National Bank For Agriculture And ... vs Shiv Shakti Electric Works
2006 Latest Caselaw 429 Del

JUDGMENT

Sanjay Kishan Kaul, J.

Page 1408

1. The petitioner invited tenders from electric contractors for carrying out the electric works at its office building at 24, Rajindra Place, New Delhi and the work was awarded to the respondent on 07.03.2001. The stipulated date for completion was 07.09.2001. The standard terms and conditions of the contract contained an arbitration clause no. 43. Since disputes arose between the parties, the same were referred to the sole arbitration of Justice J.K.Mehra (Retd.). The arbitrator made and published his awarded on 12.09.2005 finding that the petitioner liable to pay to the respondent a sum of Rs 8,45,801.60/- along with interest at the rate of 9 per cent from 01.09.2002 till the date of payment. A supplement to the award as addendum was made and published on 02.12.2005 reducing the amount of the award by Rs 5,547/-. The petitioner aggrieved by the award has filed the present objections.

2. The objections have been filed under the provisions of Section 34 of the Arbitration and Conciliation Act, 1996 and thus it was made clear to the learned senior counsel for the petitioner that until and unless the grounds set forth by the petitioner fall within one of the conditions mentioned in Section 34(2) of the said Act as enunciated by the Supreme Court in Oil and Natural Gas Corporation Ltd. v. Saw Pipes Ltd. , it will not be possible for this court to scrutinize the same. This court is not to sit as a court of appeal over a decree and re-appraise and re-appreciate the material on record before the arbitrator. In fact, even if this court was to come to a different conclusion on the material available before the arbitrator, it will be no ground to interfere with the award. Learned senior counsel for the petitioner thus fairly confines his submissions and states that he would be pressing such matters as fall within the aforesaid parameters.

3. The first submission of learned counsel for the petitioner arises from Clause 45 of the terms and conditions of the work agreement. Said clause is as under:

ALTERATION, ADDITION, OMISSIONS ETC.

No alteration omission or variation shall vitiate this contract but in case the Architect thinks proper at any time during the progress of the works to may any alterations in, or additions, or omissions from, the works or any alteration in the kind of quality of the materials to be used therein and shall give notice thereof in writing under writing hand to the contractor. The Contractor shall alter, add to, or omit from, as the case may be in accordance with such alterations or additions to or omissions from the works or any deviation from any of the provisions of the contract stipulation, specification or contract drawings without the previous consent in writing of the PMC and the Page 1409 value of such extras, alterations, additions or omissions shall in all cases be determined by the PMC with the prior approval in writing of the Employer in accordance with provision of Clause 17 hereof, and the same shall be added to or deducted from the contract Amount as the case may be.

4. Learned counsel for the petitioner thus submits that the amount awarded and finding arrived by the arbitrator is contrary to the aforesaid clause of the contract. These findings are as under:

The plea of the respondent is that the work was to be executed as per the instructions of PMC/respondent. There is no dispute that work is to be executed as required by the employer but that does not mean that if extra work is got executed then the contractor is not entitled for the payment. The respondent has not disputed the work but the only plea is that this was required to be executed as per the instructions of PMC and the respondent. There is no justification for denying the claim. The work having been executed, the payment of the same having been demanded, the respondent is liable for payment of the amount of Rs 24, 778/- which is awarded to the claimant.

5. In the alternative learned senior counsel for the petitioner submits that Bus Bar in DB-I and EDB were part of the original requirements in the contract and did not fall in the category of extra items. The claim of the respondent in this behalf, as recorded in the award, was as under:

Under item No.4 an amount of Rs 24,778 is claimed arising out tender items no.4 and 5. The claimant contended that PMC required the claimant to provide Bus Bar in DB-I and EDB. The work was executed and in view of this extra work the respondent became liable for payment of the amount of Rs 24,778/- to the claimant. The payment was demanded by the various letters dated 30.01.2002 (C- 88C), 23.02.2002 (C-99), 23.02.2002 (C-100), 13.03.2002 (C-104), 04.04.2002 (C- 112), 12.06.2002 (C-134), 23.10.2002 (C-143) and 01.12.2002 (C-144).

6. Insofar as the alternative plea is concerned, in my considered view, this is a pure finding of fact arrived at on the basis of nature of work to be performed under the contract and the parameters to be reached as against what work the respondent had completed. It is not the function of this court to sit in appeal over the said finding.

7. Insofar as the first aspect is concerned, the work was completed. The only question is whether it was open to the respondent to have done this work without the prior approval of PMC as per clause 45 and in case such work was done could the respondent be compensated for the same. The finding of the arbitrator is that such work was executed. Insofar as the issue of prior approval is concerned, learned counsel for the respondent has invited the attention of this court to the plea raised in this behalf by the respondent that the work was executed to the satisfaction of the PMC and that was the reason in the final bill the following certificate was recorded by the PMC as well as the petitioner.

