Bhagat Construction (P) Limited vs Delhi Development Authority And ...
1999 Latest Caselaw 1090 Del

ORDER

Dr. M.K. Sharma, J.

1. The respondent gave a contract to the petitioner for construction of 400 houses in SFS at Rajouri Garden, New Delhi. While executing the aforesaid contract certain disputes arose between the parties. The said disputes in terms of clause 25 of the agreement were referred to the sole arbitration of Shri S. Nagarajan, Additional Director General (Retd.), for adjudication and decision. The Arbitrator entered into the reference and upon hearing the parties made and published his award by order dated 8.5.1992. The a foresaid award was placed before this court for making the same a Rule of the Court, as against which objections were filed by Delhi Development Authority, the respondent herein.

2. I have heard the learned counsel appearing for the parties in respect of the aforesaid objections and also on the issue about making the award a Rule of the Court. I have also perused the records placed before me including the records maintained by the Arbitrator as also his award and on appreciation thereof I propose to decide the matter claimed.

CLAIM NO.1:

3. Claim No. 1 was a claim for an amount of Rs. 2 lac being the amount due to the petitioners towards final bill including labour escalation. During the proceedings before the Arbitrator the petitioners reduced their claim to an amount of Rs. 1,61,587/-as per Ex. C-39. The petitioners have admitted that there is a clerical mistake in the award so far the present claim is concerned. On perusal of the records I find that the total amount as awarded by the arbitrator in respect of the aforesaid claim should have been Rs. 1,13,552.68 and not Rs. 1,59,495.66. The aforesaid mistake is an admitted mistake appearing on the face of the record and therefore, could be corrected and the award could be modified to the aforesaid extent in terms of the provisions of Section 15(b) of the Arbitration Act. The amount of Rs. 24,261/- was recovered on account of secured advance and therefore, the said amount is to be deducted from the final bill as submitted by the petitioners which was for Rs. 1,59,495.66 and therefore, the said amount is to be deducted from the modified amount. Total amount payable on this account is admittedly Rs. 1,13,568.60 and therefore, the award is modified to the aforesaid extent holding that the petitioners would be entitled to receive an amount of Rs. 1,13,566.38 as against claim No. 1 instead of Rs. 1,59,495.66 which has been awarded by the Arbitrator.

CLAIM NO. 2:

4. So far claim No.2 is concerned the aforesaid claim relates to payment of an amount of Rs.25,000/- for increase in price of bricks. The arbitrator considered the aforesaid claim and after considering the pleadings of the parties and the records found that a balance amount of Rs.11,828.75 was still due and payable to the petitioners. On considering the records I find that the respondents have not denied the liability to make payment for the increase in price of bricks to the petitioner. The petitioner claimed the aforesaid amount of Rs.11,828.75, on the basis or increase in price of bricks on two occasions i.e. 29.5.1981 and 11.5.1982, basing their claim on such statutory increases in the price of bricks. After perusal of the records and after due and proper calculation the arbitrator found the same due and payable by the respondents. The said findings are based on appreciation of facts and therefore, the said award in respect of claim No.2 is not liable to be interfered with. Counsel appearing for the respondent however, submitted that the element of thought process of the arbitrator is not indicated in the aforesaid award. The said contention is without any basis, for the arbitrator has given the element of thought process in giving his award. Reliance sought to be placed on the decision of this court in M/s. Anant Raj Agencies Vs. Delhi Development Authority;

is misconceived.

CLAIM NO.3:

5. This claim of the petitioners was for payment of Rs. 15 lac due to increase in market rate of materials and labour during the prolonged period of the contract. The petitioners claimed the aforesaid amount on the ground that the respondents defaulted badly in their obligation under the contract to supply materials such as cement, pipes and door shutters and also for the delay in making available the site for the work which resulted in considerable delay in the work and therefore, there was a breach of the contract and as such the petitioners are entitled to loss and damages in terms of the provisions of Sections 53, 70 and 73 of the Contract Act. It was also pleaded by the petitioners that as soon as the stipulated date of contract was over the petitioners demanded a higher rate of 98% above the estimated rates, against their contract rates which were pending and therefore, they are entitled to claim the aforesaid damages. It is the case of the respondents that there was general shortage of cement at the relevant time. It was also pleaded that if there be any delay on the part of the respondents the petitioners are entitled to extension of time for completion of the contract and that since respondents have already taken notice of and paid the increase in labour escalation and bricks which are part of claims 1 & 2 therefore, the petitioners were not entitled to any payment towards loss and damages.

6. The arbitrator on consideration of the records however,found that the respondents are liable to pay damages and loss due to continuous rise in prices of materials and labour, and therefore, awarded an amount of Rs.9,08,000/-. Counsel for the respondent vehemently objected to the aforesaid award passed by the arbitrator awarding Rs. 9,08,000/- as against claim No.3. He submitted that the arbitrator did not take into consideration the reason of delay which was on account of short supply or non-supply of the stipulated material. He submitted that such loss is already taken notice and care of in respect of claims No.1, 2 & 5 and therefore, the arbitrator was not justified in allowing the aforesaid clams. He also drew my attention to the provisions of clause (1) of Specifications and Conditions and clause 10 of the Contract.

The contractual period was from 3.3.1981 to 2.3.1982 and the work was actually completed on 1.10.1984 with a delay of 31 months. The time for completion of the work was extended by the respondent from time to time. According to the aforesaid provisions of the contract in the event of delay in the completion of the work due to non-supply or short supply of the stipulated material the petitioner was entitled only to extension of time and for no compensation. It is stipulated as follows:

"Provided the contractor shall in no case be entitled to any compensation or damages on account of any delay in supply or nonsupply of all or any such materials or stores."

