National Industrial Development ... vs P.D. Contech Private Ltd.
2006 Latest Caselaw 2238 Del

JUDGMENT

Pradeep Nandrajog, J.

1. A cyclone hit the coastal areas of Orissa in March, 2000. Large number of primary school buildings were damaged. Schools had to recommence the session in mid July, 2000. Nalco, a Government of India Undertaking, was appointed as the nodal agency for reconstruction of schools. In turn, Nalco appointed NIDC as the agency to execute the works. In turn, NIDC entered into back to back contracts.

2. Respondent bagged one such contract for carrying out works in different blocks in the State of Orissa. Work pertaining to 82 sites was awarded by NIDC to the respondent.

3. During the stage of execution, part sites were withdrawn. Contractor sought extension of time to complete the work. Same was denied.

4. Partly affected works were resumed possession of. No payment was made to the contractor.

5. Contract contained an arbitration clause. Arbitrator was appointed. Award was published on 28.8.2003. Objections thereto have been filed by NIDC.

6. Award is a reasoned award and runs into 67 pages.

7. Only two substantive claims of the contractor have been allowed. Cost of arbitration in sum of Rs. 2 lacs has been allowed in favor of the contractor.

8. I would thus be noting relevant facts only in relation to the two claims and cost of arbitration which was allowed as also the rejection of the counter claim of NIDC.

9. Letter of award was issued to the contractor on 31.3.2000 stipulating date of start of work as 1.4.2000. The works were to be completed in 3 months i.e. up to 30.6.2000.

10. Reason for the tight schedule, as noted above, is that schools had to reopen by mid July, 2000.

11. Buildings which were to be constructed were to have RCC columns and slabs.

12. To even a layman it would be apparent that structural drawings would be the sine qua non for any person to commence the work.

13. Learned arbitrator has noted that these drawings were made available only on 13.5.2000, the date on which formal agreement was entered into.

14. Learned arbitrator has, therefore, held against NIDC, and in my opinion, rightly so, that half time was consumed by NIDC in making available the drawings and thus contractor could not be penalised for the same.

15. Award shows, and these facts are not in dispute that the contractor sought extension of time for completion of works till 30.10.2000 alleging not only late release of drawings but even late release of payments but NIDC terminated the contract on 31.8.2000.

16. From pages 3 to 33 of the award, learned arbitrator has noted the the rival versions of the parties and has also noted the documents relied upon by the parties to substantiate their claims on the points in dispute, and in light of the rival submissions and relied upon documents has listed his findings from pages 33 to 43 of the award.

17. Briefly noted, learned arbitrator has taken note of the fact that the awarded work was at 82 sites. Value of the work was Rs. 2.5 crores. Date of commencement was 1.4.2000. Drawings were made available by NIDC on 13.5.2000 when nearly half time granted for completion of work was over. It has been noted that date of completion was 30.6.2000. Learned arbitrator has further noted that drawings pertaining to doors, windows, window frames etc. were furnished by NIDC on 24.4.2000. Learned arbitrator has further noted that considering the nature of works, NIDC set unrealistic time for itself and the contractor. Learned arbitrator has noted that after the works were taken over from the contractor even till the end of November, 2000 NIDC could not complete the work.

18. Learned arbitrator has noted that NIDC was dependent upon Nalco did not have full funds to finance the project over a short period of 90 days. Learned arbitrator has noted the correspondence wherein NIDC wrote to the contractor that payment could not be released till amounts were released by Nalco. Learned arbitrator has noted that running payments had to be released at an interval of 15 days, an obligation which was observed in breach and not in compliance.

19. Issue of delay and cause of delay are issues of fact. I find that the learned arbitrator has dealt with the relevant issues and has perceived the problem from correct angle. I do not find any error in the award or the reasoning of the learned arbitrator wherein he has concluded that NIDC was at fault for the mess which was created.

20. Contractor's claim for payment due for work done and material left at site was a subject matter of claim No. 1. Rs. 20 lacs have been awarded to the contractor.

21. Perusal of para 1.1.11 of the award shows that NIDC admitted that value of work done for which payment had to be made was Rs. 16,59,167/-.

22. Shri Mukul Talwar, learned Counsel for the petitioner conceded that said sum would in any case be payable.

23. Reasons given by the learned arbitrator to award Rs. 20 lacs is that according to the contractor, value of work done for which payment had yet to be received was Rs. 18,66,362/-. Besides, material was left at the site by the contractor and the same was not measured. According to the contractor it was entitled to payment for the material left at site.

24. In para 1.1.12 of the award, learned arbitrator has noted that NIDC terminated the contract abruptly and delayed taking joint measurements. Learned arbitrator has noted that the contractor has submitted the details with break-up of various materials brought to site as also the bills evidencing purchase thereof.

25. Since joint measurements were not promptly recorded, it was difficult for the learned arbitrator to pinpoint with exactness the material left site.

26. I am thus of the opinion that sum awarded under claim No. 1 is reasonable and fair. Given the evidence before him, learned arbitrator could have done no better.

27. Second claim allowed and to which objection has been raised is claim No. 3 where Rs. 5,55,497/- have been awarded to the contractor.

28. Claim No. 3 of the contractor was for a sum of Rs. 28,31,000/- being the amounts realised by NIDC after invoking the bank guarantees submitted by the contractor.

29. Noting that the bank guarantees were furnished to secure the mobilization advance received by the contractor, learned arbitrator has found that Rs. 5,55,497/- was recovered by NIDC and, therefore, learned arbitrator has held that NIDC cold not enrich itself in said sum.

30. Viz-a-viz the contractor, the learned arbitrator has held that to the extent mobilization advance had to be repaid, NIDC was entitled to invoke the bank guarantees, but limited to the said sum.

31. Thus, Rs. 5,55,497/- have been allowed under claim No. 3.

32. Except for stating that the award suffers from perversity viz-a-viz claim No. 3, Shri Mukul Talwar, learned Counsel for the petitioner could not shake the foundation of the award pertaining to claim No. 3.

33. Cogent, legal and valid reasons have been given by the learned arbitrator. Indeed, NIDC was entitled to recover the balance mobilization advance and not the full value of the mobilization advance.

34. Since it was not disputed that NIDC had already recovered Rs. 5,55,497/- towards mobilization advance, I do not find any error in the award pertaining to claim No. 3.

35. That takes me to the last issue raised pertaining to the claims of the contractor.

36. Learned arbitrator has awarded litigation expenses of Rs. 2 lacs.

37. Considering the number of hearings held and the nature of dispute, cost awarded by the arbitrator cannot be labelled as excessive.

38. Since imposition of costs is within the discretion of the learned arbitrator, as long as it is not perverse, it would not be open for me to re-assess the cost of arbitration.

39. Learned Counsel for NIDC made an futile attempt to question the award pertaining to counter claim of NIDC.

40. Considering that the counter claims were by way of damages and loss of reputation, counsel for NIDC conceded that if the award pertaining to issue whether NIDC was at fault was upheld, rejection of NIDC's counter claim could not be faulted with.

41. Since I have found no error in the award in so far as it holds that NIDC was responsible for the mess and was at fault, I uphold the award in so far the counter claims of NIDC have been rejected.

42. To summarise, I dismiss OMP.No. 472/03.