Shri P. C. Sharma And Company vs Delhi Development Authority And ...
2004 Latest Caselaw 1036 Del

JUDGMENT

R.C. Jain, J.

1. Parties had entered into a work Contract Agreement No16/HDXXI/A/82-83 dated 14.9.1994 for construction of 1994 houses under SFA Kishengarh Pocket C. S.H.- Construction of 192 Houses (96 category III and 96 category II) and 144 scooter garages including internal development of land. As per the terms of the contract, the work was to be completed by 8.7.1983 but it was declared to be completed on 15.7.1988, after extensions granted for the completion of the work. Disputes/differences arose between the arties and in terms of the Arbitration Agreement contained in the work Contract, the same were referred for settlement through Mr. K. S. Gangadharan, former Chief Engineer, CPWD, and Addl. Director General CPWD (Retd). the Sole Arbitrator, The said Sol Arbitrator entered upon the reference, made and published his Award dated 14.9.1994 thereby awarding certain sums of money to the claimant against some of claims filed before him. A petition under Section 14 and 17 of the Arbitration and Conciliation Act 1940 (hereinafter referred to as the ''Act'') was filed on behalf of the petitioner praying for a direction on the Sole Arbitrator to file his Award and the proceedings. The Award and proceedings were filed by the Arbitrator and a notice was issued to the parties inviting objections, if any, against the said Award.

2.The petitioner did not file any objection but objections under Section 30 and 33 of the Act have been filed on behalf of the respondent-DDA challenging the Award so far as it has awarded certain sums of money against claim Nos.1, 2, 3, 17, 17(a), 17(b), 17(c), 17(d), 22, 25, 26 and 28. The respondent has sought setting aside of the Award qua those claims.

3. Parties have not adduced any evidence in these proceedings and have largely relied upon the arbitration award and the proceedings.

4. I have heard Mr. M. S. Vinaik, learned counsel representing the plaintiff and Ms Anusuya Salwan, learned counsel representing the defendant and have given my thoughtful consideration to their respective submissions.

5. In the case in hand the Award given by the Arbitrator is a reasoned Award. Such an award is liable to be set aside if the objector is able to establish any one or more of the following grounds:

(a) There is error apparent on the face of the Award,

(b) The Arbitrator has misconducted himself or the proceedings.

6. Ms. Salwan, learned counsel for the respondent has taken me through the Award of the Arbitrator on claim Nos. 1, 2, 3, 17, 17(a), 17(b), 17(c), 17(d), 22, 25, 26 and 28 in order to show that the Arbitrator was not justified in awarding different sums of money against these claims of the claimant. Claim Nos.1, 2 and 3 of the claims were in regard to the recovery of the amount of rebate of 0.1% which had been deducted by the respondent-DDA in respect of bills payable of which whether the payment was made within one month or not as per the Agreement. In the opinion of this Court the Arbitrator has given cogent reasons as to why it directed the respondent to refund the rebate of certain amounts in respect of certain bills payment of which was admittedly delayed. In the opinion of this Court on the basis of factual matrix as recorded by the Arbitrator and reasons given by him, the Award of these claims appear to be quite justified and needs no interference.

7. In regard to claim No.14, it was argued by learned counsel for the respondent-DDA that the DDA was within its right to insist upon the petitioner to keep the security/bank guarantee alive uptill the preparation of the final bill. The Arbitrator has held that as per the terms of the Agreement the security deposit was to be released after maintenance period of six months from the date of completion e.g. up to 8.7.1983. However, since the completion of work was delayed uptill July 1988 and so at best respondent could insist upon the petitioner to keep the guarantee alive for a period of six months thereafter. However, due to the unjustified insistence of the respondent, the claimant had to incur extra expenditure for keeping the bank guarantee alive, apart of which the Arbitrator held to be recoverable from the respondent. This Court see no error of fact or law on the part of the Arbitrator in awarding this amount.

