Anant Raj Agencies vs Delhi Development Authority
1998 Latest Caselaw 734 Del

ORDER

DR. M.K. Sharma, J.

1. This judgment and order shall dispose of Suit No.754/1994 instituted on the basis of the petition filed by the petitioner under Section 14 & 17 of the Arbitration Act in pursuance of which the arbitrator filed the award in this court, as also the objections filed by the respondent under Sections 30 & 33 of the Arbitration Act against the said award passed by the Arbitrator and registered as I.A.No.12307/1994.

2. The petitioner was awarded the work of construction of additional facilities in the nature of work of internal water supply system for individual connections Group II in resettlement colony, Mangolpuri. Disputes arose between the parties on the question of performance and carrying out of the terms and conditions of the aforesaid contract. The said disputes were referred for arbitration by the Engineer Member of the Delhi Development Authority in terms of the arbitration agreement to the sole arbitrator Shri J.K. Varshneya.

3. The arbitrator entered upon the reference of the disputes on 11.2.1991 and finally made and published his award on 16.11.1992. The award was filed in this court in terms of the aforesaid application filed by the petitioner in this court. On filing of the said award and on notices of filing of the award having been served on the respondent, the respondent has filed objections as against the said award.

4. I have heard Shri Harish Malhotra, counsel appearing for the petitioner as also Mr. V.K.Sharma, counsel appearing for the respondents on the aforesaid objections filed by the respondent as also on the issue of the award being made a Rule of the Court. Having considered the submissions of the learned counsel appearing for the parties and on careful perusal of the award passed by the arbitrator read alongwith the arbitration proceedings enclosed with the award, I give my decision on the issues claim-wise.

CLAIM NO.1:

5. Claim No.1 relates to claim of the petitioner for an amount of Rs.4,26,200/- as payment of the final bill of the petitioner. The arbitrator has awarded an amount of Rs.2,000/- as against the aforesaid claim. An objection has been raised by the respondent as against the aforesaid award. However, on the facts and circumstances of the case and in view of the reasons recorded by the arbitrator I do not find any infirmity in respect of the said award.

CLAIM NO.2:

6. This claim is for Rs.3,00,000/- raised by the petitioner for loss suffered on account of the staff and labour having been rendered idle due to the controversy created by the department on the obliteration in transit of ISI marks on LA pipes transported from Calcutta mainly by road. The petitioner has claimed the aforesaid amount of Rs.3,00,000/- @ Rs.10,000/- per day for the delay of 30 days. The arbitrator has awarded an amount of Rs.4,400/- as against the aforesaid claim. Contents of R-14 indicate that from 1.3.1985 to 31.3.1985 the average expenditure on labour wages was Rs.880/- per day. The award given by the arbitrator on consideration of the records for the aforesaid amount computing at the rate for five days cannot be said to be unreasonable. Reasons have been given for the award and I find no error in the same and therefore, the objection of the respondents as against the aforesaid award stands rejected.

CLAIM NO.3:

7. This claim was raised by the petitioner for an amount of Rs.30,000/- for loss suffered on account of the failure of the department to make available the water mains. According to the petitioner the loss was suffered due to idle labour for 30 days @ Rs.1,000/- per day, and the amount of Rs.30,000/- was claimed. The arbitrator, on perusal of the contents of C-18 found that the department could not give the water connection, with the result that the labourers of the petitioner remained idle and accordingly the arbitrator held that the petitioner is required to be compensated for the aforesaid loss which was assessed by the arbitrator at Rs.12,000/-. On perusal of the records I find that there was in fact a failure on the part of the department to make available the water mains for 12 days i.e. from 13.6.1985 to 26.6.1985 during which period the labourers of the petitioner were sitting idle and accordingly loss was suffered by the petitioner to that extent, which was assessed by the arbitrator at Rs.12,000/- @ Rs.1,000/- per day. The said award is also based on reasons and appears to be justified and accordingly the said award is also upheld.

