Delhi Development Authority vs Hargobind Jaggi
1999 Latest Caselaw 711 Del

JUDGMENT

M.K. Sharma, J.

1. The present appeal filed by the appellant is directed against the order dated 2nd December, 1995 passed by the Additional District Judge, Delhi in Suit No. 7/1993 making the award against Claim Nos. 2 and 3 a rule of the Court.

2. The respondent entered into a contract with the appellant for execution of the work of "loading, unloading and cartage of materials like pipes and fittings". Certain disputes arose between the parties while executing the aforesaid contract and the same were referred to the sole arbitration of Sh. R.C. Malhotra. The said Arbitrator made his award on 24.12.1992. The award was filed in the Court as against which an objection was filed by the DDA. The Additional District Judge set aside the award given by the Arbitrator as against Claim No. 1 and remanded the same back to the Arbitrator to decide the matter afresh So far Claim Nos. 2 & 3 are concerned, the Additional District Judge upheld the said award and made the same rule of the Court. Being aggrieved by the aforesaid judgment and order the present appeal has been preferred by the appellant/DDA.

3. Mr. Sharma appearing for the appellant submitted before me that the judgment and order of the learned Additional District Judge is illegal and bad on the fee of the records of the case. He submitted that the Additional District Judge committed error apparent on the face of the record in upholding the award passed as against Claim No.

2. In support of his submission the learned Counsel relied upon the decision in The New India Civil Erectors (P.) Ltd. v. Oil & Natural Gas Corporation, reported in JT 1997 (2) S.C. 633=II (1997) CLT141 (SC). He also submitted that the judgment and order passed y the learned Additional District Judge in respect of Claim No. 3 also is liable to be set aside inasmuch as the said judgment is contrary to the Division Bench decision of this Court in DDA v. U. Kashyap, reported in 1998 VIII AD (Delhi) 300.

4. I have also heard the learned Counsel appearing for the respondent who submitted that the jurisdiction of the Court in an arbitration matter is limited and the Court has no jurisdiction to sit in appeal and examine the correctness of the award on merits. He also submitted that the award cannot be set aside by the Court as mistake of fact is not amenable to correction. In support of his submission the learned Counsel relied upon the decisions of the Supreme Court in Puri Construction Pvt. Ltd. v. Union of India, and Coimbator District Podu Thozillar Samgam v. Bala Subramania Foundry and Ors., .

In the light of the aforesaid submissions I proceed to examine the merit of the submissions of the learned Counsel appearing for the parties.

5. The award as against Claim No. 2 is also a subject matter in the present appeal. The said claim relates to a claim of the respondent for Rs. 40,547/- on account of demurrage/wharf age charges paid by the respondent. It was submitted that it was for the railways to give clear site/siding and that due to the unavoidable circumstances and in absence of clear site/siding where slippers were lying, it was not possible to unload the pipes from the railway wagons within the allotted time of five hours consequent to which the railway authority levied demurrage/wharf age charges which were in turn recovered by the appellant from the respondent's bills. It was submitted on behalf of the respondent before the Arbitrator as also before the Additional District Judge that since the goods belonged to the DDA and the railway receipts were also in the name of the DDA, it was only the appellant which could take up the matter with the railway and, therefore, the respondent could not be made liable for the said payment.

6. It is, however, the case of the appellant that as per the contract it was the responsibility of the respondent to unload the goods from the wagons and to remove the same thereafter within the specified time and in case of their failure in doing so, they were liable for payment of demurrage/wharf age charges levied by the railways.

7. Mr. Sharma appearing for the appellant drew my attention to the stipulations under the contract which is also referred to by the Additional District Judge in his judgment relating to demurrage and wharfage charges. Admittedly, the aforesaid demurrage/wharf age charges were levied by the railways for late removal of the consignment from the railway premises. In Clause 5(c) it is stipulated that the contractor shall be responsible for all demurrage charges i.e. those due to late receipt of railway receipts owing to public holidays or non-receipts of prior intimation. It is also stipulated therein that the contractor shall be responsible for all wharfage charges due to late removal of the consignment from the railway premises. Paragraph (g) of the said clause also stipulates that the contractor would pay all the demurrage and wharfage charges direct to the railway authorities and shall produce a clearance certificate to that effect alongwith the monthly bills, without which the running bills may not be paid to the contractor. It was also laid down that the contractor would not prevent the Engineer Incharge from recovering any demurrage and wharfage charges from the final bill of the contractor and the department shall not be responsible for the correctness of the demurrage and wharfage charges claimed by the railways.

8. The submission of the Counsel for the respondent that the respondent could not be made liable for payment of the aforesaid demurrage/wharf age charges, which is sought to be recovered from the bills of the respondent, cannot be accepted in view of the aforesaid stipulations in the contract.

9. The Arbitrator awarded an amount of Rs. 34,550/- in favour of the respondent and against the appellant in respect of the aforesaid claim holding that it was the responsibility of the appellant to see that the site was made available to the respondent to enable him to execute the work i.e. to unload the goods on the site/siding and carry the same to the required destination. He further held that the appellant is liable to pay the aforesaid amount of Rs. 34,550/- to the respondent against Claim No. 2 inasmuch as the goods belonged to the appellant and the railway receipts were also in the name of the appellant and, therefore, the respondent had no locus standi to take up the correspondence with the railways.