8. Claim 17 comprised of four parts i.e. (a) recovery of Rs.11,976.13 on account of cost of work done by another contractor at the cost of the claimant, (b) a sum of Rs.30,000/- on account of CTE's observations, (c ) a sum of Rs.1,21,607.41 in excess to the claimant recovered from the final bill which was paid in excess to the claim and (d) a sum of Rs.18,128.02 on account of penal recoveries in the final bill for materials. In regard to claim No.17 (c ) i.e. for a sum of Rs.1,21,607.41, learned counsel for the respondent-objector has submitted that the Award of this amount is patently illegal and constitutes an error apparent on the face of the Award. While awarding this amount the Arbitrator had observed as under:

'' An amount of Rs.1,21,607.41 is claimed by claimants on account of refund of recoveries made by the respondents in the final bill which in the opinion of the claimants is barred by limitation as the excess amounts paid by mistake cannot be recovered after three years from date of payment. The 20th running account bill had been paid on 3.8.1988 and recoveries if any are to be made before 2.8.1991. As the recoveries have been proposed in final bill paid in 94, these are not justified. Further no notice of the proposed recoveries was also served on the claimants. Hence such recoveries are against the contract provisions.

On the other hand, the respondents argued that all running account bills are only intermediate payments and they are very much within their rights to make reductions in payments wherever necessary before finalising the bill and only the final bill contains these reductions.

The work was declared completed on 15.1.1988 by the respondents and as per agreement, they should have finalised the bill within six months of the date of completion as per clause 7 of the agreement for the undisputed items. A perusal of the reductions proposed indicate that for most of these items, full rates had already been given in the earlier bills indicating that there were no disputes.

The final bill should have been prepared within a reasonable time after the date of completion but no reductions can be unheld if they are proposed after five years after the date of completion, more so when no notice also has been issued. Accordingly I award Rs. 1,21,607.41 to the claimants.

9. It would appear from the above observations/reasoning given by the Arbitrator that a sum of Rs. 1,21,607.41 had admittedly been paid in excess to the claimant on 3.8.1988 and it was recovered from the final bill. According to the claimant, the respondent was not within its right to recover this amount at the stage of final bill because the claim of the said amount has become barred by limitation, a period of more than three years having elapsed between the payment of the excess amount and the date on which the recovery was made. Somehow this reasoning appealed to the Arbitrator and he accepted the same.

10. Having regard to the totality of the facts and the circumstances of the case and more particularly the fact that the final bill in this case was prepared only in the year 1993 and the claims of the claimant itself arose after the preparation of the final bill, the claimant could not have been asked for the refund of excess amount paid to him before the preparation of the final Bill. The respondent-DDA was certainly entitled to adjust the said excess amount paid to the claimant in one of the running bills. In the opinion of this Court, this is an error apparent on the face of the Award and the Award of the Arbitrator directing a refund of a sum of Rs. 1,21,607.41 paisa is concerned, is liable to be set aside. Rest of the claims under this claim 17 are not liable to be set aside on any ground. Ordered accordingly.

11. Claim No.22, 25 and 26 were towards escalation under Clause 10 (c ) was due to increase labour rates etc. due on the basis of increase in cost of indices beyond stipulated date of completion and related to site expenses overheads unused under utilised machinery, staff etc. due to prolongation of contract on account of various acts of omission and commission of the respondent, the Arbitrator has found the delay in completion of work attributable to the respondent for their failure to supply the reqired cement and steel etc. as per the schedule and also by not supplying various structural details which caused hindrances in the progress of the work. Once this finding of the Arbitrator cannot be faultered, it would certainly entitle the claimant to various sums of money which have been awarded by the Arbitrator under those heads. This Court, therefore, see no reasons for setting aside the Award of the Arbitrator sofaras these claims are concerned.

12. Claim No.28 is related to the pendente lite and future interest. The Arbitrator has awarded pendente lite simple interest @ 12% on the amount awarded under various claims from 21.2.1998 which appears to be the date on which the reference to the arbitration was made and also future interest at the same rate on the awarded amount from the date of the Award uptill the date of payment or date of decree whichever is earlier. It is a settled position that the Arbitrator has the power to award pendente lite and future interest uptill the date of the decree. In the case in hand the Arbitrator has found the claimant entitled to certain amounts which were largely on account of certain defaults committed by the respondent and, therefore, in the opinion of his Court the award of interest is also justified. The rate at which the interest has been awarded does not appear to be excessive or harsh having regard to the period during which the work was completed and the period the arbitration proceedings were held.

13. In the result the objections filed by the respondent-DDA are partly allowed to the extent that the award for a sum of Rs. 1,21,607.41 awarded by the Arbitrator to the claimants against their claim No. 17 (c ) is hereby set aside while the objections are dismissed qua other awards and rest of the Award of the Arbitrator dated 14.9.1994 qua all other claims is made a Rule of the Court. The claimant/decree holder shall be entitled to future interest @ 12% p.a. till realisation of the amount. Let a decree sheet be drawn accordingly.

The suit and all pending IAs stand disposed of accordingly.