Page 1410

1. The work has been executed as per drawings/ specifications approved by the architect/PMC.

2. Materials used for the work are as per specifications and makes specified in the agreement document.

3. There is no labour complaint at site of work.

For Gherzi Eastern Ltd.

Sd/

Certified that work has been done as per tender specifications. Rate have been verified from the tender. Materials supplied are as per tender specifications.

Sd/-

8. In my considered view the effect of the aforesaid certificate is even if the work was done by the respondent without taking prior approval of the petitioner, the petitioner had granted post-facto approval as per the final bill and that is the factor which weighted with the arbitrator while granting the amount. Such a finding cannot be said to be contrary to the contract.

9. The second plea of the learned counsel for the petitioner arises from the finding arrived at by the arbitrator as per issue no.5 in Para 31 to 34 of the award. The said paragraphs are reproduced herein asunder :

31. Issue No.5 is framed as under:

Whether the claimant had carried out proper checking and testing as required under the terms of the contract.

32. The claimant submitted that proper checking and testing as required under the agreement of the equipments supplied by the claimant and of the work was done by the claimant was done. the claimant referred R-39 and stated that the respondent and PMC certified that the materials used for the work are as per specifications and makes specified in the agreement and work has been executed as per drawings/specifications approved by Architect/PMC.

33. In reply the respondent stated that no proper checking and testing as required under the agreement was done by the claimant.

34. The claimant submitted that the proper checking and testing of the work executed by the claimant was done as per agreement and the PMC and the Engineer of the respondent being satisfied that the work done as per the specifications and agreement recorded the necessary certificate on the bill. In respect of the work of testing which was not executed by the claimant the amount has been awarded to the respondent, as entire work except the work of testing completed by the claimant to the satisfaction of the respondent.

10. Learned counsel for the petitioner contends that testing and commissioning was part of the balance work which the respondent had failed to complete. In this behalf, learned counsel referred to clause 28 of the terms and conditions which reads as under:

The payment for the works to be executed under this contract shall be made as follows after obtaining PMC certificate:

Page 1411

i)60% of the contract pro-rata against delivery of materials at site less retention money.

ii)20% of the contract pro-rata on erection less retention money.

iii)10% of the contract pro-rata basis on testing and commissioning less retention money. iv)Balance 10% of the work done less retention on obtaining certificates from all concerned authorities. The date of issue of such certificate will be treated as date of virtual completion.

11. Learned senior counsel thus contends that as per the schedule of payment 20 per cent of the amount had to be paid at a stage which the respondent did not complete.

12. The aforesaid aspect has been dealt with by the arbitrator in the following manner:

It is clear in the light of the above discussions that 80% payment was released of the amount recorded in the last column of R-40 and R041 and the balance amount was not paid, as according to the respondent testing and commissioning was not done. At the most the respondent could claim the actual expenses required to be incurred for testing and commissioning From documents filed by the respondent as RA-1 to RA-11 it is noticed that the expenses stated therein are much more than what would have been paid to the claimant if it had completed the job under the contract. Further the claimant was not informed of the work being given to another agency and also not informed about the rates. Admittedly the respondent did not follow the procedure required to be followed in such cases. However, considering the entire facts and discrepancies pointed out by the claimant in the aforesaid documents, I award an amount of Rs 80,000 to the respondent which is the amount paid for testing and commissioning.

13. The arbitrator found that the petitioner had got the balance work done at the cost of the respondent. The respondent was liable to be paid for this work if completed and admittedly had not been so paid. Taking into consideration these aspects, the respondent was held entitled liable to the petitioner for a sum of Rs 80,000/- which amount has been adjusted out of the amount found due to the respondent. Thus apart from denying any payment to the respondent on this account the respondent has been held liable for payment to the petitioner. This finding thus does not call for any interference.

14. The last aspect raised is in respect of the date from which interest has been awarded. Learned counsel has drawn the attention of this court to the statement of claim filed by the respondent where in Para 34 it has been stated that the arbitration clause was invoked by the respondent vide letter dated 07.02.2003. Learned counsel thus submits that the finding arrived at that the date of invocation for arbitration was 01.09.2002 is erroneous as recorded towards the end of the award. Learned counsel for the respondent concedes that this is an error which has crept into the award Page 1412 and the interest would be liable only form 07.02.2003 and not from 01.09.2002.

15. The objections are accordingly allowed to the aforesaid extent. The net result would be that the respondent is held entitled to the sum of Rs 8,40,254.60/- along with interest at the rate of 9 per cent from 07.02.2003 till the date of payment in terms of award dated 12.09.2005 as rectified by the supplement to the award as addendum dated 02.12.2005.

16. The petition stands disposed of.