Mohinder Nath & Co. vs Delhi Development Authority
2000 Latest Caselaw 1155 Del

JUDGMENT

Mukul Mudgal, J.

1. The petitioner is a Contractor and is carrying on the business of construction work for the Delhi Development Authority. The petitioner was awarded Contract No. 15/PD-VIII/ DDA/81-82 by respondent-DDA for the construction of Aerodrome at Indoor Stadium Complex, I.P Estate, New Delhi. That certain differences and disputes had arisen between the parties and as per the Arbitration Clause in the agreement between the parties, Mr. Suresh Mehta, Superintending Engineer (Arbn-I), DDA Office Complex, Motia Khan, Paharganj, New Delhi, respondent No. 2 herein, was appointed as Sole Arbitrator by the Engineer Member of respondent No. 1/DDA. The Arbitrator made and announced his Award by granting a sum of Rs. 1,51,539.56/-with interest out of the total claim of Rs. 5,56,649/- to the petitioner/claimant by his Award dated 25th October, 19% after giving full opportunity of hearing to both the parties.

2. The present Objections in IA, 6502/97 have been filed by the Delhi Development Authority/respondent No. 1, the Objector herein, to set aside and Award dated 25th October, 1996.

3. The respondent-DDA/Objector has challenged all the claims wherever any amount has been awarded by the Arbitrator, raising an objection that all the claims are barred by limitation.

4. The preliminary objection in respect of limitation raised on behalf of the respondent/DDA/Objector is two-fold. Firstly since the work was completed on 5th of August, 1982, the limitation of 3 years is said to have expired in August, 1985 while the arbitration clause was invoked by the petitioner/claimant on 8th of July, 1993. The principal grievance of the respondent-DDA is that the impugned Award dated

25.10.1996 is liable to be set aside as the claims of the petitioner were clearly barfed by limitation since the work was completed on 5.8.1982 and the arbitration was invoked on 8.7.1993 well beyond the prescribed period of limitation of three years. It is submitted that the Arbitrator has erroneously held that the limitation period would be reckoned from finalization of the accounts and intimation in respect of the final bill to the claimants as per Clause 25 of the agreement. The Arbitrator held that the respondent submitted the final bill during the hearing before the arbitrator and consequently all the claims, were found to be within the period of limitation.

5. The learned counsel for the respondent/Objector has been unable to show how the aforesaid reasoning of the Arbitrator is wrong. The plea of the respondent-DDA is that the right of the claimant to receive the payment arose from the date of completion of the work and not from the finalization of the bill and this does not in any manner defer the commencement of the period of Limitation Act cannot be countenanced. The respondent themselves had not finalized the bill and cannot be heard to say that the limitation run dehors the finalization of the bill.

6. The relevant portion of Clause 25 of the agreement which provides for arbitration reads as follows:

"It is also a term of the contract that if the contractor (s) does/do not make any demand for arbitration in respect of any claim(s) in writing within 90 days of receiving the intimation from the Engineer-in-Charge that the Bill is ready for payment the claim(s) of the contractor(s), will be deemed to have -been waived and absolutely barred and the Delhi Development 'Authority shall be discharged and released of all liabilities under the contract in respect for those claims."

7. In the light of the above provision it is very clear that the limitation would begin to run only when the Engineer-in-Charge intimates to the claimant that the bill is ready for the payment. The counsel for the DDA submitted that claimant/petitioner did not submit the final bill for payment as required under Clause 7 of the Agreement and therefor the claim, raised by the petitioner/claimant is not maintainable as the same did not constitute a dispute which is s condition precedent for reference under Clause 25. After going through the pleadings, the Arbitrator while rejecting the preliminary objections of the respondent-DDA found that the final bill was submitted by the respondents during the hearing before the Arbitrator and accordingly all claims were held to be within the period of limitation. Since the learned counsel for the respondent-DDA has been unable to show any intimation by the Engineer-in-Charge as per Clause 25, this objection as to limitation by the DDA has no merit and is accordingly dismissed.

