Kamal Construction Co. vs Dda And Ors.
2007 Latest Caselaw 2476 Del

JUDGMENT

Sanjay Kishan Kaul, J.

IA No. 14917/2007 (Under Section 30 and 33 of Arbitration Act, 1996) in CS (OS) No. 1461/2007

1. The petitioner is a registered partnership firm to whom the respondent No. 1- DDA assigned the work of construction of houses and industrial development of land in pursuance to invitation of tenders by respondent Nos. 1 and 2. The work had to be carried out in Sector B at Vasant Kunj, New Delhi and a formal agreement was executed bearing No. 89/SWD-8/A/89-90. The agreement contained the standard arbitration clause and in view of the disputes having arisen between the parties, the petitioner invoked the arbitration clause vide letter dated 01.01.1996. The Chief Engineer of the DDA appointed Sh. Suresh Mehta, then Superintendent Engineer (Arbitration I) was appointed as the arbitrator vide letter dated 20.08.1996.

2. The petitioner had made 12 claims, but out of the same only only eight claims were referred to the arbitration. The arbitrator made and published the award dated 05.05.1997 and the said award was not challenged by either of the parties and the payments were made in terms thereof. The dispute, however, remained in respect of balance four claims for which no reference had been made and the petitioner had filed a suit No. 3083A/96 under Section 20 of the Arbitration Act, 1940 for appointment of an arbitrator for adjudication of the balance four claims. This petition was allowed vide Orders dated 12.03.1998. The Chief Engineer in terms of directions of the Court being the designated authority even appointed an arbitrator but in view of change of arbitrators, the matter did not proceed till Sh. Sultan Singh Jain, respondent No. 3 took up the proceedings in pursuance to the letter dated 03.07.2006. The said arbitrator has made and published the award on 06.07.2007.

3. The petitioner filed the present suit seeking directions to the arbitrator to file the original award in court which has been stated to have been so filed.

4. The present objections have been filed by the respondent in respect of the two claims awarded by the arbitrator.

5. The first is claim No. 2 of the petitioner on account of watch and ward of the completed work as the respondent Nos. 1 and 2 failed to take over the site from the petitioner. The arbitrator against the claim of Rs. 1,06,000/- has awarded a sum of Rs. 1,00,800/-.

6. The grievance of the respondent Nos. 1 and 2 is that the site was not handed over on account of the fact that it is the petitioner who failed to remedy the defects. A further plea has been raised that the petitioner failed to establish the actual expenses incurred and thus award of any amount was contrary to the provisions of Section 73 of the Contract Act, 1972 which provides for damages to be proved.

7. The arbitrator has found that the work was completed by the petitioner on 05.03.1993 as per the completion certificate recorded by the respondent Nos. 1 and 2 and the maintenance period as per terms of the agreement also expired on 04.09.1993. After expiry of the maintenance period the respondent Nos. 1 and 2 vide their letter dated 30.11.1993 informed the petitioner about the defects pointed out by the Superintending Engineer in the completion certificate. The arbitrator found that the so called defects referred to in the letter dated 30.11.1993 were without any particular reference to place or flat and were general in nature. The defects are about fixing of China ware, brass fittings, final coat of white wash, grinding of floors etc. In terms of Clause 14 and 17 of the agreement between the parties, a specific notice was required to be issued by the respondent Nos. 1 and 2 in case of failure on the part of the petitioner and in that eventuality the respondent Nos. 1 and 2 were at liberty to get the defects rectified within the reasonable time. No evidence was placed by the respondent Nos. 1 and 2 about any such rectification of the so-called defects. In terms of the agreement, there was no liability on the part of the petitioner for watch and ward of the completed works and the respondent Nos. 1 and 2 failed to take over the site within the maintenance period of six months. In fact, up to 08.03.1994 only fifty per cent houses were handed over to the allottees by the DDA. The arbitrator has thereafter proceeded to determine the claim on the basis of the expenses for watch and ward charges.

