing which respondent No. 1 was to be liable to pay damages for loss of profit etc. to the petitioner. It is admitted case of the parties that thereafter respondent No. 1 closed the contract and the petitioner was informed accordingly through a letter dated 29.12.88. By that date, petitioner had not started the awarded work of construction.

(6) Submission referred to above advanced on behalf of respondent No. 1 centres around the interpretation of aforesaid Clause 13 of the agreement which reads as under :- "I Fat any time after the commencement of the work the President of India shall for any reason whatsoever not require the whole thereof as specified in the tender to be carried out the Engineer-in-charge shall give notice in writing of the fact to the contractor who shall have no claim to any payment of compensation whatsoever on account of any profit or advantage which he might have derived from the execution of the work in full but which did not derive in consequence of the full amount of the work not having been carried out, neither shall he have any claim for compensation by reason of any alterations having been made in the original specifications, drawings, designs and instructions which shall involve any curtailment of the work, as originally contemplated.

(7) Provided that the contractor shall be paid the charges on the cartage only of materials actually and bona fide brought to the site of the work by the contractor and rendered surplus as a result of the abandonment or curtailment of the work of any portion thereof and then taken back by the contractor, provided, however, that - In the case of such stores having been issued from Government stores and returned by the contractor to Government Stores, credit shall be given to him by the Engineer-in-charge at rates not exceeding those at which they were originally issued to him, after taking into consideration and deduction for claims on account of any deterioration or damage while in the custody of the contractor and in this respect the decision of the Engineer-in-charge shall be final"

(8) At bare reading of aforesaid Clause 13 omitting the provisos goes to show that it will not apply to a case where the construction work was not even commenced. Further, second proviso appended to the aforesaid Clause clearly indicates that the decision of the Engineer-in-Charge was made final thereunder only in respect of deduction for claims on account of any deterioration or damage to the stores issued from the Government stores while in custody of the contractor. Therefore, the argument advanced on behalf of respondent No. 1 that the decision of the Engineer-in-charge closing the contract communicated through the letter dated 29.12.88 to petitioner was final under aforesaid Clause 13 and no amount could have been awarded in respect of claim No. 1 is fallacious and is, thus, repelled. Rulings referred to above have no application to the facts of the present case.

(9) This brings me to yet another submission advanced by Sh.Harish Malhotra appearing for the petitioner that the claim of loss of expected profit @ 10% of the estimated cost of the project made by the petitioner was fully justified under the Law. Reliance was made on a decision of this Court in Pishore Lal Maggo vs. D.D.A. 1997 Athc 1579. In this decision, contractor was held to be entitled to claim profit @ 10% of the estimated cost of the construction in respect of contract work in terms of Section 73 of the Contract Act. This decision is based on earlier two decisions - one rendered by the Apex Court in M/s.A.T.Brij Paul Singh & Bros. vs. State of Gujarat and the other by this Court in M/s. Metro Electric Company vs. Dda Air 1980 Delhi 266. In that view of the matter, I do not find any illegality in the award passed in respect of aforesaid claim No. 1.

(10) Consequently, objection(IA No. 8503/90) preferred by respondent No. 1 is dismissed and the award dated 26.12.89 is made the rule of the Court. Respondent No. 1 is allowed two months time to pay the decretal amount failing which petitioner will be entitled to interest @ 12% per annum from the date of decree till realisation. No order as to costs.