8. In the light of this finding the plea relating to non-raising of dispute under Clause 25 and the consequent applicability of limitation cannot be countenanced.

9. In respect of the following claims nil amount was awarded to the claimant/petitioner by the Arbitrator and consequently all the claims stood rejected:-

(i) Claim No. 3, and

(ii) Claim No. 8.

10. In so far as claim No. 1 is concerned, refund of Rs. 1,72,8021- on account of balance payment due towards final bill was sought by the petitioner/claimant before the Arbitrator. After considering the pleadings and submissions of both the parties at length qua Claim No. 1, the Arbitrator awarded a sum of Rs. 79,359,51 out of Rs. 1,72,802/- in petitioner's favour as follows:

(I) During hearing, the respondent had relied on Annexure-X and head shown Rs. 4902.32 as payable to the claimant after of income-tax, The Arbitrator was of the view that the said amount is thus admitted by the respondent and accordingly amount of Rs. 4,905.32 was justified in claimant's favour.

(II) The claimant claimed an amount of Rs. 17,381.27 for deduction and reduction items. After going through the pleadings, the Arbitrator rejected the petitioner's claim and justified the recovery made by the respondent for Rs. 17,381.27.

(III) The claimant while relying on Annexure C-43 stated that the rates which were being paid in the 6th running bill has been changed now. After going through the pleadings, the Arbitrator rejected the petitioner's claim.

(IV) The claimants stated that during execution, on the request of the Project Engineer, the analysis of various items were filed by them as per Exhibits C-7, 8, 9 & 14. The respondent-DDA had not refuted the analysis during execution and was unable to submit the analysis which it prepared during execution. After going through the pleadings, submissions, analysis of rates and various documents on record, the Arbitrator found the claimant's claim justified to the extent of Rs. 48,376,56.

(V) The claimant/petitioner referred to C-47 & C-48, indicating the few items which were executed at a later stage and therefore were not measured. He further stated that the sured advance had been recovered without recording the measurements for the material recovered despite making request to measure the work as per Annexures C-40 & C-41. After going through the pleadings and submissions of both the parties, the Arbitrator found that the measurements were not recorded fully for the material against which advance was recovered and no details were submitted by the claimants and justified the petitioner's claim only to the extent of Rs. 20,000/-. The Arbitrator further awarded Rs. 6,077.63 to the claimant in respect of claim for relevant connected items.

11. The respondent-DDA in its Objections qua Para (IV) of Claim No. 1 alleges that at the arbitrator has based his award on surmises and conjectures in the absence of any evidence. The learned counsel for the respondent-DDA further submits that the Arbitrator has awarded a sum of Rs20,000/- & Rs. 6,077.63 under Para (V) in the absence of any evidence on record to show whether such work was actually executed and what was the extent of the work so executed. It is also submitted that the Arbitrator has also ignored the provisions of Clause 8A of the Agreement which made the measurement recorded in the Measurement Book as final & binding and the Award on Claim No. 1 is not supported by reasons.

12. In so far as Claim No. 1 is concerned, sub-claim I is founded on an admission by the respondent and thus cannot be. challenged by the respondent-DDA.

15. The aforesaid sub-claim III of Claim No. 1 has been rejected by the Arbitrator and is not required to be considered.

16. In respect of sub-claim No. IV of Claim No. 1, the claimant had filed analysis of various items as per Exhibits C-7, 8,9 & 14 whereas the DDA was not able to refute the analysis or give its own analysis. In this view of the matter, the Arbitrator's award founded on the claimants' analysis cannot be impugned by the respondent-DDA and it cannot be said that the award on sub-claim No. IV of Claim No. 1 is based on surmises and conjectures and no evidence. It is in fact based on Exs. C-7, 8,9 & 14 and on un-rebutted, analysis submitted by the claimant and accordingly this sub-claim No. 4 under Claim No. 1 cannot be impugned.