8. It is trite to say that this Court does not sit as a court of appeal over the findings of an arbitrator. It is not the function of this Court to reappreciate the evidence or proceed on a basis that if the Court was the arbitrator, it may have come to a different conclusion on the material available before the arbitrator. There is a catena of judgments on this aspect, but it would suffice to make reference to two judgments of the Apex Court in Gujarat Water Supply and Sewerage Board v. Unique Erectors (Gujarat)(P) Ltd. and Anr. and Food Corporation of India v. Joginderpal Mohinderpal and Anr. (1989) 2 SCC 34. In fact in State of U.P. v. Allied Constructions it was once again reiterated that Section 30 of the Act provided for setting aside an award only as per the conditions specified therein and thus the objections have to be restrictive in its operation and an award can be set aside only on the grounds as per the said Section. The arbitrator is a judge chosen by the parties and his decision is final and thus the Court is precluded from reappraising the evidence. The terminology 'error apparent on the face of the record' was thus held not to imply closer scrutiny on the merits of the documents and material on record. Once it was found that the view of an arbitrator is a plausible one, the Court should refrain from interfering.

9. It can be hardly be said that the view taken by the arbitrator in the present case is not based on the appraisal of evidence. Thus I find no merit in this petition.

10. The second challenge is in respect of claim No. 3 for which the petitioner had claimed a sum of Rs. 4,50,000/- on account of damages/compensation due to idle establishment, T and P etc. The arbitrator has awarded a sum of Rs. 1,00,000/- on that account.

11. The grievance of the respondent Nos. 1 and 2 is that the petitioner could have been paid escalation in terms of formula provided under Clause 10CC of the agreement for increase in prices in material and wages of labour and that the establishment and T and P were maintained at site on account of own faults of the petitioner as the rectification in the flats had not been carried out even after the date of completion of 05.03.1993.

12. Insofar as the fault being of the petitioner is concerned, as noticed above, the arbitrator has already found against respondent Nos. 1 and 2. The arbitrator had already taken note of the fact that though the work was required to be completed by 04.09.1991, same was completed on 05.03.1993 with extension being granted by respondent Nos. 1 and 2 without levy of compensation. The actual delay in completion of work was 547 days days i.e. 18 months solely on account of factors attributable to respondent Nos. 1 and 2. It is thus the petitioner who was held entitled to the loss suffered on account of the delay in completion of work which has been calculated by the arbitrator. A distinction has to be made between escalation in the rates of labour and material which would arise on account of delay attributable to the opposite party and a claim on account of idle establishment. These two are not overlapping. Thus Clause 10CC would have nothing to do with the idle labour and machinery at site for which the arbitrator has awarded a sum of Rs 1,00,000/- against the claim of the petitioner. Thus there is no error in awarding this amount.

13. The aforesaid being the only objections, the same are dismissed.

IA No. ___________/2007 (be registered)

1. Notice which is accepted by learned Counsel for the respondent Nos. 1 and 2.

2. These are objections filed by the petitioner and the only grievance made is that no interest has been awarded by the arbitrator on account of the fact that there is no specific reference. The aforesaid reasoning is ex-facie erroneous as the arbitrator has the authority to award interest on adjudication of claims including under Section 3 and 4 of the Interest Act, 1978 and the arbitrator would have full authority to award interest as held by the Apex Court in S.I.D., Govt. of Orissa v. G.C. Roy 1992(1) ALR 145. Once the amount was found payable to the petitioner, interest should have been granted.

3. In view of the aforesaid, I deem it appropriate to set aside the award to the extent it does not grant any interest and to award interest from 12.03.1998, the date of the Order directing the claims to be so referred, till the date of payment. The interest would be payable at the rate of 12 per cent per annum simple interest on the amount awarded under the award.

4. The application is allowed.

CS(OS) No. 1461/2007

1. The objections having been disposed of, the award of Mr. S.S. Jain of the Sole Arbitrator dated 06.07.2007 is made rule of the Court with the modification that the petitioner would be entitled to interest from 12.03.1998 till date till date of payment on the awarded amount at the rate of 12 per cent per annum simple interest.

2. Parties are left to bear their own costs.

3. Decree sheet be drawn up accordingly.