Delhi High Court
Aries Construction Co. vs Delhi Development Authority And ... on 6 September, 2001
Author: V Aggarwal
Bench: V Aggarwal
ORDER
V.S. Aggarwal, J.
1. This is a petition filed by Arises Construction Co. under Section 14, 17 read with Section 20 of the Arbitration Act for a direction to the arbitrator to file the award and further to make the said award a rule of the court and for decree to be passed in terms of the award.
2. The parties has entered into an agreement and there was an arbitration clause contained in the said agreement for referring the disputes between the parties to the arbitrator. Certain disputes had arisen between the parties. Respondent no.2 was appointed as the arbitrator who had published his award on 30th June, 1992. The petitioner claims therefore that the arbitrator's award be made a rule of the court and a decree in terms of the same should be passed.
3. Notice had been issued to which the respondent (Delhi Development Authority) which had filed objections. It is prayed that the award is liable to be set aside because a sum of Rs.22050/- had been allowed to the claimant on account of deprivation of the profit though the claimant had claimed Rs.40,000/-. The arbitrator has failed to give reasons for arriving at the conclusions in this regard that claim no. 7 is justified. The figures so arrived at also is hypothetical. The arbitrator failed to take a note of the fact that the petitioner was not prevented by respondent DDA from doing any other work. In this regard, it was prayed that the arbitrator must be held to have misconducted himself. Furthermore it is asserted that the arbitrator has committed legal misconduct while granting simple interest at the rate of 12% on 27th September, 1991 to the date of the actual payment. The arbitrator could not have awarded the future interest.
4. In the reply filed the assertions of respondent no.1 have been controverter. It is denied that the arbitrator has misconducted himself in awarding the interest or that the arbitrator was not competent to award the interest.
5. On 1st September, 1995 this court had framed the following issues:-
1. Whether the award is liable to be set aside on the averments made in the objection petition?
2. Relief.
6. Issue No. 1: The short question that comes up for consideration is a s to whether the award is liable to be set aside on the objections of the respondent/DDA. As regards the first controversy that the arbitrator was in error in awarding the amount of Rs.22050/- on account of deprivation of the profits, according to the objector the arbitrator was not competent to award the same but the attention of the court has been drawn towards the judgment of this court in suit no. 3439/92 decided on 20th September, 2000. A similar argument was advanced and was repelled holding that the arbitrator can award the amount on account of deprivation of profit by the contractor. The precise findings can indeed be reproduced and reads:-
"The other objection seriously pressed was objection to claim no.5 in which Rs.40,000/- was claimed on account of deprivation of profit by the contractor. The respondent has relied on clause 13 of the contract.
The arbitrator has found the aforesaid clause to be inapplicable on account of its finding in respect of claim no.1. The arbitrator found that clause 10 and in particular clause 10CC stipulated that the claimant should be compensated to cover escalation. Clause 10 (CC) postulates 15 per cent margin toward over head profits. The arbitrator has relied upon State of Kerala vs. V K Bhaskaran, to sustain the award of lose of profit. The learned counsel for the petitioner has stated that clause 13 will not come into operation as the work had not even commenced and this clause only operates after the commencement of the work. Clause 13 is clearly inapplicable in the facts of the present case as that clause 13 provides the there shall be no compensation for alterations in or restriction of work to be carried out. The said clause cannot apply in the present situation as work had not commenced at all. In fact the opening words of clause are "If at any time after the commencement of the work ....." Consequently, the reliance upon the said clause 13 by the DDA is not justified.
The arbitrator had relied upon the judgment of the Hon'ble Supreme Court in M/s A T Brij Paul Singh & Ors. vs. State of Gujarat where in paragraph 9 the Hon'ble Supreme Court held that in a works contract, when the party entrusting the working commits breach of the contract, the contractor would be entitled to claim damages for loss of profit which he expected to earn by undertaking the works contract. The award of the arbitrator is thus clearly sustainable on the basic of the law laid down by the above judgment.
Even the judgment of the Division Bench in State of Kerala vs. K. Bhaskaran clearly applies on all fours to the facts of the present case. The above case also involved a works contract and the work was not commenced in that case and the Division Bench held that the award of 10 per cent loss of profit was clearly sustainable. In my view the above judgment will apply squarely to the facts of the present case apart from the judgment of the Hon'ble Supreme Court in A T Brij Paul Singh's case (supra). The Judgment which is relied upon by the learned counsel for the petitioner is M/s Salwan Construction Co. Vs. Union of India reported in 2nd (1977) II Delhi 748. The above judgment does not support the case of the respondent and in fact held that the measure of damages is the loss of profit arising out of reduced profitability or added expenses of the work carried out and completed by the builders."
7. One finds in respectful agreement with the said view the therefore the argument so much thought of by the learned counsel must fail.
8. The only other plea raised was that the arbitrator was not justified in awarding the future interest. Even on that count the contention must fail. The argument in the facts must fail and need not be gone into. The power of the Court to award the same is not disputed. Since the interest awarded is not excessive thus it requires no interference.
9. For these reasons objections must fail and are dismissed and the award is not liable to be set aside. Issue is decided accordingly.
10. As a result of the reasons given above the award is made a rule of the court and decree in terms of the award is passed.