Reference may also be made to clause (1) of Specifications and Conditions. The relevant provision reads thus-

"If part of site is not available for any reason or there is some unavoidable delay in supply of materials stipulated by the department, the programmer of construction shall be modified accordingly and the contractor shall have no claim for any extra or compensation on this account."

In this connection reference may be made to the Division Bench decision of this court in Grandly Electricals (India) Ltd. and others Vs. Vidya Batra and others; reported in 1999 (1) Arbitration Law Reports page 88 wherein this court held that the arbitrator has to act in accordance with the terms of agreement settled between the parties and cannot award anyhing more than what is agreed to be paid. When the contractor specifically agreed in the contract not to claim for any compensation and extra for delay in handing over site and also for delay in handing over materials, the arbitrator could not have awarded compensation for such delay in contravention of agreed stipulation. Besides claim No. 1,2 and 5 also include claims on similar account namely- escalation in the price of bricks and labour rates and therefore, the claim made herein is over-lapping with that of claims No.1,2 and 5.

In this connection reference may be made to the case of Associated Engineering Company Vs. Govt. of Andhra Pradesh and another; reported in 1991(2) Arb. L.R.180 wherein it was observed by the Supreme Court as follows:

"These four claims are not payable under the contract. The contract does not postulate - in fact it prohibits - payment of any escalation under Claim No.III for napa-slabs or Claim No. VI for extra lead of water or Claim No. IX for flattening of canal slopes of Claim No. II for escalation in labour charges otherwise than in terms of the formula prescribed by the contract. This conclusion is reached not by construction of the contract duty by merely looking at the contract. The umpire traveled totally outside the permissible territory and thus exceeded his jurisdiction in making the award under those claims. This is an error going to the root of his jurisdiction. See Jivarahbhai Ujamshi Sheth and others Vs. Chintamanrao Balaji and others. We are in complete agreement with Mr. Madhav Reddy's submissions on the point."

In the light of the aforesaid provisions of the contract namely clause (1) of the Specifications and Conditions and clause 10 of the agreement and also the Division Bench decision of this court, I hold that the arbitrator was not justified in awarding loss and damages which amounted to acting contrary to the provisions of the contract. In coming to the aforesaid conclusion I am also fortified by another decision of the Supreme Court in New India Civil Erectors (P) Ltd. Vs. Oil & Natural Gas Corporation; reported in JT (1997) 2 SC page 633, wherein it was held that the Arbitrator cannot act contrary to the specific stipulation/condition contained in the agreement. The Supreme Court held that in view of clear stipulation in the agreement the arbitrator could not have awarded any amount on the count that the contractor must have incurred extra expenses in carrying out construction after the stipulated date.

It is needless to reiterate here that the parties have already envisaged a situation where there could be some delay in the completion of the work due to short supply and non-supply of the material and both the parties have signed the agreement being conscious of the fact and having agreed that in such an eventuality the petitioner will be entitled to extension of time but the petitioner can not claim any loss or damages. In that view of the matter the aforesaid claim is not maintainable and the award passed by the arbitrator stands set aside in respect of the aforesaid claim.

CLAIM NO.4:

7. This claim relates to a claim for payment of Rs. 40,000/- which was wrongly recovered for rebates in running bills. In respect of the aforesaid claim an amount of Rs. 5,591/- has been directed to be paid by the respondent to the petitioner by the arbitrator. Upon going through the records I find no error apparent on the face of the record in the aforesaid award passed by the arbitrator and therefore, the said award is upheld.

CLAIM NO.5:

8. Claim No. 5 relates to claim of Rs. 2 lac by the petitioner for their establishment and labour out of contractual obligations. The arbitrator, after consideration of the pleadings of the parties and the evidence adduced, awarded a sum of Rs. 43,020/- in settlement of the claim. In respect of the aforesaid claim discussion at some length has already been made while deciding the claim in respect of claim No.3. In support of the aforesaid claim the petitioner stated that there establishment and labour had to finger on for 1-1/2 years. On consideration of the evidence on record the arbitrator found that the petitioner had to linger on with the quarters till March, 1985 when the balance quarters were allotted and therefore, the petitioners were forced to keep their establishment and labour for about 6 months. The aforesaid claim for a period of six months only was found admissible and on the basis thereof an amount of Rs. 43,020/- was awarded by the arbitrator. The said findings have been arrived at by the Arbitrator after considering the evidence on record and on the basis of calculations and I do not find any error apparent on the face of the record to interfere with the said conclusions. The said award is accordingly, upheld.

CLAIM NO.6:

9. This claim relates to pendentelite interest. The Arbitrator awarded pendentelite interest at 15% per annum to the claimants on Rs.1,52,654/ i.e. the award amount of claims 1,2 & 4 and excluding claims No. 3 & 5 w.e.f. 1.11.1988 upto the date of the award i.e. 30.4.1992 assessing the same at Rs.80,143/-. The arbitrator, however, did not award any pre-suit interest. The arbitrator has also awarded post-suit interest allowing the respondents two months time to pay the awarded amount, falling which the amount awarded would carry interest at 15% per annum from the date of the award uptil date of payment. I find no reason to interfere with the aforesaid award passed by the arbitrator. The arbitrator has also awarded costs of Rs.5,000/-. I do not find any reason to interfere with the said award also.

10. In terms of the aforesaid order the award passed by the Arbitrator in respect of claims No.1, 2, 4, 5, 6 and 7 are upheld and they are made a Rule of the Court. So far the award in respect of Claim No. 3 is concerned the same stands set aside. Decree be accordingly drawn in terms of this order.