Kochhar Construction Works vs Delhi Development Authority & ...
2001 Latest Caselaw 720 Del

ORDER

J.D. Kapoor, J.

1. This is petition under Sections 14,17 and 29 of the Arbitration Act, 1940. The arbitrator has filed the award dated 22.2.1995 Along with correction slip dated 2.3.1995. Pursuant to the notice for making it is rule of the Court the main contestant respondent No. 1 has filed objections. At the outset, it may be pointed out that the arbitrator is a retired Director General of Works, CPWD and was appointed by the respondent DDA itself. Relevant facts are as follows:

The petitioner was awarded the work of construction of 850 SFS houses Sector-B, Pocket-X, Gr-I at Vasant Kunj SH-construction of 90 Cat-III and 90 cat-II SFS houses and 135 S/G Sector-B, PKT-X, Gr-1 Vasant Kunj including internal developments of land and work of sanitary installations.

2. Most of the objections are with regard to the claims that have been awarded on the basis of documents and materials produced by the parties. These are claims 1,2,3,4,5,6,7,13 and 14.

3. The criterion laid down by the Supreme Court in cases after cases and recently in Arosan Enterprises Ltd. vs. Union of India and Another are to the effect that (i) reappraisal of evidence by the court is not permissible and as a matter of fact exercise of power by the court to reappraise the evidence is unknown to proceedings under Section 30 of the Arbitration Act;

(ii) in the event of there being no reasons is the award, question of interference of the court would not arise at all;

(iii) in the event, however, there are reasons, the interference would still be not available within the jurisdiction of the court unless of course, there exists a total perversity in the award; (iv) that the court cannot substitute its evaluation even if the arbitrator had acted contrary to the bargain between the parties; (v) if the view of the arbitrator is a possible view the award or reasoning contained therein cannot be examined as the court does not sit in appeal; (vi) the attempt should be always made support the award but within the letter and spirit of law and even if it is a boarder line case the award should always be upheld as the parties after having chosen the forum cannot challenge the same except on the ground of grossest kind of misconduct inasmuch as that the arbitrator has exceeded his brief.

4. When tested on the anvil of aforesaid criterion the objections are not maintainable and are dismissed as the findings are based on evidence and material produced by the parties and none of these claims is beyond the terms of the agreement. Award is respect of aforesaid claims is hereby affirmed.

5. However the main objection on which Ms. Ansuya Salwan, learned counsel for the respondent DDA has banked upon and has laid stress is with regard to claim No.8. Clause 12A of the Agreement governs this claim and is as under:-

"In the case of contract substituted items or additional items which result in exceeding the limits laid down in sub-clause (vi) of clause 12 except the items relating to foundation work, which the contractor is required to do under clause 12 above, the contractor shall, within 7 days from the receipt of order, claim revision of the rates supported by the 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 work or 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 so 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.

All the provisions of the preceding paragraph shall equally, apply to the decrease in the rates of items of quantities in excess of the deviation limit, notwithstanding the fact 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 (ii) of the preceding clause 12, and the Engineer-in-Charge may revise such rates having regard to the prevailing market rates".

6. The main gravamen of the contention of Ms. Ansuya Salwan, learned counsel for the respondent is that since it was mandatory under Clause 12A for the petitioner to submit proper analysis in respect of each item within seven days from the receipt of order pertaining to the deviated items and since the petitioner did not claim revision of rates within seven days he was not entitled to claim extra rate as awarded by the arbitrator.

7. The finding of the arbitrator in this regard is that though Clause 12A is attracted as per agreement but this is a percentage rate contract and therefore the percentage asked for increase is the proper mode. The claimant had asked for 48.1 per cent extra towards contract rates. The contract started on 20.12.84 and was completed on 19.12.88. It was observed that in the cost index, the fixed price of cement and steel as per contract was also to be kept in mind and therefore CPWD cost specifications would not be directly applicable. The arbitrator awarded the claim keeping in view the deviation limit as per 20 per cent. As per Clause 10CC of the Agreement, the index for any month shall be arithmetical average index for the three preceding months.