10. The Additional District Judge found the said reasons and conclusions to be cogent and upheld the award. The parties to a contract are bound by the terms and conditions stipulated in the contract. The said stipulations in the contract are also binding on the Arbitrator and an award passed by the Arbitrator cannot go beyond the stipulations in the contract. In the face of the expressed stipulations in Clause 5 regarding recovery and payment of demurrage/wharf age charges providing that the contractor shall be responsible for all demurrage/wharf age charges due to late removal of the consignment from the railway premises, the Arbitrator could not have awarded any amount on the ground that it was the responsibility of the appellant to see that the site is made available to the respondent to enable him to expedite the work i.e. to unload the goods and to carry the same to the required destination. The site for execution of the work was to be made available by the DDA but no such obligation has been stipulated in the contract under which the appellant was responsible for making the

railway site/siding also available to the respondent. It is thus a clear case of the Arbitrator acting contrary to the specific stipulations/conditions contained in the agreement between the parties.

11. In coming to the aforesaid decision, I am fortified by the decision of the Supreme Court in the case of The New India Civil Erectors (P.) Ltd. (supra) wherein the Supreme Court has also held that the Arbitrator cannot act contrary to the specific stipulations/conditions contained in the agreement between the parties.

12. In that view of the matter, I set aside the judgment and order of the Additional District Judge so far the same relates to making the award against Claim No. 2 a rule of the Court. Consequently, the award of the Arbitrator in respect of Claim No. 2 also stands set aside.

13. Now, coming to the next issue regarding Claim No. 3 whereunder the Arbitrator has awarded an amount of Rs. 1,17,017/- in favour of the respondent, which award was also upheld by the Additional District Judge, I find that the said award was made by the Arbitrator holding that the respondent is entitled for the said amount under Clause 10(CC) as per the bill prepared by the department in February, 1990 but was not paid.

14. Claim No. 3 relates to a claim of Rs. 1,65,640/- on account of payment under Clause 10(CC) of the agreement. By Ex. C-31 containing the details of payments under Clause 10(CC) of the agreement the respondent reduced the amount of claim before the Arbitrator to Rs. 1,27,709.42. It was the case of the respondent before the Arbitrator that the provisions in the agreement under Clause 10(CC) calls for pre-determination of the elements of labour, POL and the material but in the contract in question no such predetermination was done. It was also the case of the respondent before the Arbitrator that the department on 21.2.1990 prepared the bill under Clause 10-CC for Rs. 1,17,017/- by adopting 100% labour component but the payment of the said amount was not made on the ground that labour component should be only 38%. Considering the facts and circumstances of the case and the nature of the claim, it was held by the Arbitrator that the work involved is mostly labour oriented but some element of POL is also there. Since the respondents have based their calculations on analysis of rates for arriving at the labour component in terms of which the appellant also prepared the bill for the same amount, the aforesaid award was made by the Arbitrator.

15. It was submitted by Mr. Sharma appearing for the appellant that the aforesaid award which was subsequently made a rule of the Court by the impugned order is contrary to the decision of the Division Bench of this Court in DDA v. U. Kashyap (supra). I have also perused the ratio of the aforesaid decision of the Division Bench and in my considered opinion the ratio of the aforesaid decision is not applicable to the facts of the present case. It was held in the said decision that as per provisions of Clause 10 CC any increase in the price of material and labour shall be compensated to the contractor for the work done not only during the stipulated period of the contract but also for such period for which the contract is validly extended but the question of charging revised rates would not be applicable. The aforesaid decision of the Division Bench, therefore, lays down the proposition of law that payment under Clause 10-CC for any increase in the price of material and labour shall have to be compensated to the contractor in a case where the provisions of said Clause 10-CC are applicable.

16. Counsel for the appellant, during the course of arguments, could not indicate as to how the ratio of the said decision is applicable to the facts of the present case and, in fact, during the course of the argument he had to admit that the facts of the present case are clearly distinguishable from that of the aforesaid decision of this Court.

17. No other ground was argued for assailing the said part of the judgment and order by the Counsel appearing for the appellant.

18. The Arbitrator has come to a finding and conclusion that in terms of the provisions of Clause 10-CC the respondent is entitled to the aforesaid amount as the work involved is mostly labour oriented although some element POL is also there and the calculation was arrived at on analysis of rates for arriving at the labour component, which was also accepted by the appellant when it also prepared a bill in terms of the aforesaid claim under Clause 10-CC. Therefore, I do not find any error in the aforesaid award of the Arbitrator and, therefore, the order passed by the Additional District Judge upholding the Claim No. 3 of the award passed by the Arbitrator and making the same a rule of the Court is upheld.

19. Consequently, the appeal is partly allowed and the judgment and order passed by the Additional District Judge making the award as against Claim No. 2 a rule of the Court is set aside. So far judgment and order relating to making the award against Claim No. 3 a rule of the Court, the same is upheld. Let a decree sheet be prepared in terms of the present judgment and order. Parties are left to bear their own costs.