Aarkey Engg. Co. vs D.D.A.
1999 Latest Caselaw 234 Del

ORDER

SUIT No. 1137-A/93, IA 8463/93(u/s. 30-33)

1. In response to the tender invited by the respondent-DDA, the work for construction of certain LIG houses at Hastal was awarded to the petitioner vide agreement No. 8/EE/WD-9/DDA-88-89. The stipulated date of commencement of work was 9.7.88 and the same was to be completed on 8.10.1989. On 7.1.1989, the respondent-DDA rescinded the contract. Consequent upon some disputes having arisen between the parties, the matter was referred to the arbitration in terms of the arbitration agreement. The Arbitrator published his award of 28.8.1992.

2. While the petitioner filed an application for making the award a rule of the Court, the respondent DDA has filed objections under Sections 30 and 33 of the Arbitration Act against the award. The respondent is mainly aggrieved by the rejection of counter-claim No. 2 and award on claim No. 3 preferred by the petitioner. Learned counsel for the respondent contended that in view of clause (2) of the agreement, the Arbitrator has no jurisdiction to deal with the question of compensation leviable under clause (2), as the same was in the exclusive domain of the S.E. Strong reliance was placed on the decisions rendered in Sudhir Bros Vs. DDA, 1995 (2) ALR 437 and P.C. Corporation Vs. Chief Administrator Dandkarnaya Project, . It needs to be highlighted that similar arguments were considered and rejected in the case of Vikas Engineering Co. Vs. DDA, 1995(1) A.D. 1408. The decisions in Sudhir Bros Vs. DDA, and P.C. Corporation Vs. Chief Administrator, Dandkarnaya Project (supra) are distinguishable on facts and their ratio decedent does not govern a case like in hand. It is significant to mention that the arbitrator had observed that the respondent-DDA has committed a breach of the contract by rescinding the same without fulfillling their obligation to hand over foundation drawing, etc. The petitioner preferred a claim of Rs. 10,43,557/- before the arbitrator. The arbitrator reduced the claim of Rs. 1,13,000/-. It would be useful to extract reasons assigned by the arbitrator for partly allowing the claim No.3 as under:

"This claim is for loss incurred by the claimants of anticipated profit at the rate of Rs. 10/- of the contract amount of Rs. 1,04,35,571/. After having arrived at the conclusion in claim No.1 that the respondents had committed a breach of contract by rescinding the contract without fulfillling their fundamental obligation of handing over the foundation drawing, the question of consideration is the admissibility of compensation to the claimants on account of loss of anticipated gain. Denial by the respondents was mainly on the ground that this claim is not covered under any clause/condition of the agreement and also from point of view of law of equity and natural justice. This was strongly contested by the claimants. I feel that the objection raised by the respondents are not sustainable in view of Section 73 of the Indian Contract Act which provides for compensation for loss of damage which naturally arose in the usual course of things from such breach or which the parties knew when they made the contract to be likely to result from the breach. Therefore, I hold that the claimants are entitled to receive compensation for loss of profit which they were expected to earn by executing the work under contract. However, there is no evidence on record to establish that the claimants have provided for an element of 10% profit in their tendered rates in the said agreement, but I accept the contention of the claimants that it is a general practice in this trade to allow 10% to cover overheads and profit when estimates are made for this type of work. In this case the preliminary arrangement such as C/o site office, cement godown, water tanks were made by the claimants. They also collected certain materials like bricks and stone aggregate. However, the claimants are not entitled for the profit on the stipulated material. Moreover the claimants have neither made full investment on the work nor made arrangements for equipment, material and labour required for the full execution of the work. I, therefore, in consideration of the above facts come to the conclusion that this claim is partly justified to the extent of Rs. 1,13,000/-. Accordingly, I award payment of Rs. 1,13,000/- to the claimants by the respondent in this claim."

3. In my opinion the arbitrator has assigned valid reasons for awarding the said compensation and the same cannot be found fault with. The respondent preferred a counter-claim of Rs.10,43,557/-. On account of compensation levied on the claimant under clause (2) of the agreement the arbitrator has held that levy of compensation under clause (2) of the agreement was wholly unjustified inasmuch as the respondent had committed a breach of the contract by rescinding it without fulfillling their obligations in terms of the agreement. In my opinion, rejection of the said counter-claim by the arbitrator does not suffer from any legal infirmity.

4. For the foregoing reasons the objections filed by the respondent-DDA are rejected. The award dated 28.8.92 is made a rule of the court. In addition, the petitioner claimant shall be entitled to interest @ 12% p.a. on the sum awarded by the arbitrator from the date of decree till realisation.

5. Parties shall bear their own costs. The award dated 28.8.92 shall form part of the decree.

6. A decree be drawn up accordingly.

7. A copy of this order be kept on the file of Suit No. 3771/92.