CLAIM NO.4:

8. This claim of the petitioner relates to site expenses and other overheads amounting to Rs.5,18,300/-. The arbitrator has awarded a sum of Rs.1,03,661/- in respect of the aforesaid claim. Counsel appearing for the respondents vehemently objected to the aforesaid award awarding an amount of Rs.1,03,661. The counsel submitted that the aforesaid award passed by the arbitrator is devoid of any reason. Counsel also drew my attention to the appreciation of the arbitrator as reflected from the aforesaid award. The arbitrator while awarding the aforesaid amount has recorded the argument of the petitioner that due to various delays and breaches of contract by the respondents the contract period got extended by 8.5 months and during the aforesaid extended period the petitioner had to incur additional expenditure of establishment and other over-heads. After recording the aforesaid submission of the petitioner the arbitrator recorded his conclusion that since there was no delay on the part of the petitioner, they have to be compensated for the additional expenditure incurred by them. The arbitrator, after recording the aforesaid appreciation stated that after going through the claim carefully he assessed the amount of Rs.1,03,661/-.

9. Counsel for the respondent submitted that on a reading of the aforesaid finding against the said claim it is clear that the arbitrator has merely given his conclusion and verdict without giving any reason. According to him no rational nexus between the evidence on record and the reasons has been indicated in the award. He also stated that the arbitrator has ignored the important fact that the petitioner executed the work to the tune of Rs.29,45,941/- after the stipulated date of completion i.e. 14.3.1985, which was about 90% of the work out of the gross amount of the final bill amounting to Rs.31,33,887/-. 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; reported in 1997(1) Arb. LR 149, Ajay Construction Company Vs. D.D.A. and another; reported in 1997(1) Arb. LR 92 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 in 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.

10. Counsel appearing for the petitioner however, submitted that the arbitrator is not bound to give any arithmetic calculations as to how he has arrived at a particular sum of the claim nor is he required to give detailed judgment and that he is only required to indicate the trend of his thought process. In support of his submissions the learned counsel relied upon the decisions of this Delhi Development Authority Vs. M/s. Alkaram, New Delhi; reported in AIR 1982 Delhi 375, Sanyukt Nirmata Vs. Delhi Development Authority & Another; reported in 1986 (2) Arbitration Law Reports 48, a decision of Orissa High Court in Union of India Vs. M/ss. T.S.Sandhu & Co.; reported in 1987 (2) Arbitration Law Reporter page 131. The decision in Krishna Construction Co. Vs. Delhi Development Authority; reported in 1988(1) Arbitration Law Reporter page 263, Balwant Singh & Sons Vs. Delhi Development Authority; reported in 1993(1) Arbitration Law Reporter page 405 and in S.S.Jaitley Vs. Delhi Development Authority; reported in 1994(1) Arbitration Law Reporter page 278.

11. There is no dispute with regard to the aforesaid proposition of law laid down by the various decisions of this court as also of the other High Courts and by now the extent of power and jurisdiction of the Court to interfere with the award of the Arbitrator is well settled. Although the arbitrator is not required to write a detailed judgment as is required in a 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 also 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.

