Short Pile Construction Company vs Delhi Development Authority
1998 Latest Caselaw 911 Del

JUDGMENT

Dr. M.K. Sharma, J.

1. The petitioner entered into a contract with the respondent for execution of the work of construction of certain flats in Pocket 'C' at Kilokari village and a proper agreement was executed between the parties in respect of the aforesaid works. While executing the aforesaid work disputes arose between the parties and in terms of the arbitration agreement in the contract the aforesaid disputes were referred to the sole arbitration of Shri Trilok Singh, the Arbitrator.

2. The Arbitrator, after hearing the parties and receiving the documents placed on record made and published his award on 29.9.1993. Notice of filing of the award was served on the parties and thereafter objections to the award have been filed by both the petitioner as also by the respondent which were registered as I.A. Nos. 7570/1994 and 7571/1994. The petitioner has sought for setting aside and/or modification of the award passed by the Arbitrator in respect of Claims No. 3 & 7 relating to extra cost of cement and less measurement of areas respectively, whereas the respondent has filed the objections in respect of the award passed by the Arbitrator against claims No. 1, 2, 3, 6, 7, 16 and also as against the award passed by the Arbitrator awarding costs in favour of the petitioner.

3. When the matter was called out for arguments none appeared on behalf of the parties and accordingly I myself considered the objections filed by the parties and also perused the award alongwith the records of the arbitration proceedings in order to arrive at a just decision.

4. On careful consideration of all the aforesaid documents, I propose to dispose of the present suit as also the objections in the light of the discussion hereinafter recorded.

Claim No. 1:

5. This claim relates to payment of an amount of Rs. 9,16,534/- on account of extra establishment, idle labour, tools and plants. The petitioner was unable to complete the work in time, as per agreement on the ground of failure on the part of the respondent to make available the site and material like-cement etc., and also not making available the decisions of the respondent relating to the contract work expeditiously. During the course of arguments the petitioner reduced the aforesaid claim to Rs, 2,61,685,53. The aforesaid claim was challenged by the respondent on the ground that the claim had been withdrawn by the petitioner vide Ex. R-1 dated 26.11.1990. The aforesaid letter, according to the petitioner was obtained under pressure by granting extension of time. The Arbitrator considered the statement of facts, arguments, records of examination\cross-examination of the petitioner's sole proprietor, cases quoted by both the parties and letters written by both the parties. The Arbitrator found that the extension of time was granted without levying any penalty. The petitioner's tools, plants and machinery were found to have remained idle during the period of hurdles and that watch and ward staff had also to be kept by the petitioner at site. Thus the Arbitrator found the claim to be partially justified in view of delay beyond the contract period but found the claim to be on the higher side. He also found that no specific details have been supplied by either party in respect of the aforesaid claim although he found that the plant, machinery and watch and ward staff remained idle. Thus considering all the circumstances, nature of works and all possible factors, the Arbitrator awarded Rs. 75,000/- in favour of the petitioner.

6. The respondent stated in the objections that the Arbitrator has only indicated the conclusions reached by him and he has failed to disclose his thought process and also to give reasons as to how he has arrived at the awarded amount. It is further indicated in the objections that although the Arbitrator was required to give reasons for his award no reason has been provided by the Arbitrator while arriving and\or computing the awarded amount.

7. The aforesaid objection, in my considered opinion has considerable force. In terms of clause 25 of the contract the Arbitrator is required to give his reasons, which means that he has to indicate his thought process for arriving at his conclusions. The reasons as to how the Arbitrator arrived at the aforesaid conclusion are not indicated in the aforesaid findings nor the basis on which the aforesaid assessment is made is indicated in the award. In support of his contention the learned Counsel appearing for the respondents relied upon the Division Bench decision of this Court in College of Vocational Studies Vs. S.S. Jaitley, reported in AIR 1987 Delhi 134; J.S. Construction Vs. Delhi Development Authority, Ajay Construction Company Vs.D.D.A and Another, , and a decision of this Court on Suit No. 2504-A/1987 in the case of Shri N.D.R. Israni Vs. Delhi Development Authority, disposed of on 28.1.1992. In the aforesaid decisions it has been held by this Court that although the Arbitrator is not required to give detailed reasons and is not expected to write judgments as are rendered by Court of Law but at the same time the Arbitrator must mention the basis on which he reached his conclusions. Division Bench decision of this Court is College of Vocational Studies (supra) also laid down that reasons being the links on the material documentary or oral evidence being adduced before the Arbitrator on which certain inferences are drawn and conclusions are made there must be some rational nexus between the two indicated in the award. It was further held in the said decision that the Arbitrator may not set out every process of reasoning or may not deal with every point raised but must, when he is called upon to give reasons, to tell the "reason" why he came to the particular conclusion.

8. Although the Arbitrator is not required to write a detailed judgment as is required in Court of Law wherever he is required to give reasons for his award the Arbitrator has to give reasons for his award. The Arbitrator may not set out every process of reasoning or may not deal with every point raised but he must set out the reasons as to why he has come to the particular conclusion. If the Arbitrator while coming to his conclusions ignores some important documents that would also amount to misconduct which calls for interference by a Court.

9. Thus in the light of the aforesaid I hold that the award passed by the Arbitrator in respect of this claim is devoid of reasons and therefore, the same is required to be set aside and remitted back to the Arbitrator for reconsideration and for giving reasons in respect of the aforesaid award.