17. In so far as sub-claim No. V under Claim No. 1 is concerned, the Arbitrator has relied upon Annexures C-40 & C-41 to plead that the measurements were not recorded fully in spite of various-requests made by the claimant. However, the whole of the claim was not upheld by the arbitrator but only a sum of Rs. 20,000/- was granted to the claimant in addition to the connected items in the sum of Rs. 6,077.63. The objection of the respondent-DDA that there is no evidence on record is clearly builed by Annexures C-40 & C-41 and thus this objection cannot be sustained.

18. All these objections in respect of Claim No. 1 are thus factual in nature and it is not open to this Court in the present proceedings to reappraise the evidence and come to different finding of fact. Consequently the objections to Claim No. 1 must fail and are dismissed.

19. In respect of the Claim No. 2 for payment of Rs. 18,568/-, on account of rise in wages of labour admissible under Clause 10C of the agreement, the petitioner has filed the details of amount payable as per Ex.C-I for Rs. 18.679/-. After going through the pleadings and submissions of the parties, the Arbitrator found that during the course of hearing, the claimant was agreeable to Rs. 5,166.56 as worked out By the respondent and accordingly justified the petitioner's claim to the extent of Rs. 5,166.56. The respondent-DDA in its Objections categorically objected to the award of Rs. 5,166.56 by stating that petitioner neither proved he had given any notice of increase to it as stipulated wader Clause 10C nor had produced any record to show that such payment was made by him and, therefore, in the absence of any ????? proof the arbitrator had no jurisdiction to award such reimbursement. Since the award to Rs. 5,166.36 is based on figures worked out by the respondent-DDA itself I fail to see how any objection to the award qua this claim can be raised by DDA. Accordingly the objection to Claim No. 2 is also dismissed.

20.In respect of the Claim No. 4 for refund for Rs. 30,458/- as security deposit, the claimant submitted that since the work was completed on 5.8.1982, the security deposit should have been refunded by 4.2.1983. After considering the pleadings and submissions of both the parties, the Arbitrator found that the respondent had agreed that the security deposit was lying with is and accordingly the Arbitrator directed the respondent-DDA to release Rs. 30,458/- lying with it is the shape of bank guarantee. The respondent while objecting to the same submits that this claim is barred by limitation and moreover the award on Claim No. 4 is not supported by reasons. In, so far as limitation is concerned the issue has already been dealt with hereinbefore and the refund of the security deposit is based on the admission by DDA that the security deposit was still lying with it. Thus this objection also has no merit and is dismissed.

21. In respect of the Claim No. 5 for Rs. 65,907/- on account of increase in quantities of various items beyond deviation limit under Clause 12-A, the Arbitrator found that the claimant/petitioner had submitted the analysis of rates for various items, which were exceeding the deviation limit and were not refuted by the respondent-DDA and as per the Agreement, if the quantities exceed 50% of the quantity provided in the agreement, then Clause 12-A was attracted. The Arbitrator rejected the respondent's contention that claimants were to execute quantities of various items upto 50% deviation at the agreement rates only and accepted the claimant's right to demand revision of rates. Accordingly the Arbitrator awarded Rs. 26,555.89 to the claimant for quantities executed beyond the deviation limit for these items. The respondent-DDA submitted that the applicability of Clause 12A was derived from Clause 12 and moreover the arbitrator failed to consider that Clause 12A is not an independent provision and it becomes applicable only when the requirements of Clause 12 are fulfillled.

Clause 12 A reads as under :-

"In the case of contract or substituted items which individually exceed the quantity stipulated in the contract by more than the deviation limit, except the items relating to foundation work, which the Contractor is required to do under Clause 12 above, supported by proper analysis in respect of such items for quantities in excess of the deviation limit, notwithstanding the fact that the rates for such items exist in the tender for the main worker can be derived in accordance with the provisions of Sub-clause (ii) of Clause 12 and the Engineer-in-Charge may revise their rates, having regard to the prevailing market rates and the contractor shall be paid in accordance with the rates fixed. The Engineer-in-Charge shall, however be at liberty to cancel his order to carry out such increased quantities of work by giving notice in writing to the contractor and arrange to carry it out. In such a manner as he may consider advisable, but under no circumstances the contractor shall suspend the work on the plea of non-settlement of rates of items falling under this Clause.

22. All the provisions of the preceding paragraph shall equally apply to the decrease in the rates or quantities in excess of the deviation limit, notwithstanding the fact that the rates for such item exist in the tender for the main, work or can be derived in accordance with the provisions of sub-clause of the preceding Clause 12, and the Engineer-in-Charge may revise such rates having regard to the prevailing market rates."

23. Since the respondent-DDA did not refute the analysis in respect of Claim No. 5,it is not open to it to plead that these were items relating to foundation work and hence attracting Clause 12 and not Clause 12A. Thus the reliance on Clause 12 to the exclusion of Clause 12A by DDA is not justified in view of the clear terms of Clause 12A. This objection consequently fails and is dismissed.

24. In respect of the claim No. 6 for damages of Rs. 50,000/-, the Arbitrator after considering the pleading and submissions of both the parties found that the contract was extended due to dafault/missions on the part of the respondent and accordingly awarded Rs. 10,000/- in favour of the claimant. The respondent has taken routine, usual and largely mundane objections to this portion of the award such as limitation, jurisdiction, non-application of mind, violation of natural justice and the plea that the award is not based on evidence. These objections apart from that of limitation (which is already rejected) are thus to factual findings arrived at by the arbitrator and are thus rejected.

25. In respect of Claim No. 7 for grant of interest @ 18% per cent annum on the amount of claims, the Arbitrator found that the claimant is entitled for payment of interest and accordingly awarded simple interest @ 12% per cent per annum, w.e.f. 8.4.1985 on the awarded amount except for Claims 4 & 6. The Arbitrator also awarded future interest @ 16% per cent per annum from the date of award to date of payment or decree except on Claim No. 4. The respondent in its Objection has taken a plea that in the absence of an agreement for payment of interest or notice the Arbitrator has no authority to award any interest. It is now well settled that the arbitrator has power to award interest and even then this objection is taken in a routine manner without application of mind.

26. The objections of the respondent-DDA are thus factual in nature and do no fall within the limited scope of challenge to the arbitrator's award and are duly covered by the law laid down by this Court in the judgment of S.K. Jain v. DDA and Anr., in Suit No. 1671-A/92 & IA.43/93, which was pronounced on 18th of April, 2000. Accordingly, these objections, preferred by the respondent-DDA are dismissed. Almost in every claim the respondent has unnecessarily added the plea of limitation after having raised it in the preliminary objections itself. Similarly, regarding Claim No. 7 it is well settled that the Arbitrator is competent to award interest. The objections are meritless and are accordingly dismissed.

The Award dated 25th of October,1996 is thus made a Rule of the Court.

27. Interest awarded by the Arbitrator on the awarded amount with effect from 8.4.1985 till the date of decree be paid within three months from today. If the amount due under the Award is paid within 3 months from today, the Award shall not carry any future interest. However, if the payment is not made within three months from today, the awarded amount shall carry future interest at the rate of 18% per cent per annum from the date of decree till realization. When the hearing of the objections petition started I had asked the learned counsel for DDA to confine his pleas t those objections to the award which according to him were meritorious. However the

learned counsel declined to do so and insisted on arguing all the objecuons. Since I have found each of his pleas lacking in merit and he has persisted in urging even the validity of the award of interest with equal vehemence in spits of the several judgements of the Hon'ble Supreme Court on the power of the arbitrator to award interest, I have no option but to award costs amounting to Rs. 10,000/- payable to the petitioner/claimant within 4 weeks from today.

Decree sheet be drawn up accordingly.

Suit & IA are accordingly disposed of.