12. In the light of the aforesaid legal proposition let me consider the award and also the merits of the rival contentions of the counsel for the parties. The arbitrator has held that there was no delay on the part of the petitioner in carrying out the work but the contract had to be extended as the work could not be completed and for such delay the petitioner cannot be blamed. The arbitrator has held that since there was no delay on the part of the petitioner the petitioner is required to be compensated for the additional expenditure incurred by him. Although the arbitrator in his findings has not spelt out the nature of additional expenditure for which compensation has been awarded by him but on a reading of the award in respect of the said claim it appears that such additional expenditure was incurred by the petitioner on establishment and other over-heads. However, while assessing the compensation at Rs.1,03,661/- the arbitrator has not given any specific reasons or criteria as to how and on what basis he has assessed the compensation at Rs.1,03,661/- and that is left to surmises and conjectures by the parties and by the court. The counsel for the petitioner tried to give an explanation for the aforesaid assessment relying on the claims statement of the petitioner. In the light of the submissions I have also perused the claim statement of the petitioner in respect of claim No.4 including the basis for claiming a sum of Rs.5,18,300/-. The explanation sought to be given by the petitioner was also on the basis of the total amount of contract which was fixed at Rs.36,58,654/-. The arbitrator has not indicated his thought process in the aforesaid award as to how he has arrived at the aforesaid assessment. It is disclosed from the records that upto 17.5.1985 gross work executed by the petitioner was Rs.29,45,941/- as against the gross amount of the final bill in respect of the aforesaid contract of Rs.31,63,887/-. Thus the work to the tune of Rs.2,17,146/- was carried out after 17.5.1985. It is not indicated in the award of the arbitrator as to whether this important aspect was at all considered by the arbitrator. Thus I am constrained to observe that the arbitrator failed to give any discernible reason for arriving at the conclusion that the petitioner would be entitled to receive an amount of Rs.1,03,661/-. Since the arbitrator has failed to mention the basis on which he reached the aforesaid conclusion and also failed to set out the reasons and as to how he had acted to give the award in respect of the aforesaid claim, the award is liable to be set aside, which I hereby do. The same is remitted to the Arbitrator for re-consideration.

CLAIM NO.5:

13. In respect of claim No.5 the petitioner claimed Rs.35,600/- due to loss of profitability for the extended period of contract. Counsel for the respondent objected to the aforesaid award on the ground that the aforesaid award also lacks reasons. In view of the aforesaid objection I have carefully scrutinised the award passed by the arbitrator. The arbitrator has stated that due to various breaches of contract on the part of the respondent the contract period got extended by 8.5 months. It was also held that the very fact that extension of time was allowed without levy of compensation proved that there was no delay on the part of the petitioner and because the petitioner was tied down on the aforesaid work, they could not take work elsewhere and earn profit. On the aforesaid count the arbitrator found the claim to be justified and awarded an amount of Rs.35,600/-. It is true that in the aforesaid award passed by the Arbitrator, the reasons and the grounds for which the petitioner is entitled to be compensated have been indicated. However, the Arbitrator has not given reason or basis for arriving at the assessment of Rs.35,600/-. The aforesaid claim at Rs.35,600/- towards loss of profit claimed at 5% has been set out in the claim submitted by the petitioner before the Arbitrator. A bare perusal of the claim in the claim petition would indicate that the claims based on total amount of contract which was fixed at Rs.36,58,654/-. However, it is disclosed from records that upto 17.5.1985 gross work executed by the petitioner was for Rs.29,45,941/-. The final bill for the entire work executed by the petitioner was passed and accepted at Rs. 31,63,887/-, although the total amount of the contract was fixed at Rs.36,58,654/-. Thus the arbitrator failed to consider important document and facts and thereby committed an error apparent on the face of the record. The petitioner was not entitled to assessment of damage on the aforesaid count and calculation. Thus the award passed by the arbitrator as against this claim stands set aside and the same is remitted back to the arbitrator for reconsideration.

CLAIM NO.6:

14. In claim No.6 the petitioner claimed an amount of Rs.1,42,500/- towards damages due to prolongation of contract beyond the date of completion of the contract, on which count the arbitrator has awarded a sum of Rs.11,986.46. The aforesaid award is based on arithmetical calculations which are indicated in the award itself and no error apparent could be pointed out by the learned counsel appearing for the respondent with regard to the aforesaid calculations and accordingly the same is upheld.

15. Counsel appearing for the respondent did not raise any objection with regard to the other claims and therefore, I am not called upon to look into and scrutinise the rest of the award passed by the arbitrator.

16. In the result the award passed by the arbitrator in respect of claim No.4 and 5 stands set aside and the same are remitted back to the arbitrator for reconsideration. The rest of the award is made a Rule of the Court.

The petitioner shall be entitled to interest @ 15% per annum on the awarded amount and made a Rule of the Court, from the date of the decree till payment in accordance with the provisions of Section 29 of the Arbitration Act.