Claim No. 2:

10. Objection is also raised in respect of the award passed by the Arbitrator in respect of Claim No. 2 as well which is a claim for Rs. 87,142/- on account of increase in the cost of material and labour. The Arbitrator held that his reasons given in claim No. 1 are also applicable in respect of this claim as well as he was of the opinion that increase in the cost of labour and material is payable to the petitioner as extension of time has been given to the petitioner without payment of levy and compensation. The Arbitrator however, found that no specific details of costs as per agreement conditions had been given by either party. But after considering all the facts of the case and after careful examination of the evidence and nature of works he considered it to be justified toward sum of Rs. 35,000/- in favour of the petitioner.

11. The objection of the respondent in respect of the aforesaid award is that the Arbitrator has failed to give any reasons for his conclusions and that he has failed to disclose his thought-process as to how he has arrived at the awarded amount. The objection taken is almost similar to that of Claim No.1 and on the same count and the reasonings given therein I find that this award is also not sustainable in view of lack of reasons and accordingly, this award also stands set aside and remitted back to the Arbitrator for fresh consideration and for giving reasons for his award.

Claim No. 3:

12. So far as Claim No. 3 is concerned the same relates to the claim of the petitioner of an amount of Rs. 2,20,194\- on account of cost of cement used due to change in mix of concrete in piles. In respect of the aforesaid award objections have been filed by both the parties. In respect of the aforesaid claim the Arbitrator, after considering the cases of both the parties found that there is ambiguity in the agreement and that the provisions of the Code are not very clear and that specialists differ. He also found that some work was done in or under sub-soil and fowl conditions but no clear details were supplied by either party. However, in spite of the aforesaid conclusions the Arbitrator considered it quite reasonable to award Rs. 46,000/- against the aforesaid claim. The objection of the respondent to the aforesaid award is that no reason has been stated and no thought-process has been indicated by the Arbitrator as to how he has arrived at the aforesaid amount and that there is no nexus between the reasoning and the conclusion. The petitioner however, stated in the objections that although the Arbitrator accepted that the petitioner is entitled to receive payment on account of extra work but he committed an error apparent on the face of the award while arriving at the figure for which the petitioner was found to be entitled to. According to the petitioner the Arbitrator misconducted himself in not accepting the figures furnished by the petitioner and allowing only a sum of Rs. 46,000\- as against the claim of petitioner restricted to Rs. 1,70,827.80. The petitioner has also stated in its objections that the Arbitrator has not stated in the award the reasons\calculation for arriving at Rs. 46,000/-.

13. I have considered the objections raised by the parties and on consideration thereof I am of the considered opinion that the award passed by the Arbitrator is devoid of any reason and the same do not indicate his thought-process for arriving at the amount stated in the award and this award is also set aside and remitted back to the Arbitrator for re-consideration and giving his reasons.

Claim No. 6:

14. Next objection of the respondent is as against the award passed by the Arbitrator in respect of Claim No. 6. In respect of the aforesaid claim the petitioner claimed an amount of Rs. 5,386\- on account of extra length of piles due to raising of ground level as against which the Arbitrator awarded only a sum of Rs. 2,500/-. The aforesaid claim was on account of two blocks and the respondent submitted extra filling of earth in respect of one block only. The nature of objection raised in respect of the aforesaid award also is almost similar to that of the earlier claims. According to the respondent, for arriving at the awarded amount of Rs. 2,500/- no reason has been given by the Arbitrator except for stating that there is an admission of extra filling of earth in one block only. No reason is given by the Arbitrator for arriving at the assessment. The aforesaid award also appears to me to be devoid of any reason and the same also stands set aside.

Claim No. 7:

15. In respect of Claim No. 7 the claim was raised by the petitioner for a sum of Rs. 7,83,899/- on account of under-measurement of plinth area in each block. The Arbitrator considered the statements of both the parties and on studying the plans and calculations of area finally submitted found that the area has not been correctly worked out on the ground floor. The Arbitrator further held that the details have not been supplied by the parties for correct calculation of the area but he awarded Rs. 35,000/- against the aforesaid claims. Being aggrieved by the aforesaid award both the parties have filed their objections. According to the respondents no reason has been indicated nor any thought-process provided by the arbitrator in arriving at the aforesaid conclusions. Similar is the objection taken by the petitioners. On perusal of the records I find that the aforesaid award also suffers from the same vice for which the award passed by the Arbitrator in respect of earlier claims have been set aside. This award also stands set aside for the same reasons and is remitted back to the Arbitrator for giving his reasons.

Claim No.16:

16. Next objection is with regard to Claim No. 16 which relates to payment of interest. The petitioner claimed interest @ 16.5% per annum from the date the payment became due till the date of actual payment. The Arbitrator has awarded interest @ 8% per annum for the pre-suit period and 12% per annum towards pendente lite and future interest. As the award passed by the Arbitrator has been interfered with as aforesaid the award passed in respect of this claim also is set aside and remitted to the Arbitrator for fresh consideration. The award of cost by the Arbitrator also stands set aside on the same ground.

17. The award passed by the Arbitrator therefore, in respect of Claims No. 1, 2, 3, 6, 7 & 16 stands set aside and is remitted back to the Arbitrator for re-consideration and giving his reasons. The rest of the award made by the Arbitrator is made a Rule of the Court.