8. However, Ms. Salwan has assailed the observations of the arbitrator as contradictory as on the one hand the arbitrator has agreed with the application of mandatory provisions of Clause 12A of the Agreement while on the other hand he has not given any reason for making the award in respect of the said claim nor has he provided any answer to the non-compliance of the mandatory requirements of submitting proper analysis within seven days from the receipt of the order pertaining to the deviated item.

9. I am afraid the contention of Ms. Salwan is a feeble attempt to question the finding of the arbitrator that the instant contract was a percentage rate contract and therefore the percentage asked for increase is the proper mode as at first instance no order for deviated item was ever received by the petitioner and therefore the question of giving seven days notice did not arise and further vide documents R32-33 the respondent DDA had itself admitted that the items which were deviated shall be paid in terms of Clause 12(6) read with Clause 12A of the agreement. Since there was an admission on the part of the respondent there was no need for the arbitrator to refer to the notices given by the petitioner, if any, though the petitioner/claimant had issued several notices. The notices produced by the petitioner in this regard are Ex.C-2,C-3,C-9,C-19,C-25 and C-44. The fact that the claimant had asked for 48.1 per cent over contract rates and the arbitrator justified his claim only to the extent of 23.1. per cent also demonstrate application of mind by the arbitrator.

10. Further contention of Ms. Salwan that the petitioner was required to ask for percentage increase and it was only in respect of substituted items and for additional items quoted by the contractor proper rate analysis was to be furnished has been amply answered by the Arbitrator in as much as that the contract was a percentage rate contract and therefore the percentage asked for increase was the proper mode. The contention of Ms. Salwan is that every time deviation in the item was ordered, the petitioner was required to give seven days notice and submit proper analysis of rates does not stand to reason as there was no need to place order of deviated items everyday as the quantities automatically increased in the work order for which the provision had already been made.

11. Rather it was not feasible to except the respondent to place separate order for every deviated items during the execution of the contract for the contractor to submit proper analysis of the rates within seven days. In that case at every step during the execution of the work such an order was to be placed by the respondent and within seven days thereof proper rate analysis was to be submitted by the respondent. This was neither the intent, nor the purpose of Clause 12A. However, it is admitted position that there was no need to place order as to deviated items everyday as the quantities automatically increased with the works order itself. The petitioner gave a notice as required in the aforesaid clause but seven days period is not to be computed from the date of receipt of the order for the each deviated item as it was a continuous process and was to take years to complete.

12. If the contention of Ms. Salwan is accepted it would mean that if the quantities exceeded as provided in the agreement the contractor was to comply within seven days from such an increase Along with proper rate analysis. It has been rightly contended by counsel for the petitioner that the petitioner was entitled to give revisional rates by giving notice of seven days accompanied with rate analysis after the completion of the work.

13. Ms. Salwan has placed reliance on M/s Tarapore & Co. Vs. Delhi Development Authority Ar. LR 1988(1) 356 wherein the interpretation of Clause 12A was involved for determination. In this case the petitioner had sent a letter in which it was categorically stated that the increase to which they were entitled to was more than 25 per cent but the claim was being limited by them to 15 per cent. It was contended by the respondent that as per Clauses 18(6) and 12A and the conditions of the contract what would be claimed by the claimant was the prevailing market rate and since the prevailing market rate was less than 15 per cent the award as bad.

14. It was in the light of this fact that the court observed that it is not possible to come to the conclusion that this increase of 15 per cent arrived at by the arbitrator cannot be regarded being the market price of the building materials and labour etc. which was being demanded by the claimant.

15. Since the finding of the arbitrator is on a question of fact and does not suffer from any gross infirmity the same is not liable to be set aside in view of the observations of the Supreme Court made in Arosan's case (supra).

16. It is now well settled that if the arbitrator makes a speaking award and gives reasons, the court can not set aside the award merely because the court would have come to a different conclusion. Mere dissent of a court from the arbitrator's conclusion is not enough to set aside the award unless it can be shown from the face of the award that the arbitrator has tied himself down to some special legal preposition which is unsound.

17. In view of the foregoing reasons and the settled position of law governing the acceptance, rejection or remittance of the award I do not find any fault with the award which is well considered and well reasoned. I do not feel inclined to interfere with it. The award is made rule of the court. The suit is decreed in terms of the award with pendente lite and future interest at the rate of 11 per cent till the date of payment of the